Earlier this week, the EPH group of billionaire Daniel Křetínský announced that it would shut down its coal-fired power plants and heating plants throughout Europe by 2030. The only exception is Germany, where they are to serve until 2038.
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The coal decline also affects the Czech Republic, where Křetínský Elektrárna Opatovice – a producer of electricity and heat for 63,000 East Bohemian households – has one. Like its sister companies in Italy, the United Kingdom, Slovakia, France and Ireland, Opatovice will close in nine years at the latest.
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Similarly, others are reporting an accelerated flight from coal. As the co-owner of Sokolovská uhelná, Jaroslav Rokos, stated for SZ Business, his group will end up mining coal, burning it in its own power plants Vřesová and Tisová and selling it to other domestic heating plants “between 2025 and 2030”.
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The semi-state ČEZ has already closed the Prunéřov power plant, and next week it will shut down the second largest coal-fired unit in the Czech Republic – Mělník 3 and, at the latest at the end of the heating season in 2023, the Dětmarovice hard coal plant. “Lastly, we expect to close the modernized Prunéřov, Tušimice and Ledvice power plants,” says CEZ spokesman Roman Gazdík, without a more precise timetable yet.
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Another of the large energy producers Pavel Tykač (own power plants in Počerady and Chvaletice and heating plants Kladno and Zlín) has not yet published its mitigation plan. “We will switch off the power plants only after the replacement for them can be resolved,” a source from Tykačov’s surroundings assured in an informal interview for SZ Byznys. It is a question of whether to believe it.
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Prolonged business
Coal-fired power plants are starting to suffer due to expensive emission permits, although they are passing on at least part of their rising costs to consumers, who are making electricity more expensive as a result.
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Last year, Křetínský Opatovice suffered over half a billion crowns. Tykač has a loss of 190 million in Chvaletice in 2020, another 162 million was lost in Počerady. On Tuesday, CEZ Group, whose economy is dominated by nuclear energy, announced a drop in profit for the first quarter of this year by more than seven billion crowns.
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Reason? A sharp decline in the value of Severočeské doly, due to which the group had to record a nearly nine billion depreciation, and, as ČEZ explains in a press release, a “deterioration in market conditions for coal energy”.
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This raises the question of how long loss-making power plants, which have not yet announced their end, will be in operation. No one can force private investors to operate. If they close the gates now, they will improve their economy and, in addition, reap the gratitude of the ecologically oriented part of the population.
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Outage? Two-fifths of consumption
Although power engineers, like Tykač’s people, assure that they will wait until the replacement is resolved by closing the sources, they agree that coal-fired power plants and heating plants will not survive 2030 in our country. Rokos. He means Ledvice from the ČEZ Group, practically a new power plant, which was launched only four years ago.
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By the end of the decade, the Czechia will almost certainly lose resources for the production of almost two-fifths of its current consumption. According to ERO statistics, electricity from coal covered exactly 43.4 percent of domestic consumption in our country last year.
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The problem is that the Czech Republic does not have a refund for coal. Previous governments have not prepared for the situation, they are addressing it hastily only now. And they haven’t made any progress yet.
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In the Czech Republic, large-scale construction of renewable sources, especially solariums, is planned with subsidies from the Modernization Fund. However, they are not a sufficient substitute for coal, they can only produce in good weather and in Czech conditions they are useless for most of the winter. So we need backup resources for them, which will replace their seasonal outages.
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Gas as rescue
“The only meaningful substitute for coal for the Czechia is gas,” says Deputy Minister of Industry René Neděla. It is not enough to build the core in the gallows term. At today’s level of technology, seasonal outages are not efficient enough for energy storage.
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Coal can theoretically serve as a replacement for striking solar and wind turbines, as some European countries (such as Germany) expect. It wants to shut down the last coal sources only in 2038, until then they should serve as a reserve for the period of lack of power in the network. This is why EPH will shut down its coal resources in Europe everywhere by 2030 – with the exception of Germany.
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Charcoals serving as a capacity reserve are not used by the simple sale of electricity, they are produced only a few weeks a year. Therefore, in Germany, the state-owned companies responsible for operating the distribution system enter into contracts with them and pay them to “stand by”, not for the energy produced.
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With today’s emission limits, it would be possible to operate larger coal-fired power plants about 300 hours a year, which is beyond reality.
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According to Neděla, six states have similar capacity mechanisms in Europe, the implementation of which is subject to approval in Brussels. According to him, for example, Poland can use up to 80 percent of its coal energy as a capacity advance. The Czechia will no longer jump on this train, it is too late.
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With a cross after funus
Germany has had its coal reserve system in place for three years, but the Czechia did not start negotiating capacity mechanisms with Brussels until just before last year’s covid pandemic. Until then, the government believed that a new nuclear source would solve the coal outage in the second half of the 1930s. She did not solve other alternatives at all. “It simply came to our notice then. The situation changed only with the rapid growth of the price of emission allowances, “says Neděla.
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According to him, it is already unrealistic to negotiate the transfer of coal to capacity advances now. “For other countries, the European Commission approved it according to the old rules. With today’s emission limits, it would be possible to operate larger coal-fired power plants about 300 hours a year, which is beyond reality, “he says.
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The only hope for the Czechia is gas power plants, the construction of which the Czech Republic is now negotiating with the European Commission as a replacement for gas.
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It will not work without support
On the one hand, these are large steam gases for the standard production of “power” electricity, such as today in ČEZ in Počerady and Sokolovská uhelná in Vřesová. About gas cogeneration for efficient production of electricity and heat, which can also serve as a backup. And flexible gas sources designed exclusively for services in covering energy outages. They would only be in operation for a few hundred hours a year and would benefit from state payments for providing an advance.
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However, investors do not rush into their construction, because without subsidies or contracts for capacity services, they do not have a guaranteed return on their investment. In addition, the EU does not recognize gas as a “clean” resource, making it virtually impossible to obtain bank financing for gas projects. It is not clear how long the EU will at least tolerate fossil gas in energy.
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As Pavel Tykač pointed out some time ago in the Insider podcast, it may happen that at the moment of the ceremonial cutting of the tape at the opening, the gas cans will have a forced attenuation in sight. If the price of emission allowances continues to rise as fast, coal will soon not be paid out as it does today.
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“The only solution is to give subsidies for their construction, but this is not possible for gas, for example from the Modernization Fund,” says Neděla.
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It is precisely this barrier that Sokolovská uhelná encountered, which wants to replace its Tisov coal-fired power plant with two new gas boiler rooms in order to ensure the supply of heat to clients in the Sokolovská region after the coal decline. The company is embarking on an extremely uncertain investment in the amount of 150 million crowns for its own, because it failed to apply to the Modernization Fund. “The construction of gas sources cannot be financed from it,” confirms René Neděla.
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Sokolovská’s position, ie a risky construction purely its own, is hard to take for granted by all investors. Nor can the state-controlled CEZ Group be ordered.
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Although it is planning new gas power plants, it is waiting to see if the state will create incentives for this. “We plan primarily to build district heating and gas sources, which will also produce electricity in a cogeneration manner. Time will tell to what extent purely power steam-gas cycles will be needed, ”says CEZ spokesman Roman Gazdík.
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He adds: “As a listed trading company, of course, we can only do profitable projects for our shareholders. Today, the construction of gas resources cannot be done without securing some form of operating or investment support. “
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We are negotiating with Brussels
Neděla assured that the representatives of the Ministry of Industry are negotiating with the European Commission and explaining to it that the Czechia cannot do without gas as a transition bridge to new technologies.
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“During his recent visit to the Czech Republic, Frans Timmermans assured that he understood that the commission would prepare legislation for this,” he says. However, time is running out in the Czech Republic. According to Jaroslav Rokos, the preparation of an industrial building, such as a gas power plant, takes at least five years, and another roughly four years would be built.
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So we are already on the very border, when it is still possible to replace coal with gas in the Czech Republic. However, conditions still do not allow construction and time is running relentlessly.
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“I think that gas-fired power plants that have not been built in our country will no longer be built,” Tykač’s manager Alan Svoboda said recently in an interview with SZ Byznys. According to him, from the point of view of Brussels politics, the gas found itself “in the same sack” as dirty coal, and subsidies for it are difficult to negotiate.
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So it is still not clear how the looming energy hole in the Czech Republic will be resolved in a few years. Thus, Czechs must start preparing for a system that will start reducing electricity consumption in times of lack of power in the network. Or buy your own energy storage and generators.
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