Publication detail

Consumer loss in Czech photovoltaic power plants in 2010–2011

Author(s): prof. Ing. Karel Janda M.A., Dr., Ph.D.,
Jan Průša M.Phil. (Cantab), Ph.D.,
Type: Articles in journals with impact factor
Year: 2013
Number: 12
ISSN / ISBN: 0301-4215
Published in: Energy Policy
Publishing place:
Keywords: energy subsidies; photovoltaic; renewables
JEL codes:
Suggested Citation:
Grants: GACR P402/11/0948 Developing Analytical Framework for Energy Security: Time-Series Econometrics, Game Theory, Meta-Analysis and Theory of Regulation GAČR č. P402/12/0982: Trade Flows in Times of Economic Boom and Slump: Modifying the Gravity Model for Country, Time and Product-Specific Decision-Making GAUK 419111 Price development and pricing on the Czech natural gas market after the liberalisation of European energy market GAUK 684012 Determinants of Economic Efficiency in Czech Enterprises
Abstract: This paper 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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