Czech Republic Plans to Cut Feed-In Tariff Subsidies

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The Czech government recently unveiled plans to build more nuclear power plants and said it would extend the life of coal-fired power plants, while cutting feed-in tariff subsidies for existing solar, wind and hydropower projects.

The Czech Solar Association says the Czech Republic aims to undermine business conditions and investor confidence and undermine the development of new renewable energy at a time when the rest of Europe is overcoming the effects of the new corona. The plan could lead to thousands of pv projects and corporate defaults, potentially with devastating knock-on effects on the banking sector and other industries.

The Czech government also plans to reduce the internal rate of return (IRR) for some renewable energy projects through amendments to the energy law. The Solar Energy Association said photovoltaic projects would be the hardest hit, with an acceptable internal rate of return of 6.3 per cent.

The new initiative could affect photovoltaic projects built between 2009 and 2010, when more than 2GW of solar installations were deployed through the feed-in tariff subsidy scheme. In 2014, the government imposed an additional 26% tax on large photovoltaic projects.

The government has since introduced a new 10 per cent tax in 2017 for a period of 17 years.According to the International Renewable Energy Agency, the Czech PV installed capacity was 2.07GW at the end of 2019.

In January, the Czech government raised its renewable energy target from 20.8 percent to 22 percent. Clean energy currently supplies 15.6 per cent of the country's electricity. Deputy Prime Minister and Minister of Industry and Trade Karel Havlicek said at the time that by 2030, the new pv installed capacity will reach 1.9GW.

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