Petr Dubinsky

Parliament Approves Law To Kickstart Renewable Energy Projects

The government will decide on the adequacy of support for the production of electricity from renewable sources by its regulation. The so-called internal rate of return (IRR), simply the return on investment in a renewable resource over the duration of the aid, will range from 8.4 percent to 10.6 percent. Today, the Chamber of Deputies decided to do so when approving the Senate’s amendment to the amendment to the Act on Supported Energy Sources. The House originally accepted the government’s proposal, which reduced support to 6.3 percent. The Senate then added other amendments to the draft. The law will now be signed by the president.

In July, after the draft was approved in the Chamber of Deputies, the Solar Association warned that the House version of the amendment could be liquidating for thousands of companies. The Minister of Industry Karel Havlíček (for YES) stated in the Senate that the parliamentary form of the law would harm everyone completely.

According to OTE, the total annual contribution to supported resources in the Czech Republic last year amounted to 45.4 billion crowns, which was roughly the same as a year earlier. Since 2006, over 430 billion crowns have been paid out to support POZE in the Czech Republic. Last year, the state spent 27 billion crowns on the subsidy, the rest was paid by customers in electricity bills. Havlíček has previously said that the support of photovoltaics alone will total almost 600 billion crowns, while it contributes only 2.6 percent to electricity generation.

The amendment also provides for higher taxation of solar power plants. The power plants from 2009 have not yet been subject to a levy; they will now be subject to a levy on the purchase price of ten percent and a green bonus of 11 percent. The fees for power plants put into operation in 2010 will increase to 20 and 21 percent.

Minister Havlíček has previously said in the Chamber of Deputies that if the IRR of solar power plants were 8.4 percent and at the same time the solar tax on projects from the so-called solar boom was increased by ten percent, it would bring four to five billion in the state budget for solar tax. CZK. According to data from the Electricity Market Operator (OTE), 29.1 billion crowns went to support solar power plants in the Czech Republic last year.

Among other things, the Chamber of Deputies inserted into the law the exemption of electricity in transport from the fee for renewable sources. It also approved transitional support for heating plants. According to the Senate regulation, the government could set this year’s January 1 as the beginning of the period for which support will be provided. The Senate version also includes operational support for solar power plants. It will allow the state, according to its decision, to announce an auction for the purchase of electricity from photovoltaic sources. It will depend on the discretion of the government. The proposal was previously welcomed by the Rainbow Movement and appreciated by the Association of Modern Energy. The Senate version also introduces support for small hydropower plants modernized in the period after the floods in 2002 until the end of 2005. The right to support will last for 30 years from their modernization.

The Senate also inserted into the law an amendment prepared by the Ministry of Industry, which introduces into law the European Directive of 2018 on the promotion of the use of energy from renewable sources in transport, the so-called RED 2. The proposal approved by the Senate does not include an increase in the share of the bio-component in petrol. This proposal was tabled in the House, but deputies rejected it.

Havlíček considers the law to be key. According to him, it will allow to draw once and for all a thick line behind the photovoltaic system built in 2009 and 2010. He told the deputies that the Senate version gives some opportunity to those who have invested fairly in photovoltaics to continue to function. “At the same time, there is room to support modern resources,” he said, failing which the state would not be able to effectively support the domestic heating industry from next year.