The implementation of the Third EU Energy Package into the Energy Act by Act no. 211/2011 Coll. effective from 18 August 2011, introduced, amongst others, new rules concerning the operation and construction of electricity generating power plants, enhanced protection of customers and increased power of the Energy Regulatory Office (the ‘ERO’).
The most important changes introduced by the act that have a significant impact on the operation and construction of electricity generating power plants include the following:
- Dispatching operation: Operators of electricity generating power plants with an output of over 100 kW must equip the power plants with devices allowing for the ‘dispatching operation’ of the facility by the grid operator.
Power plants with an output of 100 kW up to 2 MW must be equipped with such devices by 30 June 2013, whilst power plants with outputs of 2 MW and above must be equipped with such devices by 30 June 2012.
This obligation does not apply to renewable energy power plants with an output of up to 10 MW put into operation before 2000 and small water power plants with an output of up to 10 MW.
- State authorisation: Construction of electricity generating power plant with an output of over 1 MW is now subject to a state authorisation by the Ministry of Industry and Trade. The authorisation shall be granted based on an analysis of compliance with, amongst others, the National Energy Policy, National Renewable Energy Action Plan, grid development plan and impact on the secure and reliable operation of the grid. The requirement of state authorisation applies to all electricity generating power plants for which the zoning proceedings were not initiated before 18 August 2011.
Furthermore, the Amendment introduced other important changes with respect to the electricity market:
- Protection of customers: New provisions to strengthen consumer protection, such as enabling customers to change supplier if conditions or prices of electricity or gas have been altered by the supplier, and requiring suppliers to provide customers with certain information.
- Powers of the ERO : Stronger powers and duties were given to the ERO with respect to the certification of the independence of the transmission and distribution system operators and with respect to the protection of customers’ rights.
Act on Supported Sources of Energy
Following the approval by the Lower House of Parliament on 9 November 2011, it is likely that a new Act on Supported Sources of Energy (the ‘Act’) will be adopted early 2012. The Act will replace the current Act on Promotion of Use of Renewable Sources and will become effective from 1 January 2013 (with the exception of several provisions which will become effective later).
The most important changes introduced by the Act in the wording approved by the Lower House include the following:
- New agreements: The operator of an electricity generating power plant will need to enter into a new agreement on the supply of electricity with a feed-in tariff or new green bonus agreement with the market operator. The existing agreements with the grid operators expire on 31 December 2012. However, save for this obligation, the conditions of support of existing electricity generating power plants remain intact.
- Market operators: The Act anticipates a new method of support payment. The Act allows for the authorisation of two or three market operators to support the purchase of electricity produced from renewable resources. These operators shall also act as last resort purchasers. This mechanism replaces the current scheme where support is being paid by the grid operators.
- Unification of conditions: The Act unifies the support provided for the production of electricity from renewable energy sources, production of heat from renewable sources and combined production of heat and electricity.
- Green bonuses: The Act introduces a new concept of energy buy-out, which significantly modifies the current feed-in tariffs/green bonuses with preference being given to green bonuses. The Act also stipulates that the ERO shall set the conditions for electricity support so that the feed-in tariff or green bonus does not exceed CZK 4,500/MWh. This will apply to new sources only.
- National Renewable Energy Action Plan: The National Renewable Energy Action Plan will be decisive for the support of electricity production, which allows the government to regulate the energy sector. Some experts claim that the National Renewable Energy Action Plan allows for the limitation or termination of support for some sources and the preference of others.
- Support for biomass only for co-generation: Power plants producing electricity from biomass will only be entitled to support highly effective combined production of heat and electricity.
- Solar tax maintained: The heavily criticised solar tax, which is the subject of a constitutional claim at the time of writing, has been retained in the Act without substantial changes.
- Solar panel waste disposal: The Act introduces new rules concerning the financing of solar panel waste disposal. The operator of a solar power plant will be responsible for financing the waste disposal of solar panels marketed before 1 January 2013.
- Termination of reimbursement for dispatching operations: The Act removes the provision of the Energy Act under which the grid operator’s dispatching centre has to reimburse the supplier for limiting its supplies of electricity to the grid.