E15 Weekly - Hrozba nevypsání podpory pro obnovitelné zdroje

2.11.2016, 06:00

Czech energy watchdog causes repeated disruption in sector with threat of not authorizing promotion for renewables

The Energy Regulatory Office is causing serious disruption in the Czech energy sector. Headed by Alena Vitásková, the ERO has again failed to publish the pricing decision determining the promotion for renewable energy sources for the next year, despite this being initially due for end of September. The pricing decision for the vast majority of “green” power plants from 2006 – 2012 is, thus, still uncertain. The Czech renewable energy sector needs stability and predictability, not repeated disruption.

The ERO argues – as it did last year – that this delay is due to the ongoing inquiry on possible state aid by the European Commission (EC). From a legal standpoint, however, this argument does not hold. The EC has not issued any binding decision indicating that the promotion is unlawful.

As Director of the Alliance for Energy Self-sufficiency Martin Sedlák explains “Promotion for renewable sources could only be suspended if the European Commission found it to be incompatible with the EU internal market. The text of the pricing decision on authorizing support from last December indicates the same. But nothing of the sort is under discussion, nor has the EC suggested any such thing to the Czech Republic.”

An intensive consultation process was held this year, involving the Ministry of Industry and Trade and associations representing individual renewable energy sources. Lenka Kovačovská, Deputy Ministry of Industry, has confirmed that “the whole RES sector, including plants put into operation between 2006 and 2012, can be certain that the promotion is legitimate and no one is being asked to return it.”

Veronika Hamáčková, Director of the Solar Association, has expressed the association’s full support to the Ministry of Industry, saying that “the Ministry of Industry did all it could during negotiations with the EC to stabilize renewable energy sources”. She added that the Solar Association itself also went to Brussels several times and that, through combined efforts and technical documentation, the EC should be reassured that “there is nothing at all wrong with Czech promotion for renewable energy sources.”

This is echoed by the Czech Chamber of Commerce, which in a statement by its President Vladimír Dlouhý stressed that disruption to investors’ current expectations has a long-term negative impact on the private sector’s willingness to finance energy investments. In his words, “This could ultimately damage the Czech Republic’s reputation as a stable country with a predictable business environment.”

Jaroslav Hanák, President of the Czech Confederation of Industry and Transport, also in September warned against repeating last year’s situation, underscoring that major economic losses, potential job losses and irreparable damage to the investment environment in the Czech Republic were avoided last year at the very last minute.

“If the promotion is not authorized in the end, we are talking about losing thousands of jobs in energy and agriculture, hundreds of municipalities without heat from biogas stations or biomass,” added Veronika Hamáčková from the Solar Association.

About the dispute over authorizing promotion for renewable energy sources:

Refusal to authorize promotion for renewable energy sources primarily applies to plants installed between 2006 and 2012, but also to co-firing plants.

The EC does not anticipate that promotion for sources “under review” should be suspended. A similar situation arose in neighboring Germany, for instance, where the EC reviewed the promotion system several times but it was kept ongoing. The threat of suspending promotion, therefore, makes no sense from a legal standpoint.

The pricing decision issued at the end of 2015 indicates that promotion will be suspended only in cases where it would be in conflict with the Act on Promoted Sources or it would be incompatible with the EU internal market. Neither of these conditions apply in this case.