Czech law to end renewable energy subsidies gets one step closer to reality

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A proposed law to end subsidies for the renewable energy industry in the Czech Republic has gone one step further toward coming into effect, gaining approval in the country's lower house of parliament.

If the draft legislation is approved by the Senate and signed by the president, as is necessary for it to be passed into law, any renewable energy generation facility that begins operation after 31 December 2013 will no longer be eligible for the Feed in Tariff (FiT) or any other support.

The law will also set a ceiling price of CZK495 (US$25.27) per MWh to tackle rising electricity bills. The current price is CZK583 (US$30.1) per MWh.

Subsidised electricity is considered to have inflated energy prices in the country and proponents of the law hope that the end of subsidies will mean falling energy prices for consumers.

A further amendment to the law, made since the end of July when the proposal was first put before parliament, will require owners of facilities to be licensed. The aim is to tackle corruption, with owners of power plants in the Czech Republic currently able to receive subsidies while remaining largely anonymous.

The domestic political situation in the Czech Republic has recently been turbulent, with prime minister JIri Rusnok and his entire cabinet resigning on 13 August but remaining as caretaker government until an election can be called. The election, the second in three years, is expected to take place within 60 days of a motion to dissolve parliament, a motion which will to be taken on 20 August.

A ‘solar tax’ levied at a rate of 26% and applicable to solar power plants built in 2009 and 2010 will continue to be levied beyond 2013, scrapping previous plans to cut the rate to 10% for plants built in 2010. At present power station owners in the Czech Republic also have to hold a valid business licence for producing electricity.

CZEPHO, the Czech PV industry association, argued that the new legislation would be impossible to implement without putting the government in line to face expensive court actions brought by owners of renewable energy facilities who thought their investments were guaranteed a degree of certainty.

However it is unlikely this would mean a complete end to the building of new solar power capacity in the Czech Republic even if the new legislation came into effect, according to industry commentators in the country. While electricity generation would no longer be a profit-making industry, building renewable energy facilities would still save money on energy costs that could still offer returns.

Rather, the law would mean that electricity costs could be saved and that despite the lack of subsidy, the electricity produced by photovoltaic installations could potentially still give a return on investment around halfway through the expected 30-year lifespan of a PV plant.

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