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Consumer Loss in Czech Photovoltaic Power Plants

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  • Jan Prusa
  • Andrea Klimesova
  • Karel Janda

Abstract

This article provides a financial survey of a small sample of Czech photovoltaic (PV) plants. To evaluate the extent of market losses, we calculate the shadow market price of solar electricity. From the profit and loss accounts of the PV plants and the shadow market price we estimate the total economic loss generated by PV electricity sector in the Czech Republic. The presented microeconomic approach has two main advantages: Firstly, we work with real observed data, which offsets the drawback of a limited sample. Secondly, the profit accounting calculation enables sensitivity analysis with respect to key variables of the plants. We show that money invested in PV plants would generate an annual loss of 8%. Given the estimated solar assets of CZK 165.6 billion (EUR 6.6 billion) as of December 2011, this translates in at least CZK 12.6 billion lost in the Czech solar sector in 2012. About 43% of this loss is due to high technology costs and corresponds to pure dead weight loss, while the remaining 57% constitute the redistributive profit component of subsidies. Finally, we calculate that unless electricity prices increase or technology costs decrease approximately sevenfold, PV plants will remain loss making.

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Bibliographic Info

Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-50.

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Length: 20 pages
Date of creation: Aug 2013
Date of revision:
Handle: RePEc:een:camaaa:2013-50

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Keywords: energy subsidies; photovoltaic; renewables;

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References

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  1. Sivek, Martin & Kavina, Pavel & Malečková, Veronika & Jirásek, Jakub, 2012. "Czech Republic and indicative targets of the European Union for electricity generation from renewable sources," Energy Policy, Elsevier, vol. 44(C), pages 469-475.
  2. Sivek, Martin & Kavina, Pavel & Jirásek, Jakub & Malečková, Veronika, 2012. "Factors influencing the selection of the past and future strategies for electricity generation in the Czech Republic," Energy Policy, Elsevier, vol. 48(C), pages 650-656.
  3. Dusonchet, Luigi & Telaretti, Enrico, 2010. "Economic analysis of different supporting policies for the production of electrical energy by solar photovoltaics in eastern European Union countries," Energy Policy, Elsevier, vol. 38(8), pages 4011-4020, August.
  4. Kavina, Pavel & Jirásek, Jakub & Sivek, Martin, 2009. "Some issues related to the energy sources in the Czech Republic," Energy Policy, Elsevier, vol. 37(6), pages 2139-2142, June.
  5. Dusonchet, Luigi & Telaretti, Enrico, 2010. "Economic analysis of different supporting policies for the production of electrical energy by solar photovoltaics in western European Union countries," Energy Policy, Elsevier, vol. 38(7), pages 3297-3308, July.
  6. Ratti, Ronald A. & Seol, Youn & Yoon, Kyung Hwan, 2011. "Relative energy price and investment by European firms," Energy Economics, Elsevier, vol. 33(5), pages 721-731, September.
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