Czech Republic bets on wind energy: Industry Ministry to launch 1,000 MW support auctions

The Ministry of Industry and Trade has finalised and submitted for approval a government regulation setting the amount of installed capacity that will be eligible for operating support over the next three years. Solar power plants will continue to be excluded from operating support, while wind power plants will see a significant increase. Each year over the next three years, 335 MW of new installed capacity is to receive support, equivalent to the capacity currently installed in the Czech Republic. Over three years, the state will therefore support the construction of wind power plants with the capacity of one unit at the Temelín nuclear power plant.

After around a year and a half, the Ministry of Industry and Trade has revised the long-awaited draft amendment to the regulation defining the development of supported energy sources. This regulation is crucial for the renewable energy sector, as it determines for the next three years how much installed capacity can receive operating support, either through auctions or, in the case of smaller sources, in the form of green bonuses.

As follows from the government regulation, the Ministry of Industry and Trade has decided to significantly accelerate the construction of wind power plants in the Czech Republic. If the regulation is approved, which is very likely to be a mere formality, auctions for wind power plants will offer operating support for 335 MW annually between 2025 and 2027. The aim is for around 1,500 MW of wind power capacity to be installed in the Czech Republic by 2030. By comparison, according to data from the Energy Regulatory Office, wind power plants with 340.7 MW of installed capacity are currently operating in the Czech Republic.

However, the proposal has a catch. Unlike in previous auctions, projects applying for operating support will need to have already been granted a building permit. This requirement has not previously been imposed and could make it more difficult for many projects to obtain support.

Auctions for wind power support can be considered the only relatively successful ones. Following initially only lukewarm investor interest in the auctions, the last two auctions were fully subscribed. The results of the latest auction were announced in November this year, with operating support awarded for a total of 89 MW of installed capacity.

Next year's auctions will show the current state of wind power projects in the Czech Republic. Until now, it has been possible to participate with a project that had not yet received a project permit under the Building Act. A project permit for a wind power plant is a key milestone and very often the main challenge for the entire project (including ensuring the project's compliance with spatial planning documentation).

Solar power plants will again receive no support

As expected, the Ministry of Industry and Trade has not proposed operating support for solar power plants. Unless the regulation is updated, new solar power plants in the Czech Republic will not be able to count on operating support at least for 2025-2027.

The Ministry of Industry and Trade's proposal is not surprising. Operating support for photovoltaic power plants has long been unpopular, primarily due to the ill-fated solar boom of 2009 and 2010. The after-effects of the solar boom remain a hot topic today, as the so-called Lex OZE III addresses legislative options for limiting operating support for photovoltaic power plants from 2009 and 2010.

The solar sector has long been calling for the reintroduction of operating support for solar power plants. Without a degree of certainty over future revenues, which could be provided by support in the form of a contract for difference, it may be difficult to secure bank financing for projects.