Czech lawmakers axe RE support

The Czech Republic’s lower house of Parliament has voted to end support for new renewables projects and to extend a tax on existing PV installations from the start of next year, in the latest effort to curb subsidies and reduce rising power prices.

The proposal – which has yet to be approved by the Senate and signed off by President Milos Zeman – will not affect, wind, solar, hydro and biomass operations that receive construction permits this year and are completed before the end of 2014.

In 2010, the government imposed a 26% tax on solar plants to curb a boom. This tax was slated to expire at the end of this year, but will now remain in force, albeit as a lower rate of 10%.

The new law will also require renewable companies to reveal their ownership to obtain support. The amendment was designed to clamp down on abuse of the subsidies by firms with unidentified owners, following claims that politicians have also benefited.

The Czech Republic added just 113MW of new PV capacity last year, although it has more than 2GW in place, according to the European Photovoltaic Industry Association.

The country had 260MW of wind power in place by the end of 2012, according to the European Wind Energy Association.

Subsidies have helped the Czech Republic become one of Europe's biggest solar nations but have also ratcheted up electricity prices for consumers and businesses.

This year, renewable power plants are expected to get subsidies of around 44 billion crowns ($2.3bn), or roughly 1.1% of this year's estimated gross domestic product, paid partly by consumers and the state budget.

The Czech Photovoltaic Industrial Association (Czepho) has attacked the government’s decision, claiming that it will endanger jobs. The tax extension will push out the payback period for most solar projects to 15 years, according to Czepho.

The move comes at the end of a week in which the interim Prime Minister Jiri Rusnok lost a vote of confidence in the lower house, after only 93 out of 193 MPs present backed the cabinet. Rusnok handed in his resignation after failing to win the vote.

Zeman will call an early election for 25-26 October if parliament votes to dissolve itself next week. Most parties agree on an early election which is expected to see the Social Democrats returned to power for the first time since 2006.

The Social Democrats – who want to prepare for the euro and are more passionate about deeper European integration than their right-wing rivals – won the most votes in the country’s last election in 2010, but could not form a coalition.

However, analysts caution that a change of government is unlikely to reverse the parliament’s decision to end renewables support, saying that at best it is only likely to delay what seems like an inevitable move.