Monday, November 22, 2010

How Czech politicians are stopping the solar insanity

The former largest - as of 2007 - Central European solar power plant in Ostrožská Lhota, the Czech Republic (near the Slovak border), occupies 40,000 m^2, produces 1.5 MWp (megawatts at peak conditions - that's just 37.5 Watts-peak per m^2), and its cost was CZK 100 million (CZK 2500 per m^2).

During the first year of its life, it produced 711 MWh (normal people would only pay CZK 3.5 million for this amount of energy - the payback period would be 30 years which is not far from the lifetime of solar cells - however I've been neglecting lots of other expenses): that's about 2 MWh a day in average which corresponds to 1.5 hours of peak traffic every average day only. ;-) Your humble correspondent did those calculations for you.

New power plants built on arable land have been de facto banned - see also below.

The Global Warming Policy Foundation reprints a November 17th article in Die Presse (Austria) about the newest decisions attempting to stop the insane solar boom in the Czech Republic:
Eastern Europe Puts Emergency Brakes On Solar Energy
A few years ago, the Czech politicians joined the bandwagon and introduced breathtaking subsidies for solar energy. Our subsidies and conditions were particularly generous. As a result, my homeland has probably seen the world's greatest annual percentage increase of the solar sources within the last year: by a whopping one order of magnitude per year!

Fortunately, while we're among the fastest ones who may introduce the newest technologies and standards, we're also among the fastest ones in noticing that some fads are counterproductive. And this one has been hugely harmful, indeed. Pretty much all politicians on both sides of the political spectrum have understood that the environmental deformation of the energy industry has gotten really dangerous.

The solar producers are getting CZK 15 for 1 kWh or so - while their business would only be profitable if they could get below CZK 5 for 1 kWh. So the energy continues to be excessively expensive at least by a factor of three - and because the traditional sources are actually making a profit, the actual ratio is much higher.

Note that USD 1 equals CZK 18 or so.

With the price around CZK 15 for 1 kWh, the solar investors could have made profit - as much profit as they wanted. Now, with the huge number of solar panels that have already been approved, the worries were that the electricity prices would jump up to 30%.

I've always knew that this was an exaggerated number. In reality, only 5% of the produced electricity is going to be produced by solar sources in the near future. And because solar energy is by 200% more expensive than it should be (CZK 15 instead of CZK 5), and 5% of the electricity is solar, it's clear that the electricity should jump by 5% of 200% which is 10% or so.

(The official expected figure was 12.7% for households and 18.4% for companies that expect cheaper electricity which is why the increase ends up higher.)

This was still unacceptable and pretty much everyone in the Czech Republic knows that it is completely crazy to increase the electricity price by 10% a year because of a fictitious problem of "global warming". So the government has proposed methods to stop the solar boom - and the Parliament overwhelmingly approved it. The solar business could even be driven back to the reality - so that the investors will make a loss.

Czech president Václav Klaus doesn't like when the markets are being manipulated and the new laws are a "new manipulation" with the markets. However, they may also be interpreted as the removal of the previous mistakes which is why Klaus has silently okayed the plan to cut the wings of the solar business.

The approved plan to "undo" the promised subsidies has several plans:
  1. Increased fees for solar plans that occupy agricultural land; about CZK 1.7 billion will be largely directed to the ministry of environment
  2. The introduction of a new 26% tax from energy produced from solar sources that began operations in 2009 or 2010: revenue will be about CZK 4.2 billion
  3. A new 32% gift tax for carbon indulgences distributed in 2011 and 2012: the revenue should be CZK 4.8 billion or so
Unless stated otherwise, the government will redirect the extra revenue to the power distributing companies - and add CZK 1 billion from "its own pocket" - in order to guarantee that the electricity price won't increase by more than 5.5%.

We will see. Our Slovak brothers have already de facto stopped the solar expansion in May 2010 by a new law that Slovakia adopted at that time. By the way, the crazy solar boom in the Czech Republic should be blamed to a left-wing coalition that adopted the key laws back in 2005.

I think that no superbrutal acts are needed at this point. What's really important is that there seems to be a consensus that the subsidized renewable energy is a dangerous - and potentially lethal - idea for the whole economy.

And that's the memo.

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