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Consumer Loss in Czech Photovoltaic Power Plants

Author

Listed:
  • 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.

Suggested Citation

  • Jan Prusa & Andrea Klimesova & Karel Janda, 2013. "Consumer Loss in Czech Photovoltaic Power Plants," CAMA Working Papers 2013-50, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2013-50
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    File URL: https://cama.crawford.anu.edu.au/files/publication/cama_crawford_anu_edu_au/2013-08/50_2013_prusa_klimesova_janda.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    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. 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.
    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. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Janda, Karel & Tyuleubekov, Sabyrzhan, 2016. "Empirical evidence on renewable electricity, greenhouse gas emissions and feed-in tariffs in Czech Republic and Germany," MPRA Paper 75444, University Library of Munich, Germany.
    2. repec:prg:jnlpol:v:2017:y:2017:i:6:id:1172:p:728-750 is not listed on IDEAS
    3. Janda, Karel & Málek, Jan & Rečka, Lukáš, 2017. "Influence of renewable energy sources on transmission networks in Central Europe," Energy Policy, Elsevier, vol. 108(C), pages 524-537.
    4. Janda, Karel & Tuma, Ladislav, 2016. "Market viability of photovoltaic plants: merit order effect approach," MPRA Paper 74884, University Library of Munich, Germany.
    5. Janda, Karel & Tyuleubekov, Sabyrzhan, 2016. "Overview of Czech and German Renewable Energy Policies," MPRA Paper 75442, University Library of Munich, Germany.
    6. repec:gam:jeners:v:10:y:2017:i:12:p:1947-:d:120112 is not listed on IDEAS
    7. repec:eee:enepol:v:106:y:2017:i:c:p:138-147 is not listed on IDEAS
    8. Janda, Karel & Krska, Stepan & Prusa, Jan, 2014. "Odhad nákladů na podporu české fotovoltaické energie
      [The Estimation of the Cost of Promotion of the Czech Photovoltaic Energy]
      ," MPRA Paper 54108, University Library of Munich, Germany.
    9. Rečka, L. & Ščasný, M., 2016. "Impacts of carbon pricing, brown coal availability and gas cost on Czech energy system up to 2050," Energy, Elsevier, vol. 108(C), pages 19-33.
    10. Luňáčková, Petra & Průša, Jan & Janda, Karel, 2017. "The merit order effect of Czech photovoltaic plants," Energy Policy, Elsevier, vol. 106(C), pages 138-147.

    More about this item

    Keywords

    energy subsidies; photovoltaic; renewables;

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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