Czech consumers to foot the bill for capacity mechanisms, paying up to CZK 150 billion

Under the European Commission’s approval, the Czech capacity mechanism will be fully financed by electricity consumers. The European Commission approved the scheme with estimated costs of CZK 75 to 150 billion. However, this is not an amount for a single year, but the total support spread over the duration of the contracts awarded, up to fifteen years for new fossil-fuel plants. Capacity mechanism payments will gradually replace part of the fees supporting renewable energy sources, whose support will expire after 2030. 

The European Commission approved the Czech capacity mechanism in a decision issued in mid-July. The Czech Republic notified it in April this year with the aim of ensuring sufficient dispatchable capacity during the rapid phase-out of coal-fired power plants. The Commission concluded that the proposed support was compatible with the internal market.

On Wednesday, the Commission published further details of the Czech plan and its assessment. The capacity mechanism, approved under the rules of the Clean Industrial Deal State Aid Framework (CISAF), is intended primarily to support the construction of new gas-fired generation. These plants are particularly sought after for their flexibility and ability to respond quickly to capacity shortages or surpluses in the system.