Czech solar tax a step closer to reality

Now it is up to the country’s President to cast the deciding vote. However, pv magazine has been told is more than likely that Václav Klaus will simply ignore the amendment.

Jaroslav Dorda, managing director of Czech PV site SolarniNovinky.cz said it is probable he will not react to the Senate’s decision to introduce the tax, meaning it will automatically be approved on December 24 and come into effect on January 1. "As far as I know Mr. Klaus is likely to do nothing with that piece of legislation, which was passed by Senate."

He added that the majority of senators were against the solar tax, but since they were unable to reach a decision on the changes of the respective amendment, it was passed in compliance with legal procedures.

If the new, unprecedented amendment is adopted, PV plants that were guaranteed to receive a fixed feed-in tariff for a period of 20 years, will have to pay tax – between 26 and 28 percent – on revenues generated, which, as the European Photovoltaics Industry Association (EPIA) says, has basically shattered investor confidence.

EPIA has wholeheartedly condemned the Czech Government’s actions, saying the retroactivity fundamentally changes the conditions guaranteed to the operators of solar power plants already on the grid in 2009 and 2010. The association added that the amendment "substantially interferes" with the legitimate expectations of operators of solar power plants. "One may therefore expect a number of litigations and arbitrations against the Czech Republic government," it said in a statement.

Commenting, EPIA Secretary General (ad interim) Eleni Despotou added: "The PV sector unanimously condemns the measure; investors have based their confidence on the stability that the feed-in tariff scheme brings since it is guaranteed by the law. This decision will clearly break their trust in the renewable technology as a reliable investment and in the reliability of Czech republic as a safe place for investment."

Association members protested against the tax by sending a letter to the Czech authorities and to all Ministers of Industry in the EU, and the European Commission, on November 10. However, Dorda believes this will not influence Czech officials. He said the speaker of MPO (Ministry of Industry and Trade) responded to EPIA’s letter claiming that they had to take such action in order to prevent electricity prices from rising next year, as a result of the solar boom.

"The reality is different as without any government intervention, the electricity prices would go up only by three to six percent, as a result of the solar boom," stated Dorda. "I have seen the price lists from E.ON and CEZ – they have decreased the prices from 2011 so that the impact of PV is negligible (minor one). These companies scared the Czech public [into thinking] that prices will be increased by well over 20 percent only because of PV."

He said the decision now lies in the hands of the European Commission – if it intervenes, he says there is a chance that Czech politicians will change their opinion. "If not God bless Czech from international arbitrages, loss of rating, etc."

On November 12, the lower house of the Czech Parliament approved the amendment, despite facing fierce protests from industry, a petition and a legal analysis proving that such an amendment is not in keeping with both EU and Czech Republic’s legislation.

In what has been a heavily criticized move, it is almost certain that solar investors who commissioned plants with an installed capacity over 30 kWp in 2009 and 2010 will have to pay a retroactive solar tax. It is expected to vary from 26 percent (FIT for sold power to grid operators) to 28 percent (so-called Green Bonus payments for electricity produced and consumed in the consumption place) and will reportedly be valid for three years (2011 – 2013).