Czech Senators attack retroactive solar tax

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On March 3rd, 2011 a group of 22 Czech Senators filed a complaint with the Supreme Court against a new Czech PV law, which introduces a 26% tax on solar energy production. The Senators are afraid of the impact of solar arbitrages against the Czech Republic in the near future.

Effective Solar Lobby

The solar tax imposed by the Czech Government basically means that the current FiT rates will be reduced, when they were supposed to be guaranteed for 20 years. The Government is justifiying the tax by claiming that the proceeds will be used to reduce the increase in household and industrial electricity prices over next three years.

However, the Czech Photovoltaic Industrial Association (CZEPHO) and a group of PV investors, which are entirely against this decision, have since gone to great lengths to lobby against the solar tax in the Senate, working tirelessly over the past two months. The groups have now successfully managed to obtain a special legal appraisal proving that the solar tax stood for a considerable violation of the Czech constitution.

Good Outlook

The Supreme Court of the Czech Republic will now have to assess the Senators‘ complaint against the solar tax; a process which is likely to take several months. However, the odds are high that the Supreme Court will reject the solar tax legislation, since it substantially interferes with the legitimate expectations of operators of solar power plants in the Czech Republic.

Considerable Losses

Unfortunately, while the Senators‘ work is likely to make an imapct, it won’t help the solar investors who are already set to lose several million euros before the solar tax is cancelled. Based on available estimates, the incurred losses of the investors amounted to well over €10 million in the period covering January and February 2011. It is for this reason that investors will continue in their litigations and arbitrations against the Government of the Czech Republic.

New Legislative Battle

Although it seems that the battle against the solar tax will be successful, representatives of the Czech PV industry are still concerned about new “solar legislation” they will have to cope with as Czech officials have been working hard on new solar policy which may still affect solar investments in the country in the near future.

 The proposed bills which is called “Law on Supported Sources of Energy” and “New Energy Law” contains several measures aimed at constraining the future development of PV in the Czech Republic, such as:

– Maximum price cap of 6 CZK/kWh,
– Mandatory regulation of output (its disconnection) of solar power plants with installed capacity, over 100kW in case of emergency (not clarifed yet),
– Future FiT to be paid only to PV plants with maximum installed power of 100kW,
– A new price mechanism established for solar plants with capacity over 100kW 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.

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