Another auction to support wind power plants held in Czechia, 4 projects succeed

The Ministry of Industry and Trade (MPO) evaluated the second call of 2023, which competed for operating support for wind power plants (WPPs). A total of 4 projects with an installed capacity of 24.75 MW succeeded. Seven projects with a total installed capacity of 44.05 MW were submitted to the auction. The auction capacity, which stood at 35.2 MW, was thus exceeded for the first time.

Auction support

In order to increase the share of renewable energy sources (RES) in final energy consumption, the Czech Republic, in accordance with Act No. 165/2012 Coll. on supported energy sources, holds auctions in which 20 years of operating support are competed for.

The auctions work by applicants for support bidding a reference auction price, which under the current conditions may not exceed 3500 CZK/MWh. During WPP operation, the reference auction price is subsequently compared with the hourly price on the day-ahead electricity market operated by the Market Operator (OTE). It should be recalled that OTE is 100% state-owned, with shareholder rights exercised on the state's behalf by the MPO. If the market electricity price is higher than the winning reference price, the producer pays the difference to OTE. The reverse naturally also applies: if the price is lower, OTE pays the difference to the producer. This difference is called the auction bonus.

For producers, this means they have a fixed electricity price secured for 20 years of operation. In other words, the project's economics (or financial performance in individual years) are highly stable throughout the support period. The prospect of stable economics is also reflected in financing, as banks are able to offer better lending terms. The auction system has proven successful across Europe, where it is widely used, among other things, for photovoltaic power plants.

Successful projects

In the second and final auction of 2023, 35.2 MW of new WPP capacity was put out to tender. Ultimately, 4 projects with a total installed capacity of 24.75 MW succeeded. Each of these projects had an installed capacity exceeding 6 MW. In line with the recent trend, it can be assumed that each will consist of just 1 turbine.

WPPs with a capacity above 6 MW have taller towers (approximately 120-150 m and above), while rotor diameter can be around 160 m. Their total height therefore commonly exceeds 200 m.

The highest successful reference price bid reached 3469 CZK/MWh. Three projects seeking the maximum possible reference price of 3500 CZK/MWh did not succeed in the auction. The capacity of the unsuccessful WPPs totals 19.3 MW. In order for the applicants to receive operating support, the projects will have to be completed and connected to the grid by the end of 2027. Given Czech legislative procedures, this is in itself a difficult task.