In October, Czech Finance Minister Zbyněk Stanjura presented the state budget for the coming year and thus earned criticism because the budget proposal contains billions in gaps. The finance minister wants to close these gaps by, among other things, drastically cutting operating subsidies for thousands of renewable energy plants.
Concrete proposals for the corresponding amendments to the Energy Act were presented by Stanjura and Minister of Industry and Trade Lukáš Vlček. The subsidies for renewable energies are to be cut by almost 23 billion CZK (about 898 million EUR) compared to the previous year. The changes would affect all subsidized energy sources that went online by 2012.
“For weeks, we have been pointing out to politicians and officials that further cuts to existing feed-in tariffs would threaten thousands of operators, including international investors, as well as small and medium-sized enterprises and households,” comments Jan Krčmář, managing director of the Czech Solar Association.
Fatal signal for investments
”The Czech Republic is already lagging far behind countries such as Germany and Austria, but also Poland and Romania, in terms of the expansion of new renewable energies. Further destabilization of the sector and of domestic and foreign investors would significantly hinder the urgently needed expansion of new projects,” explains Krčmář.
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”Retroactive cuts to funding that has already been approved endanger existing energy generation plants, and they also send the fatal signal that legal guarantees can be changed at the snap of a finger. Who would take the risk of investing in the Czech Republic when they can invest in more stable countries like Poland or Romania today?”
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The Czech parliament is expected to vote on the government's plans in November. “We hope that the MPs will take into account the substantive arguments we have put forward and not put the Czech Republic on a path that will lead it far away from the planned climate targets,” explains Krčmář.
Measures violate Czech and European law
Investors from neighboring Germany, Austria and Switzerland have already reacted to the government's draft and threatened to initiate international arbitration proceedings for breach of the Czech Republic's obligations. It would not be the first court case of this magnitude. Earlier this year, the Czech Republic lost an arbitration case regarding the solar tax and was ordered to pay damages.
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This decision will serve as a guide for foreign investors in future disputes. The planned cuts would affect all PV systems built before 2012 and would result in significant revenue losses for thousands of small energy producers, including households, cities, schools and farmers. (hcn)
