Consumer Loss in Czech Photovoltaic Power Plants

23 Pages Posted: 17 Aug 2013 Last revised: 20 Jan 2014

See all articles by Jan Průša

Jan Průša

Charles University

Andrea Klimešová

Charles University

Karel Janda

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Date Written: August 1, 2013

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.

Keywords: energy subsidies, photovoltaic, renewables

JEL Classification: Q42, H23, M21

Suggested Citation

Průša, Jan and Klimešová, Andrea and Janda, Karel, Consumer Loss in Czech Photovoltaic Power Plants (August 1, 2013). CAMA Working Paper No. 50/2013, Available at SSRN: https://ssrn.com/abstract=2310992 or http://dx.doi.org/10.2139/ssrn.2310992

Jan Průša

Charles University ( email )

Opletalova St. 26
Prague, 11000
Czech Republic

Andrea Klimešová

Charles University ( email )

Opletalova St. 26
Prague, 11000
Czech Republic

Karel Janda (Contact Author)

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

Politickych veznu 7
Prague, 111 21
Czech Republic
+422 240 05 223 (Phone)
+422 242 11 374 (Fax)

HOME PAGE: http://www.cerge-ei.cz

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