Czech plans retroactive cuts for PV incentives, again

According to the Czech Solar Association, the move against solar will likely trigger defaults for thousands of PV projects. The Czech government also plans to build more nuclear power plants and has vowed to extend the lifespan of its coal-fired plants.

The Czech government has unveiled plans to build more nuclear power plants and has vowed to extend the lifespan of its coal-fired power plants, while also introducing retroactive cuts for feed-in tariffs granted to existing solar, wind and hydropower projects.

According to the Czech Solar Association, the authorities will only grant exemptions for the retroactive measures to biogas and biomass plants, but it noted that a company once owned by Prime Minister Andrej Babis has heavily invested in those sectors in recent years.

“While the rest of Europe looks to renewables to lead the way out of corona-recession, Czech aims to demolish the business environment and investor confidence and sabotage development of new renewables, risking international arbitration,” the trade body said. “Plans would likely lead to default of thousands of PV projects and companies with potentially devastating knock-on effects on banking and other sectors.”

The Czech government also plans to reduce the internal rate of return (IRR) for some renewables projects, which the Czech Solar Association still considers acceptable, by passing an amendment to the Law on Supported Energy Sources. “Solar PV projects will be most hard hit, with the acceptable IRR set at 6.3%, which in many cases is below interest rates of bank loans that are still being paid off for the projects in question,” the association explained.

Martin Sedlak, director of the Modern Energy Union, criticized the government’s latest moves. “When trying to justify their decision, the Czech government is additionally using the old EU-blame game to justify their excessive and destructive plans,” Sedlak said. “They claim that the IRR of 6.3% was imposed by Brussels, which is not true, since the number was drawn up by the Czech government itself.”

The new measure will likely affect PV projects built between 2009 and 2010, when the FIT scheme was implemented and more than 2 GW of solar capacity was deployed. In 2014, a special solar tax of 26% was imposed on FITs paid to large-scale facilities connected in 2010.

Although the tax was supposed to be scrapped after three years, the government introduced a new 10% solar tax in 2017 for another 17 years. “The levy is subject to several international court cases, one of which the Czech Republic has already lost,” the Czech Solar Association said.

The Czech Republic had installed 2.07 GW of PV capacity by the end of 2019, according to the International Renewable Energy Agency. This is actually 5 MW less than at the end of 2018 and is the same as the country’s cumulative total at the end of 2105. Although a few megawatts have been deployed in the Czech Republic in each of the past few years – thanks to the Green Savings Program for distributed generation and the country’s solar-plus-storage scheme – several PV installations have since been disconnected due to alleged fraud.

In January, the Czech government raised the renewable energy target from 20.8% to 22%. Clean energy currently supplies 15.6% of the nation’s electricity. Karel Havlicek, the deputy prime minister and minister of industry and trade, said at the time that solar power would be expected to contribute 1.9 GW of new generation capacity by 2030.

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