Mrs. Martina Taxova
Prague, Czech Republic
Energy market profile - Czech Republic
Almost 88 TWh of electricity was generated in the Czech Republic in 2018. The country belongs to European leaders in electricity exports: 25.5 TWh was exported and 11.6 TWh imported. Total consumption reached 73.9 TWh.
Brown coal and nuclear fuel combine for 75% of electricity production, while renewable resources remain under 3% per each type of resource.
Given its climatic and geographic conditions, the country utilizes a mix of renewable resources – biomass, biogas, liquid biofuels, water, sun and wind, geothermal energy, and energy from the surrounding environment.
The State Energy Policy calls for renewable resources to become the second largest element in the energy mix by 2040 (with an 18-25% share) after nuclear energy, while the share of coal should fall to 15-20%.
In 2018, consumption of natural gas dropped by 4% to 8.18 billion cubic meters. Gas is supplied to 2.84 million customers. Demand is almost entirely met by imports from Russia. Local resources cover under 2% of consumption, consisting mainly of natural gas mining in South Moravia and gas from black coal mines in Northern Moravia.
As for heat production, a total of 161,542 TJ was produced in 2018. Producers of heat supply almost 30% of production to their own facilities/enterprises (via cogeneration plants). Heat supply to other entities is dominated by heat supplied to municipalities. Four resources fuel 82% of heat production, with 42% of heat produced from brown coal, 19% from natural gas, 11% from hard coal, and 10% from biomass.
The Czech Republic has over 36,000 sources producing electricity; ČEZ Group is the dominant player, accounting for almost three-quarters of production.
There are three electricity distributors and three distributors of gas, each serving a given geographic area. The heat sector is characterized by large centralized heat supply systems, varying by size as well as by technology used and extent of their operations. In recent years, the trend has been to move to decentralized heating systems and disconnecting from centralized heat supply with an aim to cut costs.
Following liberalization of the Czech electricity and gas markets in 2006 and 2007 respectively, customers are free to select suppliers (but not distributors). 77 and 76 companies were active in retail of electricity and gas respectively as of January 2019.
Since 1990, the country has enjoyed a sharp uninterrupted increase in energy efficiency due to changes in the structure of its economy. However, it still has the third most energy intensive economy in the EU (after Bulgaria and Estonia); with its energy intensity at more than double the EU average.
The EU has set targets to put members on track towards low-carbon economy. A number of EU and national programs and subsidies are available to support projects in areas covered by this report.
The share of smart homes in the Czech Republic reached 4% in 2018, and should grow to 15% in the next 5 years. The most demanded smart home solutions are home security and heat regulation, followed by light control, access control (gates and garage doors), audio-video equipment control as well as visualization of energy consumption.
The National Action Plan for Smart Grids assumes a gradual introduction of smart grids and other solutions in several stages. The period up to 2019 is characterized as a period of preparation, while in 2020-2024 and 2025-2029, a gradual implementation of the chosen smart grid model should take place. Within the 2020-2024 period, some 30% of electricity offtake points in the low voltage grid should be equipped with smart metering systems, and it should cover all customers by 2029. A number of projects related to smart grids/ cities have already been implemented in the Czech Republic.
Due to its significant industrial production, the Czech Republic has one of the highest per capita production volumes of carbon dioxide emissions in Europe. Reducing carbon emissions is thus a major challenge. According to the National Action Plan for Clean Mobility, by 2020, there should be 6,000 electric cars, 11,000 plug-in hybrid cars, and 50,000 CNG vehicles as well as 1,300 public charging stations for electric cars and 200 public CNG filling stations. In 2018, 703 electric passenger cars were registered, accounting for mere 0.38% of all car registrations. Lack of charging infrastructure (only 178 stations as of November 2108) is a key obstacle to further development of electric mobility and its development lags behind despite of financial incentives from the state.
In 2018, CNG (compressed natural gas) sale grew by 12.2% y-o-y to 75.8 million cubic meters. As of February 2019, almost 23,000 vehicles fueled by CNG were operated. There were 185 public CNG filling stations and over 50 non-public filling company-based stations. The current density of CNG filling stations enables non-problematic operation of CNG fuelled vehicles throughout the country. CNG fuelled city buses hold the largest share in CNG consumption; over 1,100 are operated in 60+ towns.
The Czech Republic, and Central Europe in general, has only a rather narrow pool of specialists familiar with hydrogen technologies. The country has only one hydrogen fuel cell filling station, used to fuel a bus that has been in testing since 2009. The company Unipetrol plans to develop two more hydrogen stations. The Ministry of Transport plans to invest CZK 200 million (CAD 11.9 million) into hydrogen infrastructure by 2023. The efforts could result in the opening of 12 new filling station for hydrogen cars by 2025.
In the stage of implementation are multiple projects with energy storage solutions; players already active in this field predict a boom in this segment in about five years.
Development of energy sector infrastructure (critical infrastructure as well as critical information infrastructure) is of course a never-ending process, and major investments are carried out annually, creating business opportunities for a large range of companies.
The Czech Republic is a member of the EU, OECD, and WTO, and complies with all directives and regulations from these bodies. Canadian companies can use the same business principles as when entering any other EU markets.
CETA made 98% of EU tariff lines duty-free for Canadian goods, while an additional one percent will be eliminated over a seven-year period. Contacting the local Customs Authority is recommended when checking import duties on individual products.
Good opportunities exist for Canadian suppliers of modern, advanced products for all segments of the energy sector. This report analyzes specific market opportunities in five areas: smart homes, smart grids/smart metering, reducing carbon emissions, energy storage solutions, and development and security of critical infrastructure.
Canadian companies are mostly advised to engage the services of a local partner (e.g. distributor) to facilitate entry into the market. A knowledgeable local representative should have both industry and regulatory contacts and can help minimize difficulties in navigating the market.
The Canadian Embassy in Prague provides assistance to exporters looking for trade partners as well as those planning to establish their own office in the Czech Republic.
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