The solar revolution should continue. But more slowly and without subsidies, says the expert

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The Czech energy industry is undergoing a fundamental change. On the one hand, renewable sources are rapidly increasing, but their production still covers only a few percent of electricity consumption. At the same time, the end of coal-fired power plants, which provide around 40 percent of our consumption, is coming to an end. Electricity production is being decentralized, transmission and distribution are changing. All this requires huge investments.

According to energy expert Michal Macenauer, strategic director of the consulting company EGÚ Brno, the greening of the energy sector should move to a more relaxed pace. The market, consumers and investors must be given time to deal with the costs of decarbonisation and the changes to the system. That is why Macenauer expects the green boom to slow down.

Michael Macenauer

  • Strategic director of the consulting company EGÚ Brno.
  • He studied electrical engineering and computer science at VŠB-TUO and sociology at MU Brno.
  • He is a specialist in energy systems, new technologies and energy consumption predictions.
  • He has been working at EGÚ Brno since 2005.
  • EGÚ Brno is the successor of the research institute of the Academy of Sciences. In 1992, it became a joint-stock company and went through privatization.

Photo: EGÚ Brno

Michael Macenauer.

“If no subsidy or other distorting mechanism intervenes in the environment, the investment effort will be spread over time. The increase in renewables should be slow enough for the consumption side to respond to it. In order to develop so-called super-flexible consumption, that is, one that can use energy during production peaks. Accumulating excess energy is expensive. It’s better to use it at times when it’s available a lot,” says Macenauer on the Agenda podcast.

Better without subsidies

According to Macenauer, two “fatal influences” are now changing the energy industry. The first is the end of dependence on Russian gas, which we have replaced with slightly more expensive but available gas from the global market. The second is the gradual transition away from coal.

“We can replace coal with natural gas. It will be associated with a certain increase in costs, but also with a very significant reduction in emissions. Undoubtedly, production from renewable sources will continue to increase – always to a level that ensures that the system can cope with their share at the given moment,” predicts Macenauer.

Proponents of renewable energy, including the Ministry of the Environment, however, say otherwise. According to them, investments in renewable resources should, on the contrary, accelerate.

A number of large terrestrial solar park projects are on the way. Only ČEZ wants to build green power plants with a capacity of six thousand megawatts by 2030, the Sev.en group, Sokolovská uhelná and Unipetrol have big plans. According to Macenauer, larger projects are desirable because solar micro-sources have low profitability even with massive subsidy support.

But even companies count on generous investment subsidies. Tens of billions of crowns are ready for this in the Modernization Fund alone. In addition to this, it is increasingly being said that operational support should also be introduced – for example in the form of guaranteed purchase prices and long-term contracts. The return on solar investments is threatened by the fact that if the weather is in their favor and the panels are running at full capacity, the price of electricity on the market falls and falls more and more often into the negative.

“Solar sources react as a whole, they have a daily and seasonal nature of production, which does not play completely with the electrical system. If load peaks collide with power peaks, power plants can only achieve very low prices on the market,” explains Macenauer.

This is also why he is convinced that for the moment, the Czech Republic is behind the photovoltaics boom. “The network and the entire consumer base will now cope with its increase. “Until this is dealt with, investment efforts in renewable sources, especially photovoltaics, will probably be put on the back burner,” he says.

He admits, however, that the continuation of the boom can be artificially dragged down by additional subsidies. And he strongly warns against such “distortion of the market”.

Premature hopes

Sudden massive surpluses of solar or wind electricity are to be solved by hydrogen energy. The electricity, which cannot be taken by ordinary consumers, would drive electrolysers for green hydrogen, which would gradually replace fossil fuels in energy, transport and industry. This should keep the prices of renewable electricity at a sustainable level and motivate investment.

However, according to Macenauer, hydrogen technologies are not at such a stage that they can be used commercially in the foreseeable future. “Hydrogen is on the pre-start line,” tames exaggerated hopes. On the other hand, he predicts that the answer to the new rhythm of electricity production will be the emergence of a “broad spectrum” of appliances capable of using sudden surpluses of cheap electricity. But it won’t happen immediately, the reaction of the industry requires some time.

According to Macenauer, the number of solar sources will be increasing and they will be cheaper. “In the next 20 or 30 years, photovoltaics will naturally be everywhere – on building facades, on parking lot covers, on roofs… Its costs will not be discussed, because they will be a fraction of today’s purchase prices. That’s also why unused electricity surpluses won’t be such a problem,” he says.

At the same time, he is convinced that even today the prices of photovoltaic installations would be significantly lower if their spread were left to the free market and not driven artificially forward by subsidies. According to him, political assignment, generous subsidy policy and artificially inflated demand for solar technologies have caused “crazy prices” that do not correspond to reality. This is also why the energy strategist warns against the continuation of massive subsidies.

Coal or gas?

Macenauer does not want to predict how long coal-fired power plants will last in operation in our country. It will depend on the further development of electricity prices and emission allowances. “It is certain that the Central European region will not be able to do without a certain part of coal power for several years,” he says. According to him, the main thing that will be missing will be the so-called regulatory power, i.e. sources capable of operatively supplying electricity to the transmission system to compensate for fluctuations in the networks.

According to him, the market should deal with this over time. Higher demand for “regulatory electricity” will raise its price and this will trigger a response from investors.

“You’ll see a lot of sources spring up, from cogeneration boilers to maybe even diesel generators that can burn biodiesel or biofuels in the future. Whenever the price rises, there will be resources, there will be investors who will react to it,” he says.

Look at: The list The report compiled a ranking of the 100 most valuable Czech companies. By clicking on a row in the table or on the interactive graphic, it is possible to find out more details about the located company.

Nevertheless, according to him, it is necessary to proceed with caution when displacing fossil energy. For the temporary preservation of coal blocks necessary for the production of regulatory electricity, Macenauer considers some form of state support to be “reasonable”.

“However, it would have to be very well thought out, very temporary and only partial. If, thanks to support, we ensured the solid operation of coal-fired sources and left the price of power electricity too low, it would dampen investment activities in new sources, such as gas. We would get into a vicious circle, which has to be broken at some point,” he said.

Clean but more expensive

According to Macenauer, we need to finally start telling the truth about low-emission energy: “We have been warning for many years that renewable energy will be more expensive. For years, various circles lied about it when they promised that its price would be low.’

Macenauer admits that more expensive electricity will lead to the departure of some energy-intensive industries from Europe. It is a tax for the western world deciding to reduce emissions. “It started in the West, but today it can be seen in sociological surveys that Czech society is also changing and the demand for low-emission energy is growing in our country too. “Energy experts have to react to this, but at the same time it is necessary to explain to people that they have to sacrifice a certain – small – part of their comfort,” he says.

“In the Czech Republic and other post-communist countries, living standards rose for many years and energy became cheaper. A slightly opposite trend will come in the future,” he predicts. But the price increase will not come immediately.

“After the shock of the crisis, we registered a sharp drop in prices, which will definitely be reflected in retail energy prices next year, maybe a year and a half. Then we will return to a slower trajectory and prices will increase. I think it won’t be anything dramatic and that both our households and the entire economy will be able to handle it,” believes Michal Macenauer.

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The article is in Czech

Tags: solar revolution continue slowly subsidies expert

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