The Czech Republic, which is slightly smaller than South Carolina, has an approximate population of 10.3 million and is bordered by Poland to the north, the Slovak Republic to the east, Austria to the south, and Germany to the west. There are 13 administrative regions (called 'kraje') in the Czech Republic, plus the city of Prague which is its own administrative region; these administrative regions are shown in Figure 1. The capital city, Prague, is located in the west-central part of the country and has a population of about 1.2 million. The currency of the Czech Republic, the koruna (Kc), has an exchange value of approximately 30.1 Kc per U.S. dollar as of January 2003. The gross domestic product (GDP) in 2001 was estimated at $147.9 billion (purchasing power parity).
The Czech Republic became the first post-communist member of the Organization for Economic Cooperation and Development (OECD) in December 1995 and is a member of the Central European Free Trade Agreement (CEFTA), which includes the Slovak Republic, Hungary, Poland, and Slovenia. In 1998 the Czech Republic became a member of the North Atlantic Treaty Organization (NATO) and in December 2002 it was one of the ten countries invited to membership in the major expansion of the European Union (which will supercede CEFTA). The Czech Republic is also a member of the World Trade Organization, the International Monetary Fund, the World Bank, and the European Bank for Reconstruction and Development.
The Czech Republic has an energy strategy that includes the following: energy prices should be fully decontrolled; state-owned energy enterprises should be restructured and privatized; safer, more efficient, and less polluting forms of energy should be produced; energy conservation should be strongly encouraged; the country should increase and diversify connections to international oil and gas pipelines and electricity networks; domestic oil and gas production should be made more efficient; and the public energy sector should be better structured to implement long-term policies and provide oversight and coordination.
The Czech government is focusing on harmonizing Czech energy sector standards with those in the EU. Practically speaking, this means decreasing Czech dependence on solid fuels (e.g., coal, wood, etc.) as a primary energy source. Coal will gradually be replaced as a source of heat, or will be increasingly used for co-generation. Improvements are also planned for legislation, business conditions, statistics and reporting standards in the energy sector to conform Czech standards with those of the EU.
On January 1, 2001 a new energy regulatory authority began operating in the Czech Republic. Its responsibilities include determining rates that customers will pay for energy and setting up the framework for third party access to the electrical grid.
The schedule for phasing in third party access to electricity starts with
the largest users and will eventually cover all customers by the end of 2006.
The timetable goes as follows:
The natural gas timetable will follow a similar pattern with the largest customers
getting access first.
It is expected that Transgas, the Czech gas pipeline utility, will phase out its subsidies to customers in 2003.
Another new energy policy change that was enacted into law at the beginning of 2001 is the requirement that energy audits be performed by the end of 2003. Energy audits by government-approved auditors are now mandatory for all government facilities (local governments as well as the national government) with energy usages more than 1,500 gigajoules per year (i.e., down to the size of most schools and large buildings). Energy audits are also required for non-government energy users (single payers), but for them the threshold is much higher -- any energy user who consumes at least 35,000 gigajoules per year (i.e., middle-size industries and larger) must have an energy audit. The purpose of these audits is to encourage energy conservation and also outside investment by energy services companies (ESCOs) for making any economically-feasible improvements in energy usage.
Oil policies are part of the Czech Republic's bid to be admitted to the EU, particularly building a 90-day state oil reserve. In 2001, the EU agreed to the Czech Republic's request to extend the deadline for building this reserve to December 2005.
The Czech Republic has placed a high priority on developing nuclear energy resources, an issue of concern to some neighboring countries. Table 1 shows how the Czech Republic has met its energy needs by fuel type.
An historical summary of the Czech Republic's Total Primary Energy Production (TPEP) and Consumption (TPEC) is shown in Table 2.
|Production (Crude Oil only)||2||2||3||4||3||4||4||6|
Recently, Geocan Energy, a Canadian company signed a letter of intent to do oil exploration in the Czech Republic. This will be done in the 37,000-acre Rostin block, which is 130 miles southeast of Prague. Geocan is teamed with two Czech firms, Unego and Ceska Naftarska Spolecnost, and they have a four-year oil and gas exploration permit in a proven oil and gas basin.
Refineries and Downstream Processing
There are two major oil refineries in the Czech Republic (the Litvinov and Kralup refineries), which have a combined capacity of 51 million barrels per year. Both of these have now been partially privatized, and they are operated by Ceska Rafinerska. Ceska Rafinerska is owned by the holding company Unipetrol, which is in turn 63% owned by the Czech government. It is expected that privatization will move further in 2002, with the sale of this 63% share; four companies are competing for it. Ceska Rafinerska sold 1.1 million barrels of fuel in 2000, and 2001 sales were estimated to be 1.9 million barrels.
In April 2001, Ceska Rafinerska began commercial operation of a new catalytic cracking unit at Litvinov. This unit handles 27,000 b/d of crude and produces mainly gasoline and diesel fuel, and cost 8 billion koruna (about $200 million) to build.
An historical summary of refined petroleum products output by fuel type in the Czech Republic is shown in Table 4.
|Refined Product||Production Rate|
|Distillate Fuel Oil||29||37||39||53||50||51||44|
|Residual Fuel Oil||31||26||27||32||30||29||21|
|Liquefied Petroleum Gases||2||2||2||6||6||5||5|
|Refinery Fuel and Loss||5||5||5||6||6||6||2|
Besides the Litvinov and Kralupy refineries operated by Ceska Rafinerska, there is a third small refinery in Pardubice operated by Paramo, A.S. The Pardubice refinery has a capacity of 20,000 b/d.
Czech oil (and gas) production could be expanded and made more efficient with foreign technology and investment. The oil refining industry requires considerable investment to improve energy efficiency and environmental performance and to configure production with the increasing demand for higher quality products.
Natural gas reserves in the Czech Republic are estimated to be 500 billion cubic feet (Bcf). Future domestic natural gas production is expected to remain essentially constant. However, natural gas demand is expected to increase by 5 to 7% per year. This is due, in part, to the fact that natural gas is expected to replace small-scale coal use in urban areas. In 1999, the Czech Republic consumed 337 Bcf of natural gas, with about 98% of it being imported. Most of the 2% that was domestically produced comes from gas deposits near the Austrian border extracted by Medusa Oil & Gas, a unit of the British company Ramco. A small amount of gas is also produced by MND.
In January 2002, the Czech government signed a contract to sell Transgas, the state-owned gas utility for $3.64 billion. The buyer is RWE Gas of Germany. Transgas is responsible for import/purchase, sales, and distribution of natural gas in the Czech Republic. Under the contract, the RWE share in Transgas is 97%. In acquiring Transgas, RWE Gas also gets large stakes in the eight regional gas distribution companies.
In 2000, Transgas bought about 325.2 Bcf of natural gas, 254.1 Bcf of which came from the Russian supplier Gazexport and the remainder from the Norwegian consortium GFU. There are eight regional gas distribution companies that purchase natural gas from Transgas, and six large industrial users that get gas directly from Transgas. Because much of the gas is used for heating and electricity generation, there is a strong seasonal trend for gas usage; the months of greatest demand are November through March, with the January demand for gas being roughly four times the demand in June, July, or August. An historical summary of natural gas purchases and sales by Transgas is shown in Table 5.
An historical summary of natural gas production and consumption in the Czech Republic is shown in Table 6.
Until recently, Czech natural gas demand was met primarily by imports from the Russian Federation, with lesser amounts from Norway and Germany. However, as part of an effort to develop diversified energy sources, in May 1997 the Czech Republic began importing gas 25 Bcf of gas from the Norwegian firms Statoil, Norsk Hydro, and Saga, which have formed a consortium. This 20-year contract was expected to result in gas imports from Norway of approximately 106 BCF by the year 2000. Over the 20 year period, Norway could deliver as much as 1.9 trillion cubic feet (TCF) of gas to the Czech Republic. The main source of natural gas, however, remains Gazexport, a subsidiary of Gazprom; the ratio of Russian gas imports as compared to imports from Norway is approximately 3:1. What limited amount of domestic gas production there is in the Czech Republic is done near the Austrian border by Medusa Oil and Gas, a part of Britain's Ramco Energy.
In 1994, the Czech gas industry was restructured, forming eight regional gas distribution companies. Transgas sells gas to these companies and handles its transmission. In 1999, a consensus was formed on privatization; the divestiture of state-owned gas holdings is necessary to meet the EU's membership criteria. This divestiture occurred in 2002.
While the Czech Republic has moderate coal and lignite reserves, most are not suited for mining expansion due to environmental and economic factors. The Czech Republic has total recoverable reserves of approximately 5.7 billion short tons. Of this, approximately 1.8 billion short tons is bituminous and approximately 3.9 billion short tons is subbituminous or lignite (brown coal). There are 16 underground mines, all located in the eastern Silesia region. Coal is exported primarily to Slovakia, Germany, and Austria. At current production rates, mineable hard coal reserves will last more than 50 years, while mineable lignite reserves will last more than 30 years. An historical summary of coal production and consumption in the Czech Republic is shown in Table 7.
The sulfur content of most Czech hard coal is approximately 0.9%, while the heating value and ash content are 16 to 28 Gigajoules/ton (GJ/t) and 9 to 38%, respectively. For lignite, the sulfur content varies from 0.4 to 5.6%, while the heating value and ash content are 10 to 19 GJ/t and 18 to 36%, respectively. The highest quality hard coal reserves are located in Moravia while the better lignite reserves are located in North Bohemia.
Coal and lignite mining has been privatized into six joint-stock companies: three hard coal mining companies and three lignite mining companies. The three hard coal companies are:
The three lignite companies are:
Over the past ten years, inefficient mines have been closed down, environmental regulations have been enforced, and the labor force has been reduced. These events were part of the Czech effort to bring the industry into compliance with EU standards. It is expected that the Czech coal industry will continue to downsize over the next ten years. One of the main companies mining black coal, Ostravsko-Karvinske Doly in northern Moravia, reduced its work force from 100,000 people in the early 1990s to 36,000 in 1999.Nuclear
On October 9, 2000, the Czech Nuclear Safety Authority cleared a second nuclear power plant, Temelin, for operation. Temelin is planned for two 981 MWe reactors of Soviet design together with western technology supplied by Westinghouse. The director of Temelin has announced that the first Temelin reactor would be running at 30% initially and then reach a fully operational state in 2001. However, there was a delay in delivery of the turbines from Skoda, the manufacturer. This has now been resolved, and some rescheduling has occurred. The plan is that the second reactor will be completed 15 months after the first one. When both Temelin reactors are in full operation in 2002, the plant is expected to provide 20% of the Czech Republic's power needs.
The Temelin nuclear power plant is situated about 60 kilometers from the Czech Republic's borders with both Germany and Austria, and has provoked anger in both Germany and Austria, where anti-nuclear activists have argued that Temelin's Soviet design does not conform to Western safety standards. In Austria, demonstrators have at times attempted to block crossing points between the two countries at various times.
A summary of the two nuclear power plants is shown in Table 8.
|Power Station||No. of Units
|Year of First
|Dukovany||4 x 440||1985-1987|
|Temelin||2 x 1,000||2001 (Unit 1)
2002 (Unit 2)
Hydroelectric and Renewables
The Czech Republic is not as mountainous as its western neighbor, Slovakia, and it produces less than half the amount of hydroelectric power as Slovakia. Most of the hydroelectric power plants in the Czech Republic are located on the Vltava River (also known as the Moldau River); the Vltava cascade of power plants are owned by the electricity generating company CEZ, and represent about 17% of CEZ's installed generating capacity. There are three pumped storage facilities in the Czech Republic, the largest located at Dlouhé Stráne in the eastern half of the country. The Dlouhé Stráne facility has two 325 MWe hydroturbines, the largest reversing water turbines in Europe, and has an elevated mountaintop reservoir with a head of more than 500 meters. The other major pumped storage waterworks, at Dalešice, is located near the Dukovany nuclear power plant, and is actually a part of that facility as the water reservoir provides a source of process water for the nuclear power plant.
A summary of hydroelectric power plants in the Czech Republic is shown in Table 9.
|Power Station||No. of Units
|River||Year of First
|Lipno I||2 x 60||Vltava||1959|
|Lipno II||1 x 1.5||Vltava||1957|
|Hnevkovice||2 x 4.8||Vltava||1992|
|Korensko||2 x 1.9||Vltava||1992|
|Orlík||4 x 91||Vltava||1961-1962|
|Kamýk||4 x 10||Vltava||1961|
|Slapy||3 x 48||Vltava||1954-1955|
|Stechovice I||2 x 11.25||Vltava||1943-1944|
|Vrane||2 x 6.94||Vltava||1936|
|Stvanice||3 x 1.89||Vltava||1987|
|Mohelno||1 x 1.2
1 x 0.56
|Zelena||2 x 0.315||n/a||1994|
|Stechovice II||1 x 45||Vltava||1947-1948|
|Dalesice||4 x 112.5||Jihlava||1978|
|Dlouhe Strane||2 x 325||Divoká Desná||1995-1996|
The amount of electricity produced from non-hydro renewable sources in the Czech Republic is negligible, but not zero. There are two wind power plants, one a pilot-scale facility in the Krusne Hory mountains that is operated by the Physics Institute of the Czech Academy of Sciences, and a small wind farm (consisting of three wind turbines) in the Jeseniky mountains. The wind farm site is also host to a very small solar power facility. A summary of non-hydro renewable power generation in the Czech Republic is shown in Table 10.
|Year of First
The electricity transmission system is highly interconnected with the transmission systems of all neighboring countries. The Czech Republic is a member of the CENTREL association (along with the Slovak Republic, Poland, and Hungary), whose members are working as a group to synchronize interconnections with the Western Europe UCPTE System, which was expected to occur by the end of 1997.
Natural Gas Pipelines and Storage Facilities
The Transgas System is the only system that transports natural gas to Western Europe through the Czech Republic. Although spare capacity exists during non-peak months, almost all capacity is utilized during winter peak demand periods. The Transgas System also provides gas to Germany, France, Italy, and Austria.
There are approximately 32,000 miles of pipelines across the Czech Republic, including about 2,500 kilometers for international transport Russian gas toward Western Europe. There are six compressor stations in the natural gas transit system, with a cumulative installed capacity of 351 MWe. The entry point for the transit pipeline into the Czech Republic is at Lanzhot on the Slovak border; there are two points in the system where the gas is piped into Germany -- the main point at Waidhaus, where the gas is delivered to Bavaria and points west and south and a secondary point at Hora Svata Kateriny in eastern Germany, covering Berlin and northern Europe. These two points have been at full capacity since 1997.
In November 1999, a long term contract was concluded between Transgas and Gazexport for the long term transit of Russian natural gas across the Czech Republic until 2020. Under the terms of the deal, 28 billion cubic meters per year (91.9 BCF) will be transported through 2008. After 2009, the guarantee drops to 13 billion cubic meters (42.7 BCF) annually. This reduction anticipates the completion of the Yamal gas pipeline across Poland which will bypass the Czech Republic and Slovakia.
There are six underground storage facilities for natural gas in the Czech Republic; these are located at Dolní Dunajovice, Tvrdonice, Stramberk, Lobodice, Tranovice, and Háje u Príbram, and have a cumulative capacity of about 72.3 BCF. The Tvrdonice site is the most recent of these to come online (in 2000).
The Czech Republic receives most of its crude oil supplies via the Druzhba (Friendship) Pipeline from Russia and the Mero Pipeline from Germany. Other pipelines include the Adria Pipeline (oil) and the Brotherhood Pipeline (gas). The Druzhba Pipeline, historically the main source of oil, has a capacity of 73 million barrels per year. The completion of the Mero Pipeline from Germany, which connects to the Transalpine Pipeline to Trieste, provides the same capacity as the Druzhba. This allows the Czech Republic to diversify its supply and reduce dependence on Russian oil. The trend over the years is expected to be more Western oil and less Russian oil.
An historical summary of installed electricity generating capacity in the Czech Republic is shown in Table 11.
Generation and Consumption
In 1999, the Czech Republic consumed approximately 53 Gigawatt-hours (GWh) of electricity while generating approximately 61 GWh. Electricity consumption is projected to steadily rise, much of which is expected to be from increased demand from small-scale consumers, primarily households. An historical summary of electricity generation and consumption in the Czech Republic is shown in Table 12.
Electric Industry Overview
CEZ was founded in May 1992 as one of the new entities formed upon the separation at the beginning of that year of the former Czechoslovakia into the Czech Republic and Slovakia; CEZ came into existence following the breakup of the former state-owned Czech Power Works. CEZ is presently a public limited company with approximately two-thirds of its shares being owned by the state National Property Fund. The remainder was distributed in the first and second wave of voucher privatization in 1992 and 1994. CEZ produces more than three-quarters of the electricity generated in the Czech Republic, handles import and export of electricity, and presently also operates the 220 kV and 400 kV grids via its CEPS subsidiary. Most of CEZ's electricity is sold to the eight regional electricity companies in the country, who then sell to customers. In addition, CEZ also sells electricity directly to six large industrial customers. The independent power and heat company is Elektrany Opatovice, which owns and operates two major power plants (Melnik I and Opatovice) and sells power to the CEZ grid under a negotiated contract.
The Czech government has indicated its intent to privatize CEZ. The current plan calls for selling the bundled transmission and generation assets (including the two nuclear power plants) to one buyer.
As of December 1999, CEZ owned and operated ten large coal-fired power plants, one nuclear power plant, 14 hydroelectric facilities, and one very small windpower facility, as well as the Czech high voltage power transmission grid. Fossil-Fueled CEZ power stations are shown in Table 13.
|Power Station||No. of Units
|Year of First
|Type of Fuel||Start Year
of Flue Gas
|Tisová I||1 x 50
2 x 55
1 x 12
|Tisová II||1 x 100||1961||Brown Coal||1997|
|Prunérov I||4 x 110||1967-1968||Brown Coal||1995|
|Prunérov II||5 x 210||1981-1982||Brown Coal||1996|
|Tusimice II||4 x 200||1974-1975||Brown Coal||1997|
|Pocerady I||3 x 200||1970-1971||Brown Coal||1994|
|Pocerady II||2 x 200||1977||Brown Coal||1996|
|Ledvice II||2 x 110||1966||Brown Coal||1996|
|Ledvice III||1 x 110||1968||Brown Coal||1998|
|Melník II (units 9 & 10)||2 x 110||1971||Brown Coal||1998|
|Melník III (unit 11)||1 x 500||1981||Brown Coal||1998|
|Chvaletice||4 x 200||1977-1978||Brown Coal||1997, 1998|
|Dvur Kralove||1 x 6.3
1 x 12
|Porící||3 x 55||1975-1958||Hard Coal||1996, 1998|
|Nachod||1 x 5
1 x 12
|Hodonín||1 x 55
1 x 50
|Detmarovice||4 x 200||1975-1976||Hard Coal||1998|
Czech power system development efforts in the 1990s were focused primarily on substantially reducing air pollution from coal-fired power facilities. These included:
These efforts were successful, by the end of 1999, in 'desulfurizing' all coal-fueled power plants under operation by CEZ. The decommissioning of obsolete power units was facilitated by a decrease in electricity demand. The majority of decommissioning is in fossil-fuel powered plants. The loss of generating capacity from fossil fuel power plants will be more than offset by increases in nuclear and hydroelectric capacity.
Over the past decade, the Czech Republic has seen a dramatic downward trend in its emissions of sulfur dioxide (SO2), nitrogen oxides (NOx), particulates, carbon monoxide (CO), and non-methane volatile organic compounds (NMVOCs). Historical and projected anthropogenic atmospheric air pollution emissions in the Czech Republic are shown in Table 14.
The energy sector, in particular heat and power generating plants, is the main source of air pollutants, accounting for approximately 82% of SO2 emissions, 21% of NOx emissions, and 55% of total particulates released into the atmosphere. The Czech Republic has placed a major emphasis on reducing harmful emissions from coal-fired power generation, and in particular, CEZ has been very proactive in modernizing its fossil-fueled power plants to reduce the amount of NOx and SO2 emissions from electric power generation. Since 1994, flue gas scrubbers for removal of SO2 have been installed on 32 coal-fueled units totalling 5,930 MWe in generating capacity. There has also been construction of seven fluidized-bed boilers at four power stations (Tisová, Hodonín, Porící, and Ledvice), improvement in the efficiency of electrostatic precipitators for fly ash removal from flue gas, and implementation of de-NOx technologies. This has resulted in a dramatic reduction in atmospheric NOx and particulates of more than 50% and 90%, respectively, as compared to corresponding 1991 levels. Finally, older fossil-fueled units are scheduled for decommissioning once Temelin nuclear power plant comes online; about 2,000 MWe of older coal-fueled generating capacity will be affected.
Greenhouse Gas Emissions
The Czech Republic has signed a number of international agreements and accords on the environment, including adopting all obligations from the Framing Convention on Climate Change (FCCC) as well as other agreements to control transboundary emissions. An historical summary of carbon dioxide (CO2) emissions from fossil fuel use in the Czech Republic is shown in Table 15.
|CO2 from coal||23.32||20.58||21.29||22.88||22.03||18.09||15.71||17.73|
|CO2 from natural gas||3.76||3.47||4.16||4.79||4.85||4.86||4.90||4.75|
|CO2 from petroleum||6.21||6.09||6.40||6.72||6.43||6.32||6.42||5.87|
from all fossil fuels
The process of restructuring of energy companies in the Czech Republic is unique. Although all major energy enterprises have been converted to joint stock companies, many are still state owned, with some likely to remain in state hands in the longer term. However in other cases, shares in newly-formed companies have been sold to both foreign and Czech investors. The ultimate mix of private and state ownership in the energy sector is not yet clear.
Deregulation in the coal trade has been apparently working well, as demonstrated by the fact that Polish steam coal is often cheaper and used in place of domestic coal.
Privatization of the refining industry has resulted in selling of formerly state-owned refineries to a consortium of Royal Dutch/Shell, AGIP, and Conoco. In January 2002, the Czech government signed a contract to sell Transgas, the state gas company, to RWE Gas of Germany.
The privatization of CEZ and the eight electricity distribution companies is the focus of current negotiations. The Czech government has plans to privatize CEZ by selling the entire company to one buyer, including both the generation and transmission facilities.
Privatization of district heating utilities is not a current concern of the Czech government, with privatization responsibility being transferred to regional district heating companies.
Since its separation from the Slovak Republic on January 1, 1993, the Czech economy has fared somewhat better than many of its Central and Eastern European neighbors. For the most part, the Czech Republic has laid the foundation for an economic transition to a western market. With a stable political situation and a favorable macroeconomic climate, the Czech Republic has a low national debt, a balanced budget, strong foreign currency reserves, moderate inflation, and moderately high unemployment (8.8% in 2000). An historical summary of the Czech Republic's GDP, inflation rate, and currency exchange rate is shown in Table 16.
|GDP (billion Kc)||1,381||1,572||1,680||1,821||1,833||1,936||2,077|
|Annual Percent Inflation||9.1||8.8||8.5||10.7||2.1||3.9||5.1|
|Average Exchange Rate (Kc per US$)||26.4||27.1||31.8||32.3||34.6||38.6||38.0|
The Czech Republic's exports in 2001 were $32.7 billion, including manufactured goods, machinery, transport equipment, and chemicals. Imports in 2001 were $37.4 billion, including machinery, transport equipment, manufactured goods, raw materials, fuels, chemicals, and food. The Czech Republic's largest trade partners are Germany, Slovakia, Austria, Italy, Poland, and the Russian Federation. Approximately 60% of Czech exports go to the EU.
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