CEZ Group

ČEZ is growing its energy services business and developing electric vehicle charging infrastructure. In 2020, 83 public charging stations were installed and put into operation, increasing the size of the ČEZ Group’s network to 270 stands in operation. Construction is expected to continue at a similar pace in the coming years. The company offers comprehensive solutions to electric vehicle owners. ČEZ is also investing into smart grids and decentralisation for developing digital distribution grids including fibre optic networks. Revenue from energy services, which was about USD 1 billion in 2020, is expected to double by 2025.

ČEZ Group has set out clear plans to reduce its coal generation from 21.7 Terawatt-hour (TWh) in 2020, which represents about a third of the company’s total electricity generation, to 14.0 TWh in 2025, and to 6.5 TWh in 2030, following the phase out of coal in 2038. This pace is not aligned with the 1.5°C scenario which requires the company to be net zero by 2035. Based on projected emissions between 2020 and 2035, ČEZ Group exceeds its carbon budget by 31%. The company needs to accelerate its coal capacity reduction and increase its investments in low-carbon generation, which only represented 4% of its growth CapEx in 2020.

ČEZ Group’s transition plan contains neither financial consideration nor any details on how it was informed by scenario analysis. Apart from high-level discussions of European and national regulatory changes impacts, no evidence was found that ČEZ Group conducted scenario analysis and stress testing to understand its climate-related risks and opportunities. The company’s transition plan does not include any future considerations of its gas-fired assets. This undermines the credibility of ČEZ Group’s long-term planning.

ČEZ Group needs to double its targeted scope 1 and 2 emissions reductions in order to align with its 1.5°C pathway. Additionally, ČEZ Group had not set enough intermediate targets at gaps up to 5 years between the reporting year and its longest target endpoint. The gap in targets between 2030 and 2050 represents a lack of planning on how to achieve carbon neutrality and operate in the low-carbon economy. The company can improve by setting more long-term targets to cover a sufficient proportion of its asset lifetimes.

In 2020, ČEZ Group invested about USD 44.4 millions in low-carbon research and development (R&D), equivalent to 3% of its total CapEx, which is more than ČEZ’s R&D expenditure in 2019, but still below the expectation that electric utility companies should be investing 5% of CapEx in low-carbon R&D. The company can improve its reporting by breaking down its R&D expenditures by technology area including project details to assess the maturity of the technologies in which it invests.

ČEZ Group committed to achieve carbon neutrality by 2050. The company plans to phase out coal by 2038 and to increase its low-carbon generation from nearly 60% (including nuclear) in 2020 to about 70% in 2030.

ČEZ Group plans to reduce its emissions intensity by closing or selling coal power plants and by developing its wind, solar and nuclear capacity. The company also focuses on expanding its energy services business in Czech Republic, Germany, Northern Italy and Poland.

In 2020, ČEZ’s coal and lignite-based generation decreased by 3,357 GWh, partly through closure of Prunéřov I power plant. Two new 1.2 GW units at the Dukovany nuclear power plant have been granted a permit. The company plans to more than double its gas-fired generation by 2030 compared to 2020.

The company reduced its emissions from 444 gCO2e/kWh in 2013 to 330 gCO2e/kWh in 2020, though this rate was not compatible with the company’s 1.5°C pathway. There was a small increase in renewable capacity from 2.7 GW in 2015 to 2.9 GW in 2020.

ČEZ Group’s plans to close its coal power plants, whilst increasing renewable and nuclear capacity, are consistent. However, the company aims to increase gas generation without plans for investments in carbon removal technologies.