The Czech Republic has received European Commission clearance to provide EUR 3.2 billion ($3.5 billion) in state aid for heat and electricity co-generation projects with high efficiency.
Qualified are operators of new or modernized combined heat and power (CHP) plants that provide primary energy savings of at least 10 percent compared to the separate production of heat and electricity, as defined in the European Union’s Energy Efficiency Directive.
CHP installations running on fossil fuels are not covered. “Projects involving natural gas will be required to either close the aided installations or enable switch to renewable and low-carbon gases by 2050, to avoid lock-in of natural gas”, the Commission said in a statement.
The aid will take the form of a feed-in bonus for each megawatt hour of produced electricity, to be paid over 15 years. The amount of the premium is set through auctions, except for small installations (up to one megawatt electric) where the amount is determined by the Czech Energy Regulatory Office on an annual basis.
The Czech government expects the package to result in 9.3 million metric tons of carbon dioxide (CO2) savings per year.
The aid was subjected to review by the Commission to ensure it observes fair competition rules in the EU.
“This €3.2 billion Czech scheme will promote energy efficiency and help Czechia meet its CO2 emission reduction targets”, commented Margrethe Vestager, executive vice president in charge of competition policy at the Commission. “Granting support through competitive tenders will limit the aid to the minimum and keep electricity prices low for consumers, at the same time ensuring that possible distortions of competition are limited”.
Last year, Energy Efficiency Directive (EU) 2023/1791 took effect, mandating EU countries to curb energy consumption by 11.7 percent by 2030 relative to projections for 2020.
The directive aims for a final energy consumption of at most 763 million metric tons of oil equivalent (MMtoe) by 2030, compared to the EU 2020 projection of 868.8 MMtoe. Final energy consumption by the definition of the directive means "all energy supplied to industry, to transport, including energy consumption in international aviation, to households, to public and private services, to agriculture, to forestry, to fishing and to other end-use sectors, excluding energy consumption in international maritime bunkers, ambient energy and deliveries to the transformation sector and to the energy sector, and losses due to transmission and distribution".
The directive sets a primary energy consumption target of no more than 992.5 MMtoe by 2030, compared to the EU 2020 projection of 1,176.1 MMtoe. Primary energy consumption by the definition of the directive means "gross available energy, excluding international maritime bunkers, final non-energy consumption and ambient energy".
Energy saving obligations, measured using the average final energy consumption during 2016-18 are set at 1.3 percent for 2024-25, 1.5 percent for 2026-27 and 1.9 percent for 2028-30.
The directive mandates member states to migrate their district heating and cooling systems to 100 percent renewable energy, waste heat or a combination of the two by 2050. In the nearer term, by 2028, district heating and cooling systems should use "at least 50 percent renewable energy, 50 percent waste heat, 50 percent renewable energy and waste heat, 80 percent of high-efficiency cogenerated heat or at least a combination of such thermal energy going into the network where the share of renewable energy is at least 5 percent and the total share of renewable energy, waste heat or high-efficiency cogenerated heat is at least 50 percent".
District heating and cooling systems that are built or substantially refurbished for a lifespan till 2030 should not use fossil fuels except gas, according to the directive.
Governments in the 27-member bloc have two years to adopt most of the measures contained in the directive into local legislation.
The directive is part of Fit for 55, the set of EU laws toward achieving a regional reduction in greenhouse gas emissions of at least 55 percent by 2030 relative to 1990.
To contact the author, email jov.onsat@rigzone.com
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