Management of funds earmarked for the State programme of energy saving and renewable energy resources support

Auditing operation No. 05/08

The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2005 under No. 05/08. The auditing operation was managed and the audit conclusion drawn up by Mr. Zdeněk Brandt, the Member of the SAO.

The aim of the audit was to examine state funds usage spent for implementation of the “State programme of energy saving and renewable energy resources support” under responsibility of the Ministry of Environment and Ministry of Industry and Trade.

The audited period covered the years from 2001 to 2004 as well as previous periods in certain cases of relevant connections.

The audited bodies were: The Ministry of the Environment (hereinafter referred to as “ME”), the Ministry of Industry and Trade (hereinafter referred to as “MIT”), the State Environmental Fund of the Czech Republic, the Czech Energy Agency, the State Energy Authority and selected beneficiaries.

The system of supporting in the framework of the State Programme appears to be too fragmented and not transparent enough. The MIT and the ME, which are responsible for fulfilment of the National Programme in the areas of the energy intensity reduction and the renewable and secondary energy resources exploitation and for co-ordination of activities carried out under other state authorities and upper territory administrations, have in the framework of this system very limited powers to influence effective and economical dealing with state funds.

There was no basic analysis enabling co-ordination of subsidies to particular kinds of renewable energy resources aiming to fulfil the Czech Republic commitment concerning energy production ratio between these resources and the total energy consumption. The MIT and ME did not co-ordinate distribution of subsidies to any direction in this sense. There no determination was set down for optimum ratio between renewable resources based on economic potential and capital intensity of particular renewable energy resources, i.e. desirable resulting ratio between using of biomass, solar, wind, water, and geothermal energy.

The link between objectives of the National Programme and separate parts of the State Programme in particular years was not consistently ensured, and as a result, the State Programme reaches its goals in single years, but the National Programme objectives have not been aimed.

State Programme evaluations in single years often introduced instead of actually reached benefits from relevant year supported projects data of still expected results. It was practiced even in cases, when the implementation was not completed yet. The completed projects often demonstrated actually aimed volumes of energy production from renewable resources in lower values than they had been designed. The Annual State Programme evaluations for the government could not be hence deemed as objective.

The considerable part of funds (about 70 % of total funds stated as used for implementation of the State Programme) was spent in the framework of projects, where renewable resources realization or energy savings represent mere secondary effect.

The existing development indicates also with reference to in 2005 expected actuation of new renewable energy resources that the main objective of the National Programme 2005 to 2005 “to reach electricity production ratio between renewable energy resources and gross electricity consumption on the level of 5.1 percent” will not be with high probability fulfilled. Thereby it is also endangered fulfilment of the objective to achieve by 2010 the portion of electricity production from renewable sources on consumption electricity in an amount of 8 % according to EC directive 2001/77/EC.

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