Critical Analysis of Proposals for an Amendment to the Supported Energy Sources Act

Critical Analysis of Proposals for an Amendment to the Supported Energy Sources Act (The Ministry of Trade and Industry)

Chamber of Renewable Energy Sources
17 April 2013

The Ministry of Industry and Trade (MPO) is preparing some amendments to Supported Energy Sources Act No. 165/2012 Coll. Those who had expected that the new supported energy sources act combined with the National Action Plan of Renewable Energy Sources approved by the Government would bring stability of the business environment were wrong. The development of RES technologies within the National Action Plan of Renewable Energy Sources by 2020 was questioned by the Government itself. In the proposal of the State Energy Policy the Government planned to stop the operational support to the renewable energy sources by 2015. The current proposal for an amendment to the Act stops the operational support to all renewable energy sources put into operation as early as of 1 January 2014.
The aim of the amendment to the Act is the effort to stop the continuing growth of the energy prices. Such aim can only be agreed with. However, in conflict with this declared aim, the The Ministry of Industry and Trade proposes to subsidise combined production of energy and heat on a basis of coal, waste incineration and moreover, introduce an operational support of nuclear energy in form of the so-called capacity payments.
The proposal for an amendment to the Act retroactively shortens the support payment time to 10 years. However, both Act No. 165/2012 Coll. and the previous legal regulations guarantee a claim of the operator for support for the energy generating plant life, i.e. 30 years for small hydroelectric power stations and 20 years for other RES. There is a new obligation of the RES operator proposed – to submit economic data on return on investment in ten years after putting the technology into operation. If the operator fails to document that investment has not been repaid yet, it will lose the operational support guaranteed to operators for the life of the technology under the existing Act. Retroactive amendments to the Act will lead to hundreds or thousands of actions and lawsuits against the State. The absolute majority of the credits for RES have been provided with maturity of more than 10 years. As a result, banks – if the amendment is adopted – will have to transfer almost the entire volume of credits for RES to classified credits that will need to be restructured. It is obvious that such changes will lead to insolvency of a number of RES operators. The submitter of the amendment to the Act should explain why the amendment supports and protects artificially overpriced anonymous photovoltaic power plants put into operation in 2009 and 2010 that are protected against solar payments as a result.
The proposal cannot be understood otherwise than as an intentional damage of investment in the already installed plants for the production of energy from renewable energy sources. The proposal itself already has negative impacts on the perception of the Czech Republic as an attractive economic location. The proposal not only discourages foreign investors from entering the Czech Republic but will also lead to a massive departure of investors from the country. Although the amendment is not yet legally binding, it leads to a massive uncertainty of investors, financing banks and cooperating partners. In addition, the amendment puts further existence of jobs created in the field of RES in the Czech Republic in recent years at risk. Its adoption would have negative consequences for the regional creation of values as contracts for the construction of facilities using RES, their commissioning and operation are awarded to local businesses and partners.

More information...