First Czech renewable energy auction ends in fiasco, with no bids submitted

The Ministry of Industry and Trade has published another call for bids in the 2022 auction for support for electricity from renewable sources. The first one ended due to a lack of investor interest, with not a single bid submitted. The ministry therefore issued a new call before the end of the year, for the same volumes but with higher maximum support prices.

Starting next Tuesday, a new call will open for applicants seeking support for renewable sources through an auction. This is already the second call published by the Ministry of Industry and Trade this year.

Under the Act on Supported Energy Sources, auctions are generally intended for plants with larger installed capacity: above 6 MW or six wind turbines in the case of wind power plants, while the lower threshold for other sources is 1 MW of installed capacity.

The first auction, announced on 19 September 2022, however, ended unsuccessfully. After several years in which renewable energy construction had been curtailed due to the practical absence of support, the first auction was expected to attract a number of bids. However, the result was the complete opposite: not a single bid was submitted to the auction, the Ministry of Industry and Trade confirmed to oEnergetice.cz.

"On 19 September 2022, the Ministry of Industry and Trade announced its first call for bids in an auction for support for electricity from renewable energy sources (RES). Since no bids were submitted in response to the call, the ministry adjusted the auction parameters to make the call more attractive to the sector (by increasing the maximum reference auction price and extending the deadline for commissioning electricity generation plants and for modernising electricity generation plants). On this basis, a second call for operational support for electricity from RES for 2022 was announced," Marek Vošahlík of the Ministry of Industry and Trade told oEnergetice.cz in response to a question.

The deadline for submitting bids under the first call opened on 5 October 2022 and expired on 7 December 2022. The auctions covered the construction of a total of 30 MW of new wind power plants, 7 MW of new and modernised small hydropower plants, and the modernisation of 5 MWe of plants using biogas.

The ministry also announced the same volumes in the second call. The main change, however, is that it substantially increased the so-called maximum reference auction price (the maximum price an applicant may request in the auction). For hydropower plants and biomass-fired plants, this amount increased by approximately 20%. For wind power plants, the Ministry of Industry and Trade increased the price by almost 50%.

Although auction support prices remain lower than the current electricity price under the reference annual contract, the price is paid by the state and carries no risk of market volatility. Should the downward trend in electricity prices continue, opting for auction support could be advantageous for wind power plants.

Potential auction winners also have a deadline one year longer than under the first call to complete the construction of the electricity generation plant. This deadline may be crucial for many projects, particularly in the Czech environment. If a plant operator fails to commission the plant in time, it may lose the financial deposit paid during the auction, or even the allocated support.

Czechia sees a renewed renewable energy "boom", though not through auctions

Construction of renewable energy sources gradually began to recover last year. Positive news is coming primarily from the solar and wind power sectors. While new solar power plants receive no operational support at all, wind power plants are eligible for operational support this year and next, through both auctions and green bonuses.

Although the state does not support further construction of photovoltaic power plants through operational support, they are apparently the fastest-growing renewable source. According to data from the Solar Association, a total of 289 MW was built last year, predominantly in the form of rooftop installations. This represents year-on-year growth of 366%.

The current boom is also benefiting partly state-owned company ČEZ. It plans to build a wind power plant with a capacity of around 20 MW and approximately five turbines within seven years in the municipality of Zátor near Krnov. The time required to prepare and construct the project is considered one of the main problems.

"Building a wind power plant is very difficult and time-consuming in Czechia because of permitting legislation. Development and construction take 10 years or more. This is why negotiations with local authorities and acceptance of the project by local residents are crucial for us,"says Jan Kalina, a ČEZ board member and director of the renewable and conventional energy division.

This project was not entered into the first auction either. Projects with a maximum installed capacity of 12 MW were eligible, and they also had to be completed by the end of 2025, whereas ČEZ expects completion only after 2029.