The Czech Chamber of Deputies is discussing a key legislative proposal, known as "Lex Plyn" (Gas Act), aimed at ensuring energy stability during the coal energy phase-out. Set to take effect in August 2025, the proposal streamlines administrative processes to attract investment in gas-fired power plants while safeguarding energy security.
Strategic support for coal and gaspowerplants
The weaking economics of coal generation are prompting a reassessment of its short-term viability. With the dark spread – the margin between the electricity price and the combined cost of coal and CO2 allowances – steadily declining, coal plant operators are weighing the possibility of shutting down power production even earlier than required under the planned 2033 phase-out.
Lex Plyn grants the Czech Energy Regulatory Office (Energetický regulační úřad) authority to mandate continued coal-fired electricity production in emergencies, ensuring grid stability. Plant operators required to extend operations would receive compensation, though public debates continue on whether this should include guaranteed profits as envisaged in the original draft. Additionally, large-scale power plants must notify grid operators of extended shutdowns, preventing abrupt capacity losses.
To accelerate gas-fired power plant construction, the proposal classifies projects exceeding 100 MW as vital to national energy security, expediting permitting and environmental assessments. Authorities must process approvals within statutory deadlines, and environmental impact assessments (EIAs) must be completed within shortened period.
Expanding the renewable energy framework
While primarily focused on energy stability and expansion of gas, as a result of amendments submitted by MPs, Lex Plyn is evolving to potentially include provisions supporting renewable energy projects over 15 MW in general, such as wind and solar. According to these new proposals, such projects may benefit from extended permit validity but will not receive the same expedited decision-making advantages as gas power plants.
Additionally, other MPs’ amendments to the original draft act aim to improve grid efficiency by ban on "load banks" that waste surplus electricity (that would need to be sold at negative prices), encouraging battery storage expansion instead.
Investment outlook
For investors, Lex Plyn improves the prospects for capitalizing on new opportunities. The assurance of coal-fired power stability mitigates short-term risks, while streamlined approval processes for gas-fired plants enhance investment feasibility. However, discussions continue on financial support mechanisms for coal power, which could impact market dynamics and may potentially delay Lex Plyn. As legislative debates progress, stakeholders should closely monitor regulatory developments in the Czech Republic. We will also continue to track these changes and keep you posted.
By Lukas Vymola, Counsel and Jan Gerych, Senior Associate, Dentons
