Czech Republic ends FIT program, extends solar tax

16 September 2013

The upper house of the Czech Parliament on Friday passed a bill that ends feed-in tariffs (FITs) for all renewable energies and extends a tax imposed on solar PV plants. The Czech PV industry body is set to take legal action.

In a highly anticipated vote, the Czech Parliament's Upper House on Friday passed a controversial bill for renewable energies that was previously approved by the Parliament's lower house in August.

The bill now needs to be signed by Czech President Milos Zeman, who has already declared he will approve any decision of the Senate rather than exercising his presidential veto.

The bill ends FIT support for all types of renewable energy starting January 2014, with the exception of wind, hydropower and biomass projects that secured construction permits this year and are completed in 2014. Furthermore, the bill extends the 28% tax currently applied retroactively on solar PV plants larger than 30 kW electrified in 2010. The 28% solar tax was to be in force until the end of this year, however the new bill passed on Friday brings an open-ended 10% tax on these installations.

Czech Photovoltaic Industry Association (CZEPHO) press officer Milos Cihelka told pv magazine that the group "is now looking for legal means to repeal the law."

When it initially introduced the solar tax in 2010, the government argued that solar panel prices had fallen significantly and the laws did not allow integrating this fall into the purchasing prices for electricity from solar power plants. Thus, the state had argued, the number of new solar PV plants and consequently the subsidies paid to them increased sharply.

Critics say solar plants owners should not pay for the lack of a balanced governmental subsidy plan, and that the bill contradicts existing state laws, hence the legal threats by many players.

The problem increases for smaller installations "up to 30% of which are threatened with bankruptcy," Cihelka told pv magazine.

"CZEPHO wanted to protect at least part of the sector against bad laws and thus asked for 300 kW and smaller plants to be exempted from the bill, but members of the parliament rejected the proposal," Cihelka added.

The new bill will certainly affect solar sector jobs, which will now only need to focus on the operation and maintenance of operating installations. Given last years' increased solar PV installations activity, many actors are disappointed that the bill does not at least provide for net metering. This could help secure some jobs without necessarily applying for FITs.

Cihelka said the bill did "not support residential solar power. Homeowners will not have the chance to produce their own electricity from the sun."

There are nearly 22,000 solar systems with a total capacity of more than 2 GW in the Czech Republic.

Partly state-owned energy group CEZ, which is looking to expand the Temelin nuclear power plant by 2025, welcomed the government's move, German news agency DPA reported.

Accusations of subsidy fraud

Meanwhile, the Czech Energy Regulatory Office (ERU) recently accused around 1,500 solar PV plant owners of manipulating their installations' electricity generation data, reporting higher production than is possible with the sunlight in the Czech Republic.

Solar power associations have rejected ERU's accusations, saying the Czech Hydrometeorological Institute could easily prove the data submitted by the solar plants are in line with the number of sunlight hours in recent months.

ERU has asked the State Energy Inspection to inquire into the matter.