Published on March 19th, 2009 | by Jennifer Kho8
Solar: Is the Czech Republic the Next Spain?
Think of the Czech Republic and you’re more likely to think of beer, castles or Kafka than solar power. But the Eastern European country is one of the world’s fastest-growing markets, says Jenny Chase, a senior associate with London-based research firm New Energy Finance.
The country installed 50.8 megawatts of solar power last year, up dramatically from only 3 megawatts in 2007, she says. The bulk of that capacity — 31.5 megawatts — got installed in December, which represented more than fivefold growth from the 5.81 megawatts installed in November.
Of course, even with that nearly 17-fold growth, the Czech Republic makes up a tiny slice of the world market. Spain installed a whopping 2.46 gigawatts last year, overtaking Germany — which installed 1.86 gigawatts — as the top market, according to a Solarbuzz report. That makes the Spanish market more than 48 times the size of the Czech market.
But as the Spanish market proves, new government policies can lead to dramatic changes from year to year. Spain saw a solar boom in 2007, when the government passed a 400-megawatt feed-in tariff program. Feed-in tariffs set a higher price for renewable energy, and Spain offered 42 euro cents per kilowatt-hour. The program, intended to last until 2010, reached its cap within the first year, then grew to an estimated 1.2 gigawatts during a grace period in 2008, while the country scrambled to come up with a new program, Chase says. (See stories about Spanish projects here, here and here.)
The Spanish solar market is now suffering from severe shrinkage after the country set a 500-megawatt cap and a price of between 32 and 34 euro cents (43 to 45.7 U.S. cents) for this year. The smaller market has contributed to a drop in solar-panel prices worldwide, Chase says.
Meanwhile, the Czech Republic, which first passed its feed-in tariff in 2005, is now offering the highest price for solar power in Europe as it aims to get 8 percent of its electricity from renewable sources by 2010. The country is paying 12.79 koruny, which comes to about 63.8 cents, for each kilowatt-hour of solar power.
Sure, Spain and Greece — which pays the next-highest tariff of 40 euro cents, or 53.8 U.S. cents — have more sun, which would mean that smaller solar projects could produce more electricity, but land is also cheaper in the Czech Republic, Chase says. In any case, many of the companies that were active in Spain are now moving east. “I know some developers that were in Spain are now in business school because the market’s over, and some have moved to the Czech Republic,” Chase says.
Not every sign is pointing up. Installations fell to 6 megawatts in January, Chase says, adding that the decrease isn’t cause for concern. A number of European countries, including the Czech Republic, have tariffs that decrease annually at the beginning of the year. Those countries tend to see an annual rush to complete installations before the end of the year, with less activity right after the tariff declines. Tariff aside, the winter would normally be a slow period for renewable-energy projects because of the weather — snow isn’t generally conducive to construction. Or as Chase puts it: “A good time to go skiing is probably a bad time to install solar panels.”
New Energy Finance is “very optimistic” that Czech demand will pick up this year, she says. If anything, the company is concerned the country could end up with more solar — and a more costly program — than it expects, she said. If that happens, the country could see a backlash that could lead to cuts. “There is danger of another boom as we saw in Spain,” Chase says.
Photo of a solar-power station in Jaroslavice, in the Czech Republic, courtesy of Zruda via a Flickr Creative Commons license.