Gov't approves support to renewable sources

Prague, Oct 24 (CTK) - The Czech government Wednesday approved a proposal which reckons with a growth is subsidies to renewable sources by Kc7bn, but at the same time reduces the state's contribution to renewables, Deputy Prime Minister Karolina Peake said at a press conference after the cabinet meeting.

The change will lead to a growth in prices that households and companies will pay for electricity as of next year. According to preliminary estimates, electricity prices for households will rise by 2 to 4 percent owing to the new setting of regulations.

Industry and Trade Minister Martin Kuba conceded Wednesday that support to renewable sources is high and is a burden for the Czech industry. But he also noted that it has been inherited from the past.

"A hike in other fixed costs of energy by more than 30 percent will lead to a worsening of the ability to compete above all in exports and to an immediate worsening of companies' cash flow," Marketa Strzinkova, the director for Central and Eastern Europe at company Atradius, said.

The new government regulation was earlier criticised by the Confederation of Industry, too.

Kuba is, together with entrepreneurs in the industry, preparing measures that would soften the impacts of renewable energy costs on companies. However, the steps will concern the budget for the year 2014.

"We now cannot adopt solutions for the budget for the year 2013," Kuba said.

The annual support to renewable sources is to increase by Kc7.2bn to almost Kc43bn in line with the new government regulation. The state will at the same time cut the amount of aid which it uses to compensate the hike in electricity prices from the current Kc11.7bn to Kc9.7bn.

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

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

Beside the regulated part of electricity price, which is made up of fees for renewable sources, there is the other half of the price which is made up of baseload electricity whose price copies the development of supply and demand on the market.

The price of baseload electricity was falling this year, which means that electricity prices for end users would drop or at least stagnate next year if they were not influenced by payments for renewable sources, according to experts.

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 be increasing also in the years to come owing to renewable sources.

The ERU wants to cancel the support to all new renewable sources as of 2014 to ease the impacts of rising electricity prices on the budgets of households and companies. The plan has been criticised by environmentalist groups.