Analysts: New Czech government focuses on short-term energy goals at the expense of development

According to analysts, the new government is pursuing mostly short-term goals in the energy sector, often at the expense of the long-term development of domestic energy. They are particularly critical of plans to nationalise ČEZ and the lack of major investment in modernisation and the development of new energy sources. They welcome, however, support for nuclear energy. This is according to comments by analysts to the Czech News Agency (ČTK).

The main priorities of the incoming government of the ANO, SPD and Motorists coalition include nationalising the energy company ČEZ, transferring all charges for renewable energy sources to the state, and opposing emissions trading systems. This is according to the draft government policy statement. The parties also agreed in the statement to continue supporting the development of nuclear energy, while not ruling out renewable energy sources.

According to Jiří Tyleček, an analyst at XTB, the planned government's energy policy is largely populist in nature. "It is trying to respond to voters affected by high energy prices, transport costs and rising living expenses. It is therefore geared towards quick, visible measures," Tyleček said.

While this approach may be effective in the short term, he sees negative consequences in the long run. "The government risks that keeping prices low without sufficient investment in modernisation and the transition to new technologies will leave the energy sector behind. The country could suffer from limited industrial competitiveness and restricted access to European funds, while the government's new policy could affect the stability of the entire energy system," he said.

Radim Dohnal, an analyst at Capitalinked.com, was particularly critical of the plan to nationalise ČEZ. He said the move would leave the company heavily indebted, while the intended reduction in profitability would make it unable to finance the construction of new nuclear units. "Corruption and nepotism would flourish. It would make things more difficult for other electricity producers and sellers. It would mark the beginning of the end of capitalism in Czechia," he said.

Dohnal also described the coalition's plan to reform the existing emissions allowance system as schizophrenic. "On the one hand, they want to reform the system and remove its market element; on the other, they want to use the proceeds from emissions allowances to buy voters," he explained. He welcomed the coalition's emphasis on nuclear development and its plan to introduce capacity mechanisms. According to Dohnal, the goal of lowering regulated energy prices is the right one, but he would choose a different approach than reducing regulated charges for all consumers.

Martin Sedlák, programme director at the Modern Energy Union, welcomed the incoming government's inclusion in its programme of plans to complete the introduction of capacity mechanisms for flexible energy sources, create conditions for the development of renewable energy sources, and make use of energy storage. According to Sedlák, scenarios involving faster renewable energy development result in lower wholesale electricity prices than scenarios with slower development. If renewable energy development slows, he said, price differences compared with neighbouring countries risk widening.

"As the Polish experience shows, transforming an energy system dependent on coal is possible if the government recognises new energy sources as, for example, a way to strengthen the country's energy security and boost the economy's competitiveness," Sedlák noted.