Czech regulator launches consultation on changes to distribution tariffs and further market design changes

The Czech Energy Regulatory Office (ERÚ) announced on its website the launch of a public consultation process on a new framework for setting distribution tariffs and other conditions in the electricity sector. The ERÚ is due to present an amendment to the Electricity Market Rules decree in September. Among other things, the decree will introduce the possibility of electricity sharing in apartment buildings.

Delays in implementing new energy legislation

The Czech Republic has lagged behind a large part of the EU in the development of renewable energy sources (RES) in recent years. The country’s infamous domestic solar boom of 2009 and 2010, as well as a lack of political will, played a role.

This was reflected in the late implementation of energy legislation that would allow further RES development. One example is the late introduction of a new scheme to support energy sources, while another is the definition of terms newly introduced by the European Union.

Support for energy sources

An amendment to the Act on Supported Energy Sources (POZE) was approved only in the second half of last year. The amendment introduced the possibility of holding auctions, an operating support mechanism that has long been proven across the EU. For example, coal-dependent Poland held its first auction for onshore wind farms as early as 2018.

Introducing EU terms

Likewise, the Czech Republic is now lagging in the implementation of European energy legislation, which was meant to introduce, for example, the concept of energy communities. This concept was introduced by the European Commission as early as 2016 and was enshrined in European directives in 2018 and 2019.

The first directive to be introduced – the Renewable Energy Directive – entered into force in 2018. Member states were required to implement it by 30 June 2021. It was intended to remove regulatory and administrative barriers associated with RES development. However, it has not yet been implemented in the Czech Republic. It is precisely legislative barriers that hinder the development of photovoltaic power plants (PV) on apartment buildings, for example.

Tariff adjustments should be fully completed in 2028

In its report, the ERÚ states that the first of its steps will be an amendment to the Electricity Market Rules decree. It will be presented in September this year and take effect from January 2023.

“The decree will allow electricity generated from a shared source in apartment buildings to be shared among individual households. The fact is that photovoltaics are literally flourishing on the roofs of family homes, while apartment buildings have so far been neglected. The reason was not technical but legislative. And especially now, when we are talking about energy security, self-sufficiency and supply stability, empty roofs in cities are a missed opportunity,” says Martina Krčová, a member of the ERÚ Board.

However, further changes will require more time and entail amendments to energy legislation. The tariff adjustments should be fully completed in 2028.

“Further, more fundamental changes will, however, require amendments to legislation, on which we want to cooperate with lawmakers. Current legislation is often more than twenty years old and therefore could not have anticipated new technologies,” adds Stanislav Trávníček, chairman of the ERÚ Board.