EU accession ‘boosted’ Czech green business

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Companies investing in renewables in the Czech Republic say the country's EU accession provided a major boost for green businesses. However, they complained of a "huge administrative burden" and favouritism of certain technologies. EURACTIV Czech Republic reports.

"EU accession opened the Czech Republic and enabled exchange of technologies, information and money," says Ji?í P?ikryl from Ventureal CZ, a Czech wind farm developer. The company, founded in 2001, also operates in Slovenia and Romania.

Petr Klímek of CZEPHO, an association representing the Czech photovoltaic industry, shares this opinion. "The business environment in the Czech Republic has gradually improved and EU accession played a vital role in this," Klímek said.

"Otherwise we would still only be building nuclear or coal power plants," P?ikryl added with a grin.

In 2005, the Czech Republic adopted a law aimed at supporting investment in renewables, primarily based on feed-in tariffs. This policy mechanism, designed to accelerate efforts to improve the competitiveness of renewable energy as a power source, was welcomed by green activists. They praised it for aiming to achieve an 8% share of renewables in electricity production by 2010.

"This system successfully started up the industry. However, like any other system, you have to adjust it from time to time," claims Aleš Spá?il from Conergy CZ, adding: "It should be changed into a more diversified version which takes into account returns on investment."

Major obstacles

Although the Czech Republic is aiming to produce 8% of its electricity from renewable sources by the end of the year, by mid-2009 the share was only 6.5%.

EURACTIV Czech Republic asked stakeholders why this objective is unlikely to be met. Investors in renewables widely complain that many regional politicians tend to fight against 'green' business, particularly wind turbines, and renewables are not supported by the Ministry of Industry either.

"On one hand, you have a progressive law supporting renewables, but on the other many other laws that to paralyse our projects," Karel Marek of Niko, the exclusive dealer in the Czech Republic for Vestas, an international wind farm company headquartered in Denmark.

"Most EU member states try to cut the administrative burden related to building renewables sites, but here the trend is totally opposite," Marek says, adding that Czech construction law presents one of the biggest obstacles.

Industry representatives complain that with better legislation, the Czech Republic could build up to 2,750 MW of wind power sites. In fact, five years after the renewables law was adopted, only 191 MW have been developed. In comparison, Austria, a country similar in size, has built 1,000 MW in that time.

Solar Klondike

Some investors also complain that solar energy was unfairly given preferential treatment. A more generous feed-in tariff for solar energy and increasingly cheaper photovoltaic panels mean the business has become extremely profitable. Investments are repaid within 8-10 years and the feed-in tariff is guaranteed for 20 years, business representatives said.

This has led to an unprecedented boom in photovoltaic power, which increased from 70 MW in 2008 to 470 MW in 2009, and is predicted to hit at least 1,000 MW by the end of 2010. The Czech transmission system operator ?EPS said it fears for the stability of the grid, and has asked distribution companies to reject all new demands to connect renewables to the grid.

Green business instantly condemned the move, calling it a "false alarm".

Economic players argue that excessive demand for grid capacity from the solar industry (which is in many cases only speculative, because sites can be reserved for free) is hindering the development of other renewable projects.

"The Czech government massively supports solar energy, which is least effective in our conditions and therefore kills stable and traditional sources like small hydroelectric plants," the head of the country's hydroelectric plants association, Zden?k Nová?ek, sais.

Czech electricity distributors, meanwhile, have published a report showing that 40% of funds designed to support renewables go on solar plants. Despite this, solar will only produce 7% of Czech renewable electricity this year.

An amendment to the renewables law has been tabled to give the Energy Regulatory Office the authority to cut feed-in tariffs more significantly. However, no-one can be sure whether this will be approved before national elections are held in May.

The Czech Republic should achieve a 13% share of renewables on final consumption by 2020, but many experts argue that so far the country is off-course. According to the Ministry of Industry, priority should be given to heating rather than electricity production from renewables, as well as biomass use.

European leaders signed up in March 2007 to a binding EU-wide target to source 20% of their energy needs from renewables, including biomass, hydro, wind and solar power, by 2020. To meet this objective EU leaders agreed a new directive on promoting renewable energies, which set individual targets for each member state (see EU renewable energy policy Links dossier)..

Renewable energies such as wind power, solar energy, hydropower and biomass can play a major role in tackling the twin challenge of energy security and global warming because they are not depletable and produce less greenhouse-gas emissions than fossil fuels. 

A new EU directive on renewable energies, agreed in December 2008, requires each member state to increase its share of renewable energies - such as solar, wind or hydro - in the bloc's energy mix to raise the overall share from 8.5% today to 20% by 2020. A 10% share of 'green fuels' in transport is also included within the overall EU target (EURACTIV 05/12/08).

For the Czech Republic, the share of renewables in 2005 was 6.1%, and the target for 2020 is 13% of all energy produced.

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