Czech Republic Renewables Report Q2 2016
BMI View: This quarter we have revised down our forecasts, as we expect to see limited opportunities in the Czech renewables sector. Concerns over the country's economic competiveness and previous difficulties with setting renewables subsidies at a sustainable level have led the government to scale back - and almost abandon - its pursuit of renewable energy. With cheaper fuel sources taking priority, we maintain our reserved outlook for the industry.
Latest Updates And Structural Trends
The country aims to develop renewables to account for at least 15-16% of total energy consumption by 2030, a target we consider unachievable at present. Although the Czech Republic has made an impressive start in adopting renewable sources into its electricity mix, we believe that high levels of regulatory uncertainty in the industry and the government's apparent preference for thermal power sources will result in a much less robust expansion than in previous years. As such, we forecast non-hydro renewables capacity to register an average annual growth rate of just 0.22% between 2016 and 2025. Non-hydro renewables generation will expand at a similarly slow rate, at 0.23% over the same time period.
On May 18 2015, the Czech government approved an updated version of the country's energy strategy - the first version of the document was approved in 2004. The revised strategy sets out the targets for and direction of the Czech energy sector for next 25 years, focusing on nuclear and renewables. While this strategy is binding on the state administration in the field of energy management, it is still unclear how it will be implemented due to budgetary and financial constraints. We will continue to monitor the situation but will not revise our forecasts until more concrete steps are taken.
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