ČEPS publishes MAF CZ 2023, assessing Czech resource adequacy through 2040

The transmission system operator has presented the document “Assessment of the Resource Adequacy of the Czech Power System through 2040” (MAF CZ 2023), which sets out possible development pathways for the Czech electricity sector. The analysis contains two scenarios – Responsive and Progressive. MAF CZ 2023 draws its information on the Czech generation fleet from an updated data collection exercise conducted in the first half of 2024, which already reflects changes in generators’ plans. For data on neighbouring European countries, the document uses ENTSO-E data valid as of March 2023.

The MAF CZ 2023 document contains two scenarios – Responsive and Progressive. Although the scenarios indicate different possible development pathways for the Czech electricity sector through 2040, they share several assumptions, including the same dataset on the electricity mix of other European countries, modelling of balancing services, and the same development outlook for hydro and nuclear power.

The Responsive scenario offers an outlook on the development of the generation fleet based on data provided annually by generators with installed capacity above 10 MWe. This scenario assumes a gradual phase-out of coal-fired generation, with operating most coal-fired power plants becoming uneconomic by 2030. Beyond that point, coal would be burned only in smaller heating plants and industrial energy facilities. These sources are expected to gradually switch to natural gas or biomass, while installed renewable capacity increases steadily.

The Progressive scenario assumes a complete move away from coal and the conversion of heating plants and industrial energy facilities to (predominantly) natural gas by the end of 2030. It envisages higher installed renewable energy capacity, particularly in solar and wind power, and higher electricity consumption due to more extensive electrification of transport, industry and heating.

Conclusions and recommendations

The results of both scenarios indicate that the Czech Republic will shift from a net exporter to a net importer after 2025. Some imports are driven by economic considerations, while others are needed to balance supply and demand. It remains an open question whether electricity from countries with a surplus, particularly Germany and France, will actually be exported or used to produce hydrogen for their domestic industries. In 2035, the results of both scenarios point to resource adequacy problems exceeding the reliability standard, despite high import volumes. The additional capacity needed to achieve adequacy in climate-average years, while assuming higher import volumes, is greatest in the target year of 2035, ranging from 1 600 – 1 900 MW. A sensitivity analysis accounting for extremely adverse weather conditions shows that additional capacity is needed as early as 2030 and could be up to twice the level required in climate-average years.

As for wholesale electricity prices, high volatility within a given year can be expected in the future. More intensive use of renewables does reduce the average wholesale electricity price, but it also increases the costs of managing the system, such as redispatch costs. As the energy component of the electricity price gradually declines, costs will shift towards distribution charges. The analysis of price trends under the scenarios shows that electricity imports may help reduce wholesale prices in the Czech Republic during the summer. In winter, however, all available generation in Europe is exhausted during some hours, prompting the activation of demand-side flexibility and subsequent significant price fluctuations.

It is therefore essential to build new flexible generation sources to prevent potential electricity shortfalls during weather-sensitive periods of the year, while also improving energy efficiency and increasing demand-side participation. Other recommendations arising from MAF CZ 2023 include ensuring a managed transition from coal to low-emission energy. It is also necessary to recognise that, in the long term, the Czech Republic will need to build additional nuclear generation. Meeting the reliability standard will also require additional installed capacity beyond that provided by new nuclear plants, particularly gas-fired and wind power plants. Exceeding the reliability standard by a significant margin puts the security of electricity supply to end users at risk.

About MAF CZ

The “Assessment of the Resource Adequacy of the Czech Power System through 2040” (MAF CZ) analyses possible pathways for the development of the electricity sector through 2040 under selected scenarios. The document primarily aims to identify potential problems in meeting electricity demand and determine the causes of the risks that may arise. Among other things, this analysis serves as a basis for state decision-making in the electricity sector.

The process and conditions for preparing a national resource adequacy assessment are set out in Regulation (EU) 2019/943 of the European Parliament and of the Council on the internal market for electricity, and further specified in the relevant methodologies based on that regulation. In preparing the national resource adequacy assessment, ČEPS builds on the European Resource Adequacy Assessment (ERAA) and uses development scenarios, methodologies and procedures defined jointly within ENTSO-E and approved by ACER.

The MAF CZ 2023 document is available for download on the ČEPS website at https://www.ceps.cz/cs/zdrojova-primerenost.