Government against rapid price hikes on electricity

The massive boom in photovoltaic electric generation plants gets a red light from MPs. The government has proposed changes to subsidies for renewable energy sources to the Chamber of Deputies - which they approved. The goal is to prevent rapid price hikes for electricity next year.

According to estimates by the Energy Regulation Authority, there will be as many photovoltaic power plants connected by the end of the year to be the rough equivalent of the output of a nuclear power plant (e.g. cca 1,600 MW). The estimated increaes in resources for subsidies to photovoltaic electric plants will come to CZK 18.9 billion. From the standpoint of impacts, this amount has forced an increase in electricity prices to end users of approximately 12.7 % for households and 18.4 % for companies.

For this reason, the government has proposed measures to ensure that the price of electricity for end users will not increase by more than 5.5 % for both households and wholesale customers. The amount of supports for solar energy will be fixed at CZK 370 per MWh. This will require a contribution of CZK 11.7 billion from the state budget.

The government is taking 3 measures:

1. Increasing the levy on taking land away from agricultural resources and a newly-set method of revenue sharing from these payments with the Ministry of the Environment as well.
Revenue to the state budget of cca CZK 1. 7 billion
2. Implementing a levy of 26 % for electricity production from solar energy from equipment brought into operation in2009 and 2010.
Revenue of cca 4.2 billion.
3. Implementing 32 % gift tax on emissions permits granted in2011 and 2012.
Revenue of cca CZK 4.8 billion

In addition, the government is counting on participation from the state budget of CZK 1 billion.

"From 1 March of next year, photovoltaic power plants which stand on agricultural land will not be supported, with the exception of those which are on buildings, and in those cases with a maximum performance of up to 30 kW. Subsidies for so-called island photovoltaic operations will also not be provided. Simultaneously, tax holidays for renewable sources were cancelled, as were linear depreciations of the costs for acquiring renewable energy sources. The qualified estimate is that the measures will decrease installed performance by roughly 700 MW, and, in that case, the government will save nearly CZK 8 billion in subsidies," explained Prime Minister Petr Nečas on how the subsidy limits would appear.

Why Worry About Solar Power Plants?

The government points out that the high subsidies for electricity produced from renewable sources, its guaranteed duration and the right of priority connection have caused great interest among investors in the construction of solar power plants. This interest peaked at the beginning of this year, when the volume of approved assessments issued exceeded by several times the capacity the Czech electricial system is capable of accepting.

Who Caused This?

The huge development of photovoltaic power plants was not caused by Petr Nečas and the current governing coalition of the ODS, TOP09 and VV political parties. In February 2005, a law on subsidies for renewable sources of electricity was approved in the Chamber of Deputies by MPs from ČSSD, KDU-ČSL, Unie svobody-DEU and KSČM.