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Czech taxpayers will pay a trillion for the solar mistake

...trillion of crowns, of course...

Because the dear reader probably doesn't know how much the Czech koruna, the peso of ours, is worth, I must tell you that 1 U.S. dollar is about 19 crowns. Still, a trillion is a large number.

Czech media published the disturbing calculation by the environment ministry yesterday. The total amount of money that the Czech taxpayers have already paid or will have to pay for the past solar subsidies and the unavoidable pledged solar subsidies in the future will probably reach a trillion of crowns or $50 billion.

News: Pope Benedict XVI is resigning as the boss of the Catholic Church. You are surely asking what is the actual reason. Wolfgang has a possible explanation. ;-)
That's quite a lot for the not-to-large Czech economy – which became Europe's #3 solar superpower in the absolute sense (not just on per-capita basis!). Multiply the number by 60 (the U.S/Czech GDP ratio) or so to see what it would do with the U.S. economy if it were equally generous: the solar subsidies in the U.S. would surpass 3 trillion dollars! No wonder, the Czech Republic has 35.5 times more solar per capita than the Sunshine State, Florida.

During a debate on TV Prima yesterday, the current center-right environment minister Mr Tomáš Chalupa said that the "green ideology and the religion of renewable energy sources have played a role in the expansion of this inefficient system. A bad bill was the culprit," the minister said while he boasted that none of the center-right ODS lawmakers (his party) voted in support of the bill back in 2005. He thinks that "a good idea was brutally abused."

However, the true boom of the subsidized energy prices took off in 2010; Chalupa blames it on the mistakes of the 2009-2010 technocratic government led by Mr Jan Fischer (an unsuccessful presidential candidate a month ago). The government pledged to buy up 1 kWh of solar energy per CZK 12.15, about $0.65 according to the current exchange rate. The end consumer pays around CZK 5-6 per kWh so the solar producers were getting at least twice as much than the overall amount of money collected for the energy as well as all other expenses.

(The solar/coal as well solar/nuclear energy price ratios are of course much higher than two.)

The solar boom instantly cooled down at the beginning of 2011 when the guaranteed prices dropped to CZK 5.5 per kWh, about the same rate that the final consumer pays for the energy. Big investors were abandoning their plans rather quickly. However, small investors continue to participate in this giant fad. In 2012, the Energy Regulation Office was evaluating over 10,000 applications to approve solar power plants although most of them were just on roofs of privately owned houses.

The current minister promised a big investigation why all these things have occurred to make it less likely that something similar would be repeated in the future. The Czech politicians, including the center-right prime minister, plasma physicist Mr Petr Nečas and parties as diverse as the (unreformed) Communist Party of Bohemia and Moravia seem to agree that the generous subsidies have been a giant blunder. A question is, of course, whether pro-renewable religious bigots and lunatics in the EU won't force us to think otherwise.

It's not hard to understand that CZK 1 trillion is a lot of money. A number to compare: we're still net recipients of the EU money. Most of the EU money that should flow to the Czech Republic in 2014-2010 according to the recently approved budget is the "cohesion fund to support the regions" and it's slightly above CZK 500 billion. That's also a lot of money but the money wasted for the solar subsidies over a similar timescale – subsidies that were mostly consequences of an insane fad imported from the EU – are still going to be twice as high as the whole "cohesion fund" we're getting from the EU.

This is an example of an estimate that suggests that when you add up all the costs and benefits that are de facto inseparable from the EU membership, we may actually be losing money by being EU members.

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snail feedback (6) :

reader Shannon said...

Yep, we're all in it together !

reader Tobias Sander said...

It is sad to imagine how much real infrastructure that money could buy, and I wish German exports could be purely of the material, useful kind.

reader Luboš Motl said...

Right. For example, the normal landscape kilometer of superhighway costs 200 million crowns, so 1 trillion is 5,000 kilometers. That's like 20 times the average diameter of Czechia - cross-country superhighway through the country in 20 directions.

Or 1 trillion is the construction of 1 million houses, reconstruction of 10-100 million (i.e. all) houses, and so on. Of course that it would be more than enough to eliminate the remaining post-war-like image of the towns and villages that make us (and visitors) not forget we're a post-socialist world. Or...

I would go on. Unfortunately, for money being lost in this way is a part of the mess.

reader raV said...

Add some money and build Dyson Ring.

reader Daniel Gardiner said...

The new nuclear fear caused by Fukushima has set back clean energy decades. Nuclear is the most silver bullet we could imagine.

This isnt even including breeder reactors that will use fuel much more efficiently. Nuclear waste doesnt seem like such a problem. Just make a fort knox around the nuclear plants. Store the spent fuel underground.

Fukushima was one of the oldest generation reactors. And it took one of the largest earthquakes in human history and one of the biggest tsunamis in human history to cause the meltdown. Even without new designs, any child could tell you how to prevent this.

reader Daniel Gardiner said...

Solar and Wind are good investments, but Fission reactors are the true emission (emissionless-ish) energy.

A global nuclear industry could be required to spend 20-30% of income on R&D. It would be the biggest improvement in energy for a long time.

Fusion might never be viable, but Fission is such a great technology. Its crazy how demonized its become.

Around 10,000 died in japan from the tsunami, from the reactor, 0. Its much worse than three mile island, but both weren't so bad compared to the alternative.

Even if you discount human CO2 as a problem, just the lead and radioactive elements released by coal plants, its many orders of magnitude worse than nuclear.