Energy: ČEZ invests in dam energy

Long before the deluge of renewable energy sources currently available was even discovered, the power of falling water was harnessed by the earliest civilizations. As the renewables sector continues to change and grow under different demands and legislation, hydroelectricity remains one of the cheapest and least environmentally harmful ways to produce energy. Since space for reservoirs and dams is limited, local companies that can't expand are investing in higher efficiency to stay competitive.  

"You can build a dam and you have virtually zero operating costs, which makes hydroelectricity the cheapest source with the biggest margins. In this respect, it's highly profitable, and it's clean," said Jan Tomaník, an energy analyst at Wood & Co. brokerage in Prague. "However, you need to have room for it, and I don't think we have much room left for large-scale plants."

So instead, companies are upgrading their technologies to increase the amount of energy they can get from existing facilities. ČEZ, the majority state-controlled energy company that owns the majority of hydroelectricity facilities in the country, recently unveiled plans to invest millions of crowns to enhance efficiency at their 35 facilities, which they say will allow them to produce an additional 60,000 megawatt hours (MWh) of energy per year.

The renovations, which would take place over 12 years, involve replacing runner blades and turbines with more technically advanced models and according to ČEZ, will allow existing facilities to cover the needs of 17,000 households by 2022.

"The same amount of water will produce more electricity," said Eva Nováková, a spokeswoman for ČEZ.

Břetislav Skácel, chairman of the board for CREA Hydro & Energy, which researches and produces technology for water management, including for hydroelectricity production, said companies across Europe were looking to renovate their facilities.

"There are a lot of reasons companies are doing this now. There are technologies that were not available before and more government promises for support, which makes people more keen on renewables," he said.

Keen as companies may be, the law lays out strict criteria for subsidies. Only small facilities with installed capacity up to 10 megawatts can receive feed-in tariffs.

According to a forecast by law firm Norton Rose, energy output from hydroelectric facilities will reach around 1,094 MWh by 2014, which means a growth of only about 47 MWh over 2010.  

"Increasing the efficiency of current plants with renovations and the installation of new turbines is likely where the main increase will come from," said Pavel Kvíčala, a partner at the law firm Norton Rose who advises clients on the renewable sector. "Most of these big facilities were made back in the 1950s, so it makes sense to do the renovations. It brings efficiency and a potential increase in output."

Although expansion potential in this country is restricted by geography, the growing use of hydroelectricity in developing countries has boosted demand for technology and created more business for companies that produce parts and research for the sector, according to Skácel, who says his company is working with energy companies in Iraq to provide information and products. He says the use of hydroelectric facilities is important because it is connected to the overall problem of efficient water management.

"All water management during this period of global climate change is important, including water storage and protection, and this is all connected to these facilities," Skácel said.

He added that local interest in hydroelectric power is so strong that companies from all over the world will meet to discuss the industry at a conference in Prague this October. 

"This conference will be about the future development in this branch. We would like to bring our partners from developing countries here to show them - and the government - the possibilities in hydroelectricity," Skácel said.

Of the Visegrad Four countries (Poland, the Czech Republic, Slovakia and Hungary), the Czech Republic comes in second in hydroelectric production to Slovakia, which gets 33 percent of its electricity from hydropower, according to a 2010 report by KPMG consulting.

Hydroelectric plants make up 13.2 percent of the Czech Republic's installed capacity and account for 3.1 percent of electricity generation.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com