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Market and economy of the electricity industry

In addition to decisions based on compliance with energy policy targets, the basic criterion for investment in new power generation sources is the assessment of future returns. The LCOE value for a specific discount rate can be used to compare the profitability of new sources. The analyses indicate that at a 5% discount rate, which is lower than usual in commercial projects, and electricity price of 60 EUR/MWh, no sources other than hydroelectric and wind power plants are profitable. Although nuclear units are most costly due to the required level of investment, they represent the most advantageous units in terms of LCOE to cover the basic load, on condition of low discount rates and a minimum lifetime of 60 years. However, their advantageousness may be adversely affected by their lower utilization due to the increasing share of RES in the power system, as well as by potential further increases in unit prices or reduction their technical lifetime.

In the long-term, expected production costs differs significantly among case studies. After 2030, the composition of the production base will begin to be differentiated according to case studies, and so will be production costs. The most substantial increase is anticipated by the Renewable case study with electricity prices going up by more than 140% in 2050 compared to 2017. In the Conceptual and Gas case studies, the increase is by more than 60% and around 80% respectively, relative to 2017.

In the final year of 2050, generation costs amount to EUR2016 101 per 1 MWh at a 5% discount rate in the Conceptual case study. The Gas case study is similar in terms of costs (EUR2016 115), while in the Renewable case study they are higher by 51% (EUR2016 153). Total investments in the generation base and the transmission, or rather distribution infrastructure will range between CZK2016 1.8 and 3.1 billion over the period of 2019–2050. Estimated annual investment in 2050 is shown in the following figure.

Estimated annual investment in 2050

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