Czech renewable energy support auctions attract first two bidders, but none fully subscribed

The Ministry of Industry and Trade has received the first two applications for renewable energy support awarded through an auction. Although the auction conditions were adjusted to make it more attractive, only two bids were submitted. Both bids were submitted in the category intended for wind power plants, which nevertheless remained undersubscribed. The Ministry of Industry and Trade confirmed the number of bids submitted. 

In the Czech Republic, the allocation of support through auctions has only been enshrined in law since January last year. Although many experts expected this new framework to accelerate the development of renewable energy, the auctions have so far failed to meet expectations.

The Ministry of Industry and Trade had announced its second auction. In the first one, which ended in December last year, not a single bid was submitted. The ministry therefore announced a new auction before the end of last year. The deadline for submitting bids in this second auction ended on Wednesday.

Although the second auction was more successful, it still apparently fell short of expectations. Only two bids were submitted in the auction for support for wind power plants. The other two auctions, which offered support for biogas plants and small hydropower plants, again received no bids at all.

However, none of the three announced auctions was fully subscribed. The total capacity of the wind auction, the only one to receive bids, was 30 MW. However, the maximum capacity per bid was 12 MW. Therefore, if both bids meet the other auction conditions, a maximum of 24 MW of installed capacity will be awarded.

The total auction capacity had already been criticised, with 30 MW considered too low. However, as can be seen, even this volume will not be filled under the current auction and market framework.

The auction offered support of up to 148 EUR/MWh

The conditions of the second auction were substantially more favourable than those of the first. For wind power plants, bids could be made for support of up to 148 EUR/MWh. This is the maximum price, but since the auction was not fully subscribed, participants will be awarded the price they requested in the auction (provided that it is below the maximum price and that they also meet the other auction conditions).

In neighbouring Germany, where auctions have been held regularly for several years, there is also a shortage of capacity in auctions. However, compared with auctions in the Czech Republic, lower support prices are used there: in recent years, these stood at around 60 EUR/MWh, before exceeding 70 EUR/MWh after price caps were raised this year.

The problem in the Czech Republic apparently does not lie in the level of support either. After many years in which no new support schemes were announced, many projects were halted and no new ones were launched. Given the relatively lengthy permitting process, the issue may instead be the deadline by which a power plant must be brought into operation. For this auction, the commissioning deadline is set for the end of 2026.