Thirteen European countries already have auctions for supported energy sources, Czechia lags behind

Thirteen European countries have already introduced auctions for providing support to supported energy sources. A further five countries have legislation for auctions in place, but have not published specific plans for individual auction rounds. The Czech Republic is among 11 countries which, according to a report by the Council of European Energy Regulators (CEER) from late June this year, have not presented any specific plans to introduce the auctions required by European legislation.

The provision of support based on clear, transparent and non-discriminatory criteria through a competitive bidding process has been required since 1 January 2017 by the Guidelines on State aid for environmental protection and energy 2014-2020. An exception applies to plants with installed capacity of up to 1 MW, for which support may continue to be provided without a competitive bidding process.

According to the CEER report from late June this year, as of the end of 2017, 13 European countries had introduced auctions for providing support to supported energy sources (Belgium, Denmark, France, Germany, Greece, Italy, Malta, the Netherlands, Lithuania, Portugal, Poland, Spain and the United Kingdom).

A further five countries (Croatia, Finland, Hungary, Luxembourg and Estonia) have legislation for auctions in place, but have not yet published specific plans for individual auction rounds.

“Many national auction mechanisms have already been introduced or are currently being introduced. The report shows that by the end of 2017, 18 out of 29 countries had introduced an auction mechanism or were preparing to do so. CEER welcomes this trend, as the level of support set through these mechanisms is generally lower than support set administratively, particularly thanks to the ability of these mechanisms to adapt to technological innovation and falling unit costs for solar and wind power plants.” CEER states in the report.

Under the Guidelines on State aid for environmental protection and energy 2014-2020, competitive bidding processes should be technology-neutral. However, if this approach would lead to suboptimal outcomes, for example due to electricity transmission constraints or the need for diversification, auction mechanisms may be targeted at specific technologies.

CEER states in its report that eight of the 13 countries that have already introduced auctions chose the latter option, namely auctions for specific technologies. In addition to photovoltaic power plants, wind power plants and plants burning biomass, several Member States have also targeted other supported energy sources, such as hydropower plants (France, Italy, Lithuania and Portugal), geothermal power plants (Italy) and high-efficiency combined heat and power (Germany and France).

Investors in Czechia will have to wait for auctions

The Czech Republic is among 11 countries that have not yet published any specific plans regarding auctions for supported energy sources.

However, by the end of September, the Ministry of Industry and Trade is due to submit to the government an amendment to Act No. 165/2012 Coll. on supported energy sources, which will include, among other things, rules for support after 2020, including the required auctions.

Given the length of the legislative process in the Czech Republic and the fact that new support schemes must be notified to the European Commission, it is likely that auctions will not be introduced until after 2020.

Investors in supported energy sources, which include not only renewable sources but also, for example, high-efficiency combined heat and power, will therefore have to wait some time longer for support.