Are renewables to blame for high power prices? - Impact of renewable incentives on on residential electricity prices in Visegrad countries

Since 1995, household nominal electricity prices trippled or quadrupled in the Visegrad countries. Renewables are often blamed to be the key reason for more expensive electricity, but as studies done by experts in Poland, Slovakia, Hungary and in the Czech Republic show, this is not the case.

The key reasons are rather the profits of energy production and distribution companies that has been included into the electricity price during the market deregulation. In reality, renewables contributed significantly to the massive reduction of the stock market electricity price on the European market and balance out the small negative impact of renewable energy support schemesExpert analysis of electricity prices in four Visegrad countries show that: 

  • between 1995 and 2014 household electricity prices (nominal prices) grew by 237 % in Poland, by 280 % in the Czech Republic, by 378 % in Slovakia and by 414 % in Hungary.

 

  • support of renewable electricity production increased retail electricity prices, but less than other price components like distribution fee, stock market electricity price or VAT rate.

 

  • in the Czech Republic, where costs of feed-in tariffs for renewables are transposed onto the consumer, the overall costs of the renewables support scheme represent only 13 % of the electricity retail price. In Slovakia, an incentive for renewables is included into the „system operation tariff“- standard electricity price component – and represents only 7.5 % of electricity retail price. In Poland renewables are supported through „property rights RES“ which represent only 3 % of electricity retail price. In Hungary renewables are supported by a pricing component, which was removed from the residential electricity price structure in 2013 but in fact would represent less than 3 % of retail electricity price in 2014. [2]

 Table: Comparison of electricity retail price development in Visegrad countries 1995 – 2014 (price level from August 31st for 2014) 

Country Electricity retail price increase between 1995 and 2014 [%] Actual retail price in 2014 [euro cent] Share of RES incentives on retail price [%]
Poland 237 15.65 3
Czech Republic 280 18.30 13
Slovakia 378 12.70 7.5
Hungary 414 12.64 3