More renewable energy than in the national plan at the similar cost and with a boost to the economy

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More renewable energy than in the national plan at the similar cost and with a boost to the economy

Prague, 4 September 2019 – An increase in the share of renewable energy sources in the Czech Republic to more than 23% in 2030 may be achieved without placing an additional burden on public resources. In addition, it can help modernise the energy sector and support the Czech economy. This is the result of Deloitte’s study Development of Renewable Sources until 2030. The basic scenario of the current National Climate and Energy Plan (Národní klimaticko-energetický plan – NKEP) expects only a 20.8% share. A higher share is required from the Czech Republic by the European Commission.

The study compares NKEP with two possible scenarios of increasing the share to 23.8%. The “realistic scenario” models the increase in renewable energy resources in particular in the electricity sector, while the second scenario, cogeneration, anticipates an increase in renewable energy sources in the electricity sector as well as heat generation.

Deloitte’s analysts have found that increasing the renewable energy resources target from 20.8% by three percentage points does not have to cause a significant increase in public support. On the contrary, given the expected high electricity prices on wholesale markets in the next ten years, a neutral or even positive impact on public budgets may be expected for the realistic as well as the cogeneration scenario compared to the current plan.

“Necessary modernisation and making the Czech electricity sector greener can be performed for a relatively reasonable cost. A higher share of renewable sources in the generation of electricity and heat will bring not just cleaner environment, but also significant support for the Czech economy,” says Josef Kotrba, Deloitte’s Chairman.

“An increase in the share of renewable energy sources will also have a positive impact on the employment rate. NKEP anticipates the creation of 26,000 job positions, the cogeneration scenario 32,000 and the realistic scenario up to 33,000. GDP could increase by as much as 7%,” adds Deloitte’s chief economist and co-author of the study David Marek.

Electricity generation from renewable sources is modelled more conservatively in the original NKEP proposal of the Ministry of Industry. The smallest increase in renewable sources is in the electricity sector, amounting to less than 10% compared to 2016. In the heat and transportation sectors, the growth is significantly higher, amounting to 40% and 115%, respectively. The realistic scenario is modelled for the target state of 9 GW of power of solar power plants and 1.4 GW with respect to wind power plants in 2030. The cogeneration scenario plans 6.85 GW from photovoltaics and 1.4% from wind. At present, the Czech Republic has approximately 2.2 GW from solar power plants and 0.32 GW from wind power plants.

“Dynamic development of production of photovoltaic modules and wind turbines has led to a decrease in the prices of this technology and a further decrease of another 30% is expected by 2030. The results of a German tender for support in the form of auctions show that under certain conditions, especially solar power plants could be competitive in the contemplated timeframe. Therefore, with higher electricity prices it will be possible to consider photovoltaics competitive on the market and thus the most suitable source for the potential increase in the share of renewable sources,” says Miroslav Lopour, Manager at Deloitte’s E&R team and co-author of the study.

The study also shows that the placement of photovoltaics does not have to be a challenge in terms of claiming agricultural land. In both scenarios, the aforementioned values for the development of photovoltaics would require ten or even twenty times less agricultural land surface than NKEP plans for the transportation and heat sectors. In addition, brownfields, spoil tips, or low-quality land can be used advantageously. Photovoltaic sources can also be built relatively quickly, especially in the event that other sources would be unable to meet the targets.

“The study shows that solar power plants offer the most affordable solution for fulfilling the Czech Republic’s commitment to increasing the share of renewable energy resources. The study offers a way to decarbonise the Czech economy and confirms that we cannot do without the development of renewable sources in the electricity sector. Moreover, a suitably selected combination of renewable sources would make the same or even smaller demands on public support compared to the original proposal of the Ministry of Industry. The development of a modern power industry in regions that are currently burdened by the fossil industry could additionally bring new impulses for their recovery and a new stage of development,” comments Martin Sedlák, Program Director of the Modern Power Industry Association (Svaz moderní energetiky), the results of the study.

Deloitte’s Development of Renewable Sources until 2030 can be downloaded here.

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