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New Energy Policy in Slovakia

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In November 2014, the Slovak government approved a new Energy Policy, which sets out medium and long-term policy guidelines for the Slovak energy sector. This strategic document (and the process leading to its adoption) reflects the competing interests in the Slovak energy sector, the willingness of the government to prioritize nuclear energy in the energy mix, and general uncertainties in the sector resulting from prevailing trends in energy consumption, the pace of development of energy technologies, and geopolitical conflicts in regions vital for the supply of primary energy sources to Slovakia.

The Energy Policy is a strategic policy document – prepared and regularly reviewed by the Ministry of Economy – which defines the principal objectives and priorities in the Slovak energy sector for the next 20 years (currently until 2035 with an outlook until 2050). After its approval by the government, the Energy Policy should be reflected in the government’s proposals for new legislation. More specifically, it serves as a basic point of reference in the authorization of new energy installations by the Ministry of Economy.

To a large extent, the current Energy Policy, adopted more than eight years after its predecessor, reflects EU energy policy and sets out the following principles as its basic “pillars”: security of supply, energy efficiency, competitiveness, and sustainability. These principles are then translated into a number of proposed measures, both on a cross-sector basis and with respect to specific areas (e.g., coal, oil, natural gas, renewable energy sources, electricity, heat, transport, research and development, and education and awareness raising).

The policy framework outlined in the Energy Policy is based on forecasts of key consumption indicators (including gross domestic energy consumption, final energy consumption, and electricity consumption). These forecasts provide estimates for several scenarios – all assuming a long-term increase in energy consumption. In light of the falling trends in energy consumption since 2005 (although arguably reinforced by the 2009 economic crisis), however, it remains to be seen whether the actual figures in the coming years will confirm the correctness of the estimates and thus the relevance of the adopted policy priorities.

Among the many topics of the new Energy Policy, the future approach to the energy mix features prominently. In line with the climate change-related objective of achieving a “decarbonized” economy, the Policy places significant emphasis on the current and future role of nuclear power plants. The Energy Policy counts on the completion of two new units of the Mochovce nuclear power plant (with an installed capacity of 471 MW per unit) and contemplates the possibility of a new nuclear power plant construction in Jaslovske Bohunice to be put into operation after 2025 (with an installed capacity of 1,200 MW, although alternatives of 1,700 MW and 2,400 MW are also being considered) and the potential extension of operation of the V2 Jaslovske Bohunice nuclear power plant until 2045 (with an installed capacity of 1,010 MW).

These assumptions regarding the potential development of nuclear energy sources carry several important implications for the Energy Policy. Given the resulting electricity generation overhang, the Energy Policy foresees the need to export surplus electricity, which may require investment in the Slovak electricity transmission infrastructure (and which depends to a large degree on the generation and transmission infrastructure in neighboring countries). A high share of nuclear power plants in the electricity generation mix may also limit the regulation capability of the Slovak transmission system and conflict with the currently guaranteed off-take of electricity from renewable energy sources and co-generation power plants. 

Significantly, the Energy Policy does not count on the construction of large scale gas-fired power plants, as only limited construction of smaller co-generation power plants is expected.

Several policy shifts announced in the new Energy Policy closely relate to the issue of high electricity prices in Slovakia. While ultimately within the powers of an independent regulator, final electricity prices are considerably influenced by support schemes defined by government sponsored legislation, including those dedicated to renewable energy sources, co-generation of electricity and heat, and electricity generation from domestic coal. As a result, the Energy Policy signals certain measures aimed at decreasing final electricity prices, including the phase-out by 2020 of feed-in tariffs for electricity from renewable energy sources, focus on the use of renewable energy sources in the production of heat, and certain efficiency-enhancing changes to feed-in tariffs applicable to the co-generation of electricity and heat. The commitment to support electricity generation from domestic coal remains unchanged.

By Marek Staron, Partner, and Zoran Draskovic, Associate, White & Case

This Article was originally published in Issue 2.1. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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