Czech solar tax to be reviewed by Supreme Court

04. March 2011 | Top News, Markets & Trends, Industry & Suppliers, Applications & Installations | By:  Jaroslav Dorda

On March 3, a group of 22 Czech Senators filed a complaint to the country's Supreme Court against the recently applied retroactive PV law, which saw the introduction of a 26 percent tax on solar energy production.

PV ground-mounted installation in Czech, behind wire fence

The 26 percent retroactive solar tax placed on Czech's PV industry could be revoked. Image: Solarpraxis AG/Becky Stuart.

The Senators are afraid of the impact of solar arbitrages against the Czech Republic in the near future.

The Supreme Court of the Czech Republic will have to assess the senators' complaints against the solar tax. The process is likely to take several months, but the odds are high that the legislation will be rejected.

Although the news is positive, solar investors are likely to lose over several million euros before the tax is cancelled. Based on available estimates, the incurred losses of the investors amounted to well over €10 million in the period from January to February 2011. Consequently, investors will continue in their litigations and arbitrations against the government of the Czech Republic.

Lobbying

The tax imposed by the Czech Government basically means a decrease of the current feed-in tariff that was supposed to be guaranteed to investors for 20 years. The proceeds from the taxes will reportedly be used to reduce the increase in household and industrial electricity prices  for next three years.

The Czech Photovoltaic Industrial Association (CZEPHO) and a group of PV investors took great pains in order to lobby against the solar tax in the Senate over last two months. They managed to obtain a special legal appraisal proving that the solar tax stood for a considerable violation of the Czech constitution.

New legislative battle

Despite the fact that it seems as if the battle against the solar tax will be successful, representatives of the Czech PV industry are nonetheless concerned about new the solar legislation they will have to cope with.

Czech officials have been working hard on new legislation, which may affect solar investments in the country in the near future.

The proposed bills, titled the "Law on Supported Sources of Energy" and "New Energy Law" contain several measures aimed at constraining the future development of PV in the Czech Republic. They include:



  • A maximum price cap of six Czech crowns per kilowatt (kW) hour;
  • 
Mandatory regulation of output (its disconnection) of solar power plants with installed capacity over 100 kW, in case of an emergency (not clarified yet);
  • 
The future feed-in tariff will be paid only to PV plants with maximum installed power of 100 kW;
  • 
A new price mechanism established for solar plants with a capacity of  over 100 kW, based on so called "hourly green bonuses", which are tied to the price of electricity at the Prague Power Exchange; and
  • 
Solar investors will be responsible for recycling of solar modules via a mandatory fee.

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