Power prices to grow in 2013 due to subsidies for renewables

Prague, Oct 1 (CTK) - Power prices for Czech households and firms will probably grow again in 2013 as the annual subsidy to renewable sources will rise by around Kc7.2bn to almost Kc43bn, but the sum the state uses to compensate power price hikes will drop, according to a bill to be discussed by the cabinet.

The amount used for compensation will drop from the current Kc11.7bn to Kc9.7bn next year, the proposal, to be discussed by ministers on Wednesday, says.

The hike in electricity prices for households is to be in the interval of 2 to 4 percent, according to preliminary estimates.

People now pay Kc419 for renewable sources in the price of electricity with each consumed megawatt hour. Without support from the state, the amount would reach more than Kc700.

But now the state support is falling after two years and people's contribution to renewable sources will grow to around Kc590/MWh as a result.

Beside the regulated part of electricity price, that includes the fee for renewable sources, there is the other half of the price which is made up of baseload electricity whose price develops based on supply and demand on the market, and which was falling this year.

This means that electricity prices for end consumers would drop or at least stagnate next year if they were not influenced by payments for renewable sources, according to experts.

The biggest part of subsidies whose value reaches billions of crowns goes to the support of photovoltaic power plants that saw a boom in the preceding years thanks to generous support with guaranteed investment return.

Next year, solar sources will be subsidised by almost Kc25bn, according to the current proposal.

Industrial companies see their costs rise by hundreds of millions of crowns every year owing to hikes in electricity prices, caused by the so-called green energy, and they fear loss of competitiveness.

The price of electricity for households rose by 3.4 percent on average this year. The Energy Regulatory Office (ERU) expects that electricity prices will increase owing to renewable sources still in several years to come.

The ERU wants to cancel the support to all new renewable sources as of 2014 to ease their impacts on the budgets of households and companies.