Can there be consensus on an energy strategy in Czechia? There can

I was inspired to write this text by an article by my colleague, scientist Vladimír Wagner. I see it as a first step on his part towards seeking a society-wide consensus on this significant socio-technical-economic issue, and I thank him for it. At the same time, I feel the need to contribute my own small share to this topic.

I still hold the views that I presented on this website several years ago. Whether power engineers like it or not, the power industry is first and foremost a business activity, and the same economic principles apply to it as to any other area of the economy. In any consideration of what the energy sector should look like and where it should be heading, these principles must be respected and appropriately applied. Otherwise, it is either a pointless intellectual exercise, a game of how the author or authors would like the future to look, or dangerous thinking that will lead only to trouble.

I think there is no dispute over our vision of the future power sector. Everyone would like it to be clean, cheap, reliable and resilient. But how can this be achieved from the position of the state and regulator? I would start with the simplest thing: cheap energy.

In a market capitalist environment, cheap goods can be achieved quite easily; methods for doing so have been known for centuries. Adam Smith, the father of modern economics, already knew them well in the 18th century. The market needs to be opened as widely as possible to the largest possible number of participants, including foreign ones, while ensuring the fairest possible conditions for market operation. Any “natural” monopolies should be tightly regulated and their market share minimised. Under these conditions, the market will cope better than all the central planners in the world combined. If the state is to support any aspect of the energy sector, it must do so openly, fairly and in a technology-neutral manner.

Clean energy is not a problem either. Crudely put in mathematical terms, the market is one large optimisation function. Market regulation can fundamentally influence the “function” whose minimum, or maximum, the market seeks. It is enough to charge for the negative externalities and pay for the positive externalities of the energy sector, and it will resolve itself, surprisingly quickly.

How can the system’s reliability and resilience be ensured? Essentially, it is entirely sufficient to abandon the notion that the energy sector is something exceptional and look at how this is addressed in other areas that are no less important for society to function. What about food, for example? It is quite simple, and this was apparent this March when panic over COVID-19 began. The government made it clear that citizens had nothing to fear: according to reports from retailers, there would be food in shops, and if there were not, the state has stockpiled reserves and can, when things get serious, take control under the law even of goods in traders’ warehouses. Why could it not be the same in the energy sector? Why could potential problems with electricity supply not be addressed by the Administration of State Material Reserves (thank you, Carlos)?

What to avoid in the future and what to do right?

• Czechia is a country fully integrated into global trade. Czech international trade turnover is approximately CZK 8,000 billion a year. Does anyone really think it makes sense to play at self-sufficiency, independence and flag-waving here?
• According to the classics of modern economics, central planning is impossible. In theory, it leads to better results than a free market, but in practice it is impossible to capture all the necessary data, interactions and technological developments. Therefore, there is no point in even attempting central planning. It is no coincidence that methods based on machine learning, genetic algorithms and multi-agent systems are becoming increasingly fashionable in mathematics and engineering. This replicates nature and the market, where similar “unsolvable” optimisation problems are resolved quite satisfactorily.
• No types or groups of generation sources should be preferred.
• The entire concept for future development should focus on introducing processes that will stimulate progress towards the desired outcomes (the energy trilemma); any considerations of whether the future energy sector will be centralised or decentralised, or whether this or that type of source will play the leading role, are irrelevant. Let the capitalists resolve that through competitive struggle. ná

Please note that this is the only sentence in the entire article in which the terms nuclear power plant, photovoltaic power plant, wind power plant, hydropower plant, coal-fired power plant and gas-fired power plant occur. This is because consensus can be based only on a discussion of the general principles according to which energy sector development should proceed in the future. Belonging to one fan club or another of particular sources and pushing them forward serves no purpose.