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Last year, the Czech Republic was the fourth largest exporter of electricity in the European Union. Nevertheless, exports fell by five terawatt hours (TWh) compared to 2022, reaching a total of nine TWh.
According to experts from the energy consulting company EGÚ Brno, the reason was primarily the lower electricity production of coal and gas power plants, which paid less than before due to the fall in electricity prices.
Neighboring Germany became an electricity importer last year after more than 20 years, importing nine TWh. Historically, Germany exported part of its production and was one of Europe’s largest exporters. The turnaround occurred due to the gradual decommissioning of nuclear power plants and a decline in the production of coal-fired power plants.
“Germany is not the only neighboring country of the Czech Republic that imported electricity in 2023. Austria has also been in deficit for a long time. However, due to higher electricity production from hydroelectric power plants and lower consumption, imports reached around two TWh, rising to 10 TWh in 2022. Poland was also in deficit last year (imported four TWh) and Hungary, which in the long term imports about a quarter of its annual consumption (in 2023 it was 11 TWh), explained Matěj Hrubý, managing director of EGÚ Brno.
The statistics once again sparked a discussion about why electricity is so expensive in the country when there is enough of it and we export it on top of that.
The energy market does not work in such a way that the Czech Republic sends its own electricity abroad for less money than the Czechs buy it. The producers sell the electricity directly at a price indexed on the exchange – and the price for consumers also depends on this.
All interested parties from Europe trade on the stock exchange. In the market, priority is not only given to the one who offers a higher price, but above all to the buyer who consumes more. It may happen that the country buys electricity at a lower price but in much larger quantities. “Electricity is distributed across Europe. Priority will be given to those users who have a higher marginal benefit concentration,” says Martin Durčák, Chairman of the Board of ČEPS.
“Prices are determined by several factors over which a company like ČEZ has no influence. We trade on the European market, where our production only accounts for around two to three percent. “This means you don’t have the slightest chance of influencing the price,” said CEZ boss Daniel Beneš in an interview with SZ Byznys in the fall.
There is also the question of why the Czech Republic will not withdraw from the stock exchange, but Beneš SZ Byznys also gave an answer to that. “If we were to leave, we could of course isolate ourselves, close the borders, and we could get by with this one raw material, electricity, for some time and could theoretically set the price ourselves.” But there are a number of other raw materials, such as oil or Gas that would make us dependent on the outside world. And I would be excited to see what the world around us would allow us to do,” he explained. According to him, an exit from the European market is not realistically possible. The fundamental contribution of the European Union is geopolitical stability and the fact that the Czech Republic is part of a larger whole that protects us.
Furthermore, the trading price is 60 percent of the final amount the customer pays. The remaining 40 percent is the so-called regulated share, the amount of which is decided by the energy regulatory authority. This includes the price of electricity distribution, system services, renewable energy sources fees, circuit breaker payment and taxes.
The lack of electricity drives up the price. On the contrary, falling demand and high supply lower the price. In the European Union, demand for electricity supplies from the grid fell by three percent last year compared to the previous year.
According to EGÚ Brno’s analysis, exports from the Czech Republic will continue to decline, and if coal-fired electricity production declines, the Czech Republic could become an electricity importer in the coming years.
“If we shut down coal-fired power plants in Central Europe for political reasons, despite the ambitious expansion of renewable energies around 2030, it will be necessary to find a new source for the consumption of around 250 TWh, even if we only… Overall, we expect one slight increase in consumption by 10 percent. “Greater political pressure to replace coal would therefore lead to a significant increase in electricity prices, especially in winter,” said Michal Macenauer, strategy director at EGÚ Brno.
However, the largest domestic coal-fired power producers – ČEZ and Sev.en Energy – agree that the end of coal may not be determined by politics but by economics. And even earlier than in the 1930s, as the government explained in the program statement. In just two to three years, generating electricity from coal could no longer be financially viable.
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