Slovakia: renewable energy

New laws on renewable energy have come into force, with further provisions due to take effect on 1 January 2010.

The new law implements the 2001 EU directive aimed at promoting electricity from renewable sources.

Slovakia’s principal renewable energy sources are combined heat and power and hydro-energy. It makes very little use of solar, wind, biomass and other renewable energy sources.

The new laws entitle producers of renewable energy to:

• priority connection to the regional distribution grid
• priority access to the transmission/distribution grid
• priority in electricity transmission, distribution and supply
• off-take rights for the “electricity price on loss” with additional payment

Provisions taking effect from 1 January 2010 include the conditions for supporting electricity production from renewable sources, and the rights and obligations of electricity producers and grid operators.

Implementation of the legal framework may give rise to problems as it has no precedent.

One of the aims of the Government’s 25-year energy policy announced in January 2006 was to increase the percentage of renewable energy sources for electricity production. Around 5.2 TWh of electricity, representing c.16% of domestic consumption, comes from renewable sources. This is almost entirely hydro-energy produced by the Gabcikovo dam on the river Danube.

The policy envisages that certain types of renewable energy sources have the potential to increase their share of overall electricity production to 19% in 2010 and 24% in 2030.

The Government’s 2007 strategy for increasing renewable energy usage set a target of increasing renewable electricity production (other than from large hydroelectric power stations) to 4% of total power consumption in 2010 and 7% 2015.

Priority connection

Priority connection depends on the renewable energy plant meeting the technical requirements and accepting the grid operator’s business terms and conditions, to ensure the safety, reliability and stability of the grid operation.

Technical requirements include the grid being closest to the plant, and no other grid being better suited for connection from a technical and economic point of view.

Connection is considered technically possible even where it would require the grid operator to extend the grid (in a financially viable way) to make off-take viable. The operator must then do so on request from the electricity producer.

A formula for arriving at a maximum charge for connecting new power producers to the grid is set by the regulator . Currently, 90% of the charge is borne by the electricity producer, and 10% by the grid operator.

Priority access

Priority access to the transmission/distribution grid involves grid operators being required to reserve some capacity and to distribute the agreed volume of electricity via the grid. A fee for access and reserving capacity is payable by the producer as part of its electricity distribution fee.

Priority transmission, distribution and supply

The price charged for access and transmission or distribution is regulated.

Off-take rights

Renewable electricity producers are entitled to sell all of their electricity to the grid operator, generally for the lifetime of the power plant. In turn, the grid operator is obliged to off-take the electricity at the regulated electricity price on loss. As this is normally lower than the regulated electricity price, the producer is entitled to an additional payment to make up the difference.

The regulated electricity price for plants commissioned after 1 January 2010 is fixed for 15 years (subject to possible increase by the core inflation index only) at the regulated price in the year in which the plant went into operation.

Grid operators cannot avoid mandatory off-take on the ground that the output of solar/wind power plants tends to fluctuate. However, they are able to limit or regulate the amount of electricity produced by these fluctuating energy sources.

New renewable energy projects

Investment plans for the construction of power plants with an installed capacity above 1 MW must comply with the Government’s long-term energy policy. This involves applying for a certificate of compliance from the Economy Ministry, accompanied by confirmation that the project is approved by the transmission/distribution grid operators to which the plant would be connected.

Under the new legislation, favourable price regulation will mainly apply to green projects with installed capacity of up to 30 MW, and wind parks up to 15 MW. The impact of this on consumer electricity prices is being considered by the Economy Ministry, since photovoltaic and wind energy is significantly more expensive than electricity from sources such as hydro-energy and biomass.

This could result in legislative changes or (as in Czech Republic) a reduction in financial support which would slow down the expected development of solar/wind energy.

The transmission grid operator SEPS has issued rules for approving new solar projects, to prevent an uncontrolled increase in their numbers. It has similar reservations about wind parks. Under the rules, it will only clear projects with up to 120 MW aggregate solar generating capacity with installed capacity between 1-4 MW.

The Economy Ministry has also expressed caution about wind and solar energy projects, especially the large ones which are unstable and risky for the grids.