How many renewable sources will receive operational support in Czechia? Government has yet to issue key regulation
The Government of the Czech Republic has yet to determine the amount of installed renewable capacity it intends to support through operational support in the coming years. The government is required to set this amount by regulation each year so that support is announced for the following three years. At present, support is guaranteed only for this year, not for subsequent years. Investors in the Czech Republic therefore lack certainty as to whether their projects will be eligible for operational support in the coming years.
The latest major amendment to the Act on Supported Energy Sources, adopted in 2022, aims to restart the construction of renewable electricity sources. Specifically, since its adoption, auctions for operational support have been introduced for the first time ever, along with a transparent system under which the Government of the Czech Republic was to determine each year the amount of installed capacity it would support in each of the following three years.
Auctions in which operational support is competed for are regularly announced by the Ministry of Industry and Trade. It generally announces two each year, with the second auction last year being fully subscribed for the first time ever. After initial teething problems, this can therefore be described as a success, at least in part.
However, the second objective has not been met, even though it is an obligation arising from the European RED III Directive. To date, it is therefore unclear how much support for renewable electricity sources will be allocated in the coming years.
The government is required to determine this amount of support by regulation. This was first issued in 2022 and set the amount of newly allocated support for 2022 to 2024. Subsequent years remain uncertain. The government is obliged to determine the amount of newly granted support every year, in such a way that support is set at least three years in advance.
Section 3(5) of the Act on Supported Energy Sources: "A government regulation pursuant to paragraph 4 regulates support for electricity, heat and biomethane for the entire calendar year. Each calendar year, the government shall issue a regulation pursuant to paragraph 4, supplementing the definition of support for the following calendar year or years, so that the definition is always determined for a period of at least 3 calendar years."
Although the government prepared a draft regulation to set support at least for 2025 as early as the middle of last year, it has yet to be approved. The process stalled after the consultation procedure in the middle of last year. The public therefore does not know what support investors will be able to seek in the future. Not even in the following year.
Will operational support be introduced for solar power plants?
Operational support for certain types of sources was reinstated from 2022, after approximately ten years. However, to strong criticism from industry associations, no support was announced for photovoltaic power plants.
They must therefore rely solely on investment support – the state offers support through the Modernisation Fund or the New Green Savings programme, which targets the household sector.
Operational support for photovoltaic power plants was likewise absent from the aforementioned draft regulation that was to set support for 2025. However, the draft has been inactive for more than a year. It is therefore unclear whether the considerations that applied when it was prepared still apply now.
The solar sector has long called for the reintroduction of operational support for solar power plants. Without a degree of certainty over future revenues, which support in the form of a contract for difference could provide, it may be difficult to secure bank financing for projects.
