Proposed retroactive amendments to the investment conditions guaranteed by Czech law threaten to destabilize the country’s renewable energy sector, claims the Czech Photovoltaic Industry Association (CZEPHO) in a letter sent this week to the European Commission.
In a joint show of concern with the Alliance for Energy Self-Sufficiency, CZEPHO expressed its fears that planned retroactive changes to Czech legislation guaranteeing support for renewable energy could damage the legitimacy of the industry in the country, and seriously harm future growth plans.
In March, suspicions that such changes were being planned were confirmed when the Czech government outlined its commitment to impose further measures to scale-back support for renewable energies such as solar and wind power.
Before 2011, the Czech Republic’s feed-in tariff (FIT) supported solar and wind power installations with a 20-year prescribed lifetime. However, between 2011-2013, the government introduced a 26% levy on any income generated via the FIT, reducing to 10% in 2014, but not before scrapping the FIT altogether late last year. These measures seriously altered the fiscal landscape for project owners, meaning that most have yet to register a profit from their PV or wind systems.
The latest proposal from the Czech Ministry of Industry and Trade outlines the introduction of a review mechanism even more radical. The change would retroactively adjust the guaranteed investment conditions for each individual project after 10 years and level the return on investment to just 3.5% per year.
According to CPIA, this plan is "based on a willfully incorrect interpretation of the existing legislation" and "violates basic principles of Czech and European law."
In the letter to the European Commission, CZEPHO argues that the proposal goes against the long-term position of the European Commission, which states that its member states should not interfere in the guaranteed terms and conditions for already existing projects. Their argument also runs that such measures would create huge corruption potential and destabilize many projects that initially relied on bank loans for financing.
"If these retroactive amendments come into force, the stability of investments in renewable energy, both Czech and European, will be threatened," said Marek Lang of the Alliance for Energy Self-Sufficiency. "The Czech Republic will be in danger of not fulfilling its obligation of increasing the percentage of energy sourced from renewable resources by 2020 and it will also significantly affect the trust of investors in projects of public and EU interests all over Europe."
Veronika Knoblochova of CZEPHO added: "Solar parks have already had to deal with the so-called ‘solar tax’; if they are hit with another retroactive change, this time in the form of a 10-year review mechanism, it will put banks that have provided investors with loans for financing renewable energy projects in a precarious situation."
The Czech government’s proposals are currently being assessed by the European Commission, who are expected to publish a decision this week.