17 September 2010


End of FIT for ground-mounted PV systems in the Czech Republic

Based on the amendment no FIT support will be provided for newly built PV installation on ground. This will apply to all PV parks that are not currently interconnected to the electricity grid. Based on an estimate of the Czech government it will have a tremendous impact on solar investments in the range of 700 MW – many of them belong to foreign investors.

This amendment will have to be approved by the Czech Parliament which is likely to approve it very fast in the next few days. Should that happen, this amendment will become effective from March 2011.

Based on this amendment, FIT will only be applied to rooftop and BIPV systems. In addition to that, a new FIT scheme will include neither off-grid PV systems, nor ground-mounted PV systems on brown-fields and industrial areas.

Hot political issue

The political battle over the consequences of the solar boom in the Czech Republic has become a top political and public issue in the country. The government even established a special commission which will be in charge of assessing the consequences of the solar boom on the prices of electricity and will be preparing further steps for curbing PV in the country.

Imminent Actions to Curb Current Solar Boom

Shortly before the elections of the Senate in mid-October 2010, the Czech politicians will take swift actions against the present solar boom including:

a)    Agreement on a voluntary decrease of FIT
The government declared it would start immediately negotiations on a voluntary decrease of FIT with solar investors. However, it is unlikely that an agreement will be reached on this matter.

b)    New special “eco” tax
Another option is to impose a brand-new ecological tax on solar power or on the land where PV installations are situated. According to Jakub Hajek and Lukas Nyvlt, legal advisors of the leading Czech legal office Glatzova and Co., an implementation of the new taxes on solar power would represent a substantial change of the conditions related to doing business in the Czech Republic. “In this respect we expect a new boom of legal disputes between foreign investors and the Czech state”, added legal advisors of the Glatzova and Co.

c)    Rigorous inspections of newly built PV plants
Another step the government is preparing against PV is a very rigorous inspection of the technical features of the newly built PV plants. The PV plants have to adhere to the defined technical standards. It these are not met, the Energy Regulation Office may not grant FIT for such power plants. These rigorous inspection will only be applied to PV plants with total installed capacity over 500 kWp.

d)    End of tax holidays
Last week the Czech Ministry of Finance officially confirmed that from 2011 a new law will be applied which will result in a termination of a tax exemption based on which all present PV installations are exempt from income tax for a period up to 6 years.

New Controversial Legislation

The Czech government has already prepared a brand solar legislation called Law on Supported Sources of Energy (“LSSE”) which contains several measures aimed at constraining the future development of PV in the country such as:
- maximum price cap of 6 CZK/kWh
- future FIT will only be paid to PV plants with maximum installed power of 100 kW
- a new price mechanism will be established for solar plants with capacity over 100 kW based on so called “hourly green bonuses” tied to price of electricity at the Prague Power Exchange
- solar investors will be responsible for recycling of solar modules via a mandatory fee
- a ban of construction of solar plants on all arable farm land or extremely high fees charge to the authorities for using this land in order to discourage investors from building grand-mounted SSP
- new bureaucratic barriers (such as very complicated approval procedures required by relevant authorities, etc.).

Czech PV needs Reform not Destruction

Undoubtedly, the Czech solar industry has to be reformed. A current system of the state support is too generous and the present solar boom is not sound. “The goal of the PV legislative changes however should be a reform, not a destruction of the PV industry. The Czech PV needs a creation of a stabile business environment enabling a sustainable development of the industry in the Czech Republic in the long run”, adds Jakub Hajek of the legal office Glatzova and Co.

The Czech PV seems to be at the crossroad at the moment. According to Zuzana Musilova, Secretary of CZEPHO, the local PV has to be changed. The solar energy should be primarily generated on rooftops, not on arable land.

Apparently, Czech politicians take steps to curb the current “unhealthy” pace of the solar boom. However, some of the proposed measures look like a punishment for the local PV.

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