Renewable energy in Czech Republic

After several ineffectual years which followed the “solar boom” in 2009-2010, it is safe to say to that renewable energy and in particular photovoltaic has been experiencing a renaissance in the Czech Republic in recent years.  

At the end of 2021, there were over 50,000 photovoltaic power plants with an installed capacity of about 2200 MWp in the Czech Republic. There were 500 solar parks with a capacity of over 1 MWp. During 2022, the number of installations rose to almost 85,000 PV plants with a total capacity of 2,460 MWp. 

The development of wind energy in the Czech Republic also continues apace. The Czech government plans to triple the installed capacity from wind power by 2030, from the current 350 MW to 1 MW.    

There are several reasons for this overall positive attitude of Czechs towards renewable energy and the declared support of the Czech government. 

Whilst the recent developments in the renewable sector are driven by economic factors such as increase of the power price, there are government subsidies supporting the trend.  

With respect to the wind projects, support from public funds is expected to be provided based on the auction process for which the legislative framework has been adopted. The government has communicated that it plans to provide operational support for wind energy of up to 130 MW of capacity in 2024, while in 2025 it has proposed to support 210 MW of new capacity and 30 MW of modernised wind power plants. 

There are also available several government programmes to subsidies capital expenditure connected with development of photovoltaic and other renewable energy projects. In this regard, the most significant subsidy scheme is the Modernisation Fund, which is a scheme to support ten lower-income EU Member States in their transition to climate neutrality by helping them to modernise their energy systems and improve energy efficiency by using money generated mainly from the EU emission trading scheme. The allocation for the Czech Republic from this fund from 2021 to 2030 can be in the region of EUR 20 billion, from which about EUR 8 billion has already been used. There are several programmes designed under this scheme in the Czech Republic to support areas such as the modernisation of heating sector, transport modernisation, energy efficiency as well as the development of new renewable energy sources projects, for which about 40% of the whole Czech part of the fund is anticipated to be assigned to. The subsidy is usually provided ex-post and up to 50% of the costs of the project.  

Other notable subsidy schemes include the National Recovery Plan and the Just Transtion Fund.   

National Recovery Plan reflects the Czech part of the EU Recovery and Resilience Facility, which is an EU-wide initiative for emerging stronger from the COVID-19 pandemic, has an allocation of up to EUR 7 billion. This includes also a section on transition to greener energy representing about EUR 275 million. The supported investments include in particular construction of new photovoltaic sources and modernisation of heat distribution in district heating supply systems.  

Just Transition Fund is one of the EU’s key tools to support individual regions in the transition towards climate neutrality by 2050, with a total allocation for the Czech Republic discussed at EUR 2 – 4 billion. Three Czech regions have qualified for this scheme: the region of Ústí and Labem, the Moravian-Silesian region and the region of Karlovy Vary. Along with funding new technologies for greener energy and reducing greenhouse gas emissions, the fund will also support the revitalisation of areas affected by coal mining and the re-qualification of workers who lose their jobs as a result of the transition.     

Whilst the Czech market with cPPAs is less developed than in some other European countries, it is expected to grow in the near future. First larger PPA in the renewable energy sector has been announced in 2021. Under the quasi-corporate PPA scheme, provider of energy supplies for car manufacturer Škoda Auto, contracted the purchase of green energy from a wind farm in Moravian-Silesian region. There is a potential for growth of the corporate PPAs sector. The legal framework for entering into bankable PPAs with longer-term power price fixing is available.  

Another area which has recently gained a lot focus in the Czech Republic is facilitating permitting procedures for the development and operation of new renewable energy sources.   

The permitting procedures should be facilitated by directly applicable Council Regulation (EU) of 22 December 2022 setting out a framework to accelerate the deployment of renewable energy. New legislation has been adopted to this effect also on the national level. In 2023, law amendment to the Czech Energy Act and the Czech Construction Act became effective (nicknamed Lex RES I.), bringing set of changes to the RES permitting procedures in the Czech Republic. These include:  

• No electricity generation licence is required for sources up to 50 kW. 
• Planning permit is not required for stand-alone RES installations up to 50 kW (some exceptions provided). 
• Building permit is not required for on-site RES installations up to 50 kW (some exceptions provided). 
• Renewable energy plants with an installed capacity of over 1 MW are declared by law to be established and operated in the public interest resulting in the simplification of certain permitting procedures. 
• Power plants will be considered part of the technical infrastructure, which again will simplify the development process.  

In addition, a map of “go-to zones”, which identifies suitable locations for the construction primarily of wind power plants and photovoltaics, is being prepared by the Ministry of Industry and Trade in cooperation with the Minister of the Environment. This should also contribute to facilitating the construction of RES installations in the Czech Republic. It is expected that this will be followed by the adoption of relevant legislation allowing the faster development of renewables in these go-to zones.  

On the other hand, the government is taking steps to effectively ban the development of new RES installations on the best quality agricultural land, which in Czech terms represents the first and second protection classes according to the soil ecological classification. More flexible regime should apply to agrivoltaics projects allowing use of land for both agriculture and for photovoltaic installations.  

One of the most significant issues that hinders the development of renewable energy sources in the Czech Republic is the limited grid capacity and the need to modernise it. Grid operators have gradually been increasing their investments in the grid due to growing pressure on the grid, mainly because of the connection of new renewable energy sources and the development of electromobility. For example, ČEZ, the largest Czech grid operator, reportedly plans to invest EUR 660 million in 2023, while EG.D, the second largest grid operator, will invest EUR 290 million and PREdistribuce, as the third largest, plans to invest EUR 85 million in the same period.  

Given the lack of capacity in the grid at some locations, and lack of transparency on its availability, it can sometimes be difficult for the investors to find the right location for new projects. There is no central, publicly available map or register would provide up-to-date information on the grid capacity in particular locations. Getting relevant information on the grid availability and reservation of the grid capacity can take in practice unduly long times. There seem to be positive trend in the grid operators being more transparent and more customer friendly in this regard.  For example, EG.D, a grid operator covering mainly the south of the Czech Republic, now offers an interactive map on the connectability of smaller projects in the regions it covers.