The Energy Sector and Energy Policy of the Czech Republic Tomáš Vlček et al. The Energy Sector and Energy Policy of the Czech Republic Tomáš Vlček et al. Masaryk University Press Brno 2019 This monograph is the second, expanded and revised edition, with the expansion made possible by the Masaryk University Specific Research Project “Perspectives of European Integration in the Context of Global Politics” (MUNI/A/1025/2018). Scientific Board of Masaryk University: prof. PhDr. Jiří Hanuš, Ph.D. (Chair) PhDr. Jan Cacek, Ph.D. Mgr. Tereza Fojtová doc. JUDr. Marek Fryšták, Ph.D. Mgr. Michaela Hanousková doc. RNDr. Petr Holub, Ph.D. doc. Mgr. Jana Horáková, Ph.D. prof. MUDr. Lydie Izakovičová Hollá, Ph.D. prof. PhDr. Mgr. Tomáš Janík, Ph.D. prof. PhDr. Tomáš Kubíček, Ph.D. prof. RNDr. Jaromír Leichmann, Dr. rer. nat. PhDr. Alena Mizerová doc. Ing. Petr Pirožek, Ph.D. doc. RNDr. Lubomír Popelínský, Ph.D. Mgr. Kateřina Sedláčková, Ph.D. prof. RNDr. Ondřej Slabý, Ph.D. prof. PhDr. Jiří Trávníček, M.A. doc. PhDr. Martin Vaculík, Ph.D. Pre-publication review: doc. Ing. Václav Dostál, Sc.D. 1st edition ©2013 Masaryk University Press, Tomáš Vlček, Filip Černoch, Veronika Zapletalová, Petra Bendlová 2nd revised edition ©2019 Masaryk University Press, Tomáš Vlček, Ľubica Bodišová, Patrícia Brhlíková, Filip Černoch, Jana Červinková, Gabriela Prokopová, Tereza Stašáková, Eliška Trmalová, Veronika Zapletalová, Petra Bendlová ISBN 978–80–210–9352–2 ISBN 978–80–210–6523–9 (1st edition) https://doi.org/10.5817/CZ.MUNI.M210-9352-2019 Table of Contents Abstract 14 Introduction 15 1. Actors in, and the Legislative Framework of, the Czech Energy Sector 16 1.1 State Institutions 16 1.1.1 The Ministry of Industry and Trade 16 1.1.2 The Ministry of the Environment 17 1.1.3 Monitoring Bodies and Other Institutions 19 1.2 The Legislative Framework of the Energy and Raw Materials Policy of the Czech Republic 20 1.2.1 2000 State Energy Concept 21 1.2.2 Strategic Documents in the New Millennium 22 1.2.3 State Energy Policy Update of 2015 25 1.2.4 Conclusion 25 1.3 Sources 25 2. The History of the Czech Energy Sector 28 2.1 The Three Periods of Development from 1989 to Today 28 2.2 The Restructuring Phase 29 2.3 The Privatisation Phase 30 2.3.1 Unipetrol 30 2.3.2 ČEZ 31 2.3.3 Transgas 32 2.3.4 Privatization of the Coal Sector 33 2.3.5 Issues Related to EU Accession–Liberalization of the Energy Sector 35 2.3.6 Temelín Nuclear Power Plant 38 2.4 The Third Phase of Development – EU Membership Through to the Present 39 2.5 Sources 41 3. The Coal Sector 44 3.1 Introduction to the Coal Industry 44 3.2 Deposits, Mine Production, Companies and Traders 45 3.2.1 Lignite 45 3.2.2 Brown Coal 46 3.2.3 Bituminous Coal 48 3.2.4 Exploitation of Coal and Trading 49 3.3 The Regulatory Framework of the Coal Industry 50 3.4 Demand Forecast 52 3.5 The Heat Supply Industry 53 6 Table of Contents 3.6 The Issue of Extraction Limits 57 3.7 Coal War 59 3.8 Sources 62 4. The Oil Sector 66 4.1 Introduction 66 4.2 Deposits, Production, Companies and Traders 67 4.2.1 Deposits and the Production of Oil in the Czech Republic 67 4.2.2 International Carrier Oil 67 4.2.3 Processing Plants 68 4.2.4 Distributors 69 4.2.5 Traders in Oil Products 69 4.2.6 Use of Oil 70 4.3 The Regulatory Framework of the Oil Industry 71 4.4 Demand Forecast 72 4.5 Current Issues and Proposed Projects in the Czech Oil Sector 73 4.5.1 Infrastructure Projects 73 4.5.2 The Druzhba Pipeline 76 4.6 Summary 78 4.7 Sources 80 5. The Natural Gas Sector 83 5.1 Introduction 83 5.2 Deposits, Mine Production, Companies and Traders 84 5.2.1 Deposits and the Production of Natural Gas in the Czech Republic 84 5.2.2 Holders of Purchase Contracts 85 5.2.3 The Transportation, Transit and Distribution of Natural Gas 86 5.2.4 Important Actors on the Czech natural gas market 88 5.2.4.1 Transmission system operator 88 5.2.4.2 Distribution system operators 88 5.2.4.3 Storage system operators 89 5.2.4.4 Gas producers 89 5.2.4.5 Wholesale and Retail Traders 89 5.2.4.6 National Regulatory Authority 90 5.2.4.7 Gas Market Operator 90 5.2.4.8 Czech Gas Association 90 5.2.5 Underground Natural Gas Storage 90 5.2.6 The Use of Natural Gas 92 5.3 The Regulatory Framework of the Natural Gas Industry 93 5.3.1 The Legislation 93 5.3.2 The Energy Regulatory Office 94 5.3.3 Security of supply 94 Table of Contents 7 5.4 Demand Forecast 95 5.5 Current Issues and Projects in the Czech Gasworks Industry 97 5.5.1 The development of the Transmission System and of Cross-Border Interconnectors 97 5.5.2 Decarbonisation of the gas sector 98 5.6 Summary 99 5.7 Sources 100 6. The Nuclear Sector 104 6.1 Nuclear Power Plants in the Czech Republic 104 6.2 Deposits, Mine Production, Companies and Traders 105 6.3 Spent Fuel and the Nuclear Waste Repository 107 6.4 The Regulatory and Safety Framework of the Nuclear Industry 110 6.4.1 The safety framework after the Fukushima accident and change in the perception of nuclear power in the European Union 113 6.5 Demand Forecast 114 6.6 The long road to a new nuclear source of energy for the Czech Republic 116 6.6.1 First attempt, an unsuccessful tender for Temelín nuclear power plant 116 6.6.2 Second attempt, the new trajectory 119 6.6.3 Second attempt, who is going to pay? 120 6.6.4 Opposition to the new nuclear unit 121 6.7 New development in nuclear sector: smaller and modular 123 6.7.1 SMRs in the Czech Republic 124 6.8 Sources 124 7. Renewables 129 7.1 Introduction 129 7.2 Renewables Use for Electricity and Heat Generation 130 7.3 The Regulatory and Safety Framework of the Renewables Industry 135 7.4 Demand Forecast 137 7.5 Criticism and Development of Renewables 139 7.6 Current State of Renewables 141 7.7 Sources 144 8. The Electric Power Industry 147 8.1 The Electricity Grid of the Czech Republic 147 8.2 The Regulatory and Safety Framework of the Electric Power Industry 149 8.2.1 State Regulatory Framework 149 8.2.2 Supranational Regulatory Framework 151 8.3 The Transmission and Regulation of Electricity 153 8 Table of Contents 8.4 The Price of Electricity and the Trade in Electricity 156 8.5 Stability and Development of the Transmission System–Crisis or a Revolutionary Change in the Electric Power Industry? 159 8.6 Sources 163 About the Authors 166 Table of Contents 9 List of Tables 2. The History of the Czech Energy Sector 28 Tab. 2.1: The Process of Electricity Market Liberalization 36 Tab. 2.2: Liberalization of the Natural Gas Market 37 Tab. 2.3: The Number of Electricity and Natural Gas Suppliers Changed During the Liberalization Process and Upon its Completion 37 Tab. 2.4: Total Primary Energy Supply (TPES) by source (Ktoe) 39 3. The Coal Sector 44 Tab. 3.1: Coal Power Plants in the Czech Republic with more than 150 MWe of Installed Capacity 45 Tab. 3.2: Deposits, reserves and mine production of lignite in the Czech Republic 46 Tab. 3.3: Deposits, reserves and mine production of brown coal in the Czech Republic 46 Tab. 3.4: Exploitable Reserves of Brown Coal and Their Limits 47 Tab. 3.5: Deposits reserves and mine production of bituminous coal in the Czech Republic 48 Tab. 3.6: Development of OKD mine production and profits 49 Tab. 3.7: Shares of Solid, Liquid and Gas Fuels in Energy Resource Consumption According to the State Energy Policy of the Czech Republic from 2004 and Updates from February 2010 and August 2012 (in %) 52 Tab. 3.8: The Balance of Thermal Energy from the Central Heating Supply System in 2010–2017 54 Tab. 3.9: Fuel Mix for Production of Thermal Energy in the Czech Republic in 2017 54 Tab. 3.10: CHP of Thermal Energy by sources in the Czech Republic in 2018 55 Tab. 3.11: Forecast Demand for Brown Coal According to EGU Brno 57 4. The Oil Sector 66 Tab. 4.1: Pipeline Routes in the Czech Republic 66 Tab. 4.2: Deposits, reserves and oil well production of oil in the Czech Republic 67 Tab. 4.3: The Oil Pipeline Network of the Czech Republic 68 Tab. 4.4: Oil Consumption in the Czech Republic by Sector 70 Tab. 4.5: Final consumption of oil products in the Czech Republic 71 Tab. 4.6: Gross oil consumption in the Czech Republic in 2010–2017 72 Tab. 4.7: The Shares of Fuels in Energy Resource Consumption in 2000 and 2017 and the Shares According to the State Energy Policy of the Czech Republic from 2004 and Its Update from 2014 (in %) 72 Tab. 4.8: Oil Consumption Prediction 73 Tab. 4.9: Central European Oil Infrastructure 75 Tab. 4.10: TAL Pipeline 76 Tab.