Czech Industry Ministry submits another amendment to Energy Act for comments

The Ministry of Industry and Trade (MPO) has prepared another amendment to Act No. 458/2000 Coll., on the conditions for conducting business in the energy sectors and other related acts. The amendment aims to transpose European directives and define “new” terms in Czech legislation. Under the proposal, electricity storage and aggregation would newly be classified as energy-sector businesses. The change would open the market for ancillary services to battery storage facilities. The definition of flexibility is also linked to aggregation.

Licences for electricity storage, ability to offer balancing services

The proposed amendment to the Energy Act introduces the term “electricity storage” and establishes it as a licensed activity. This is something industry associations have been calling for for several years. The absence of this definition has hindered the development and use of the potential of standalone battery storage, which is considerable particularly in the provision of balancing services (SVR). SVR serves as a tool for maintaining system stability.

Czech transmission system operator ČEPS has in recent years adapted the transmission system code to prepare for these long-awaited changes.

The development and definition of storage in Czech legislation has been, and remains, necessary in connection with the development of renewable energy sources (RES), such as photovoltaic and wind power plants. By their nature, these are intermittent sources; put simply, they depend on sunshine and wind. As their installed capacity grows, so does the need for regulation by ČEPS due to rapid changes in their current output.

Moreover, when we look at the composition of SVR providers, we find that coal-fired power plants are among the key providers of SVR. These are power plants that should be phased out over the next 10 years. This only further underlines the necessity of this change. The SVR market is worth billions, and the change will undoubtedly attract new providers.

Capacity mechanisms, flexibility aggregators and other changes

Another important new measure is the introduction of capacity mechanisms, which ČEPS considers necessary. Under the proposal, ČEPS will be required to draw up a proposal setting out procedures and conditions for ensuring the required availability of balancing capacity.

Other planned changes to the Energy Act include the definition of a flexibility aggregator. Although companies operating in the market have been using this designation for a relatively long time, it has so far had no basis in Czech legislation. A licence for electricity trading would be required for aggregation activities, i.e. the pooling of consumption or generation. Flexibility aggregation means pooling consumption or generation and enabling their control according to the needs of the electricity system.

The proposed amendment introduces an obligation for electricity traders with more than 200 thousand metering points to offer electricity supplies at dynamic prices, along with related information obligations. These information obligations include warning customers of the associated risks.