Czech government moves to end support for renewables
In one of its major decisions since assuming office in July, the Czech government has decided to end support for most renewable sources of energy. The draft legislation, triggered by relatively high electricity prices, would scrap state support for new solar and biogas plants as of 2014. It would also cap the subsidies paid by consumers in support of renewable energy sources.
What followed has been called a solar boom, with the installed photovoltaic capacity skyrocketing from around 500 MWh at the end of 2009 to over 2,000 MWh by the end of the following year. For reasons that are now under investigation by the authorities, the government failed to react to the dynamic development. The bill so far has been enormous: subsidies have risen ten-fold, with industrial firms having paid over 160 billion and households another 35 billion crowns in support of renewable sources of energy.
“We have decided to level the prices of electricity. I believe everyone will be happy with that, including those who run solar plants. We decided against cancelling the solar tax altogether, as we originally planned, but we brought it down from 26 to 10 percent. So we want to cap the increase of prices of solar electricity.”
Under the government bill, solar and biogas plants put into operation after January 1, 2014, would receive no subsidies. Other renewable sources of energy, including hydro and wind power plants, would lose state support in 2015. The legislation also caps the subsidies paid by consumers. Instead of the current 583 crowns per MWh, end users would pay 495 crowns per MWh. That should help the Czech industry, says Finance Minister Jan Fischer.
The government also plans to prolong the so-called solar tax, introduced in 2010 for a three-year period in an attempt to get some of the subsidies back to the state budget. The government wants to keep the tax in place for now, lowering it at the same time from the current 26 percent to 10 percent. The government’s proposal should reach the lower house in the coming weeks. It has been praised by several MPs including Communist Kateřina Konečná who is on the environment committee.
Ms Konečná says this radical move is better than inaction which could incur more costs in the future, with all the negative effects that go with it.
“I agree that in this case, we are moving from one extreme to another. But if we don’t know how to level the support correctly, we better stop it for some time, and let’s talk about what to do to make sure Czech tax payers do not pay much more than they are already paying. If the government says they don’t know how to arrive at a suitable formula, I think it’s better to go for the extreme. Otherwise, we might wonder in a year’s time how much there is to pay.”
“What the government is doing is that it specifically targets renewable energy projects that would put into use by families, communities or small companies. It will continue support for big corporate projects such as waster incinerators or gas mining operations. This is legislation that will remove communities and small companies from the market, keeping it open for corporations.”
“We believe that we do need some reform of our energy market and making renewables cheaper would be an important part of that reform. We have in fact proposed a solar energy support scheme which would not involve any subsidies at all but the government rejected it. We believe the government’s motivation is to protect the market for big companies.”
“Over the short term, it will definitely cut costs. But over the long term, we believe it is a short-sighted approach because it will keep the Czech Republic dependent on fossil fuels which are getting ever more expensive while the renewables are getting cheaper and cheaper. We will also remain dependent on huge energy corporations which seems to be the government’s goal.”
“It’s not true that now, the support is unlimited. The limits for the support of the individual renewable sources are set down by the national action plan. That was introduced precisely to curb the payments. We believe the government should stick to the plan which according to our calculations would only increase the payments by 1.4 billion crowns.”
Mr Chalupa says that according to their calculations, subsidies for renewables could continue with the end users paying less.
The draft legislation should be discussed in Parliament in the coming weeks. It seems that it will easily win backing from both MPs and Senators although some changes to the bill might yet be made. Social Democrat Milan Urban is the head of the lower house’s economy committee.
