Schválení programu na podporu kombinované výroby elektřiny a tepla

Approval of Czech State aid scheme to support combined heat and power generation

On 27 May 2024, the European Commission announced the approval of a Czech scheme to support the production of electricity from new and modernised high-efficiency combined heat and power (CHP) plants in the amount of € 3.2 billion (about CZK 75 billion), in accordance with the European Union's State aid rules.

Beneficiaries of State aid

The beneficiaries of the State aid will be operators of new or modernised combined heat and power plants in the Czech Republic meeting the definition under the Energy Efficiency Directive. All technologies and projects that enable the production of electricity from high-efficiency combined heat and power plants, with the exception of plants fired by solid fossil fuels, diesel and oil, are eligible. The production of electricity while using the heat generated should result in an efficient use of fuel, a reduction in greenhouse gas emissions and enhanced energy security.

Conversely, projects involving natural gas will have to either shut down supported facilities or allow for a switch to renewable and low-carbon gases by 2050. This is in order to avoid dependence on natural gas.

Form of aid

Under the approved scheme, the aid will be provided in the form of a feed-in premium (bonus) for each MWh of electricity produced for a period of 15 years. The amount of the bonus will be set for individual installations through tenders. The procedure will be different for small installations (up to 1 MWh), where the bonus will be set administratively by the Czech Energy Regulatory Office on an annual basis, with a limitation on the funding gap.

However, if energy prices are high, operators will instead inject funds into the support system. The support will also be financed from the operating support subsidy from the State budget, from regulated payments in electricity prices and from the eventual use of revenues from auctioning of emission allowances.

Conclusion

The aim of this State aid is to contribute to the implementation of the Czechia’s National Energy and Climate Plan, the European Green Deal and the EU’s energy efficiency targets. It is expected that these high-efficiency plants will be used especially during the winter months when energy demand is higher, while reducing the amount of electricity generated from renewable sources.

We are monitoring further developments in this matter and will keep you informed. If you would like further information, please contact the authors of this article or other members of the EY team with whom you work.

Authors:

Vladimír Petráček

Magdalena Hamáčková