Czech Senate secures end to individual profitability checks for solar power plants

Solar power plants built in 2009 and 2010 will ultimately not be subject to individual checks on profitability and the appropriateness of state support. Today, the Chamber of Deputies approved the Senate’s amendment to an energy law amendment nicknamed lex plyn, removing the individual checks. The checks were intended to save the state money from the public budget allocated to support renewable energy sources.

A total of 145 of the 161 deputies present voted for the Senate version, which also received support from a significant number of government coalition deputies. The Senate had previously sought to remove the individual checks from the law, but the Chamber of Deputies overrode it in March this year.

The removal of individual profitability checks was championed in the Senate in particular by Miroslav Plevný (for STAN), chair of the Senate’s Economic Affairs Committee, who called them pointless. He warned of lawsuits and arbitration. The approved energy law amendment is primarily intended to speed up permitting for new gas-fired power plants. It is expected to shorten permitting processes by up to five years, as gas-fired power plants should provide sufficient electricity generation capacity amid the expected phase-out of coal.

Individual profitability checks for solar power plants from the so-called solar boom of 2009 and 2010 were included last year in the previous energy law amendment, with the aim of saving public funds spent on their support. The Chamber of Deputies’ opposition disagreed and also pointed to the risk of potential disputes and arbitration. The Senate unsuccessfully tried to remove the checks from that previous amendment as well. The current law sets the return threshold for support at 8.4 to 10.6 percent. Above this threshold, support is considered excessive. Today’s lex plyn amendment raised the capacity threshold for individual checks to 145 kilowatts, narrowing the range of sources subject to them.

“The lex plyn law itself is necessary and essential, and there is complete agreement on that between the Chamber of Deputies and the Senate,” Senator Plevný told deputies today.

Deputy Speaker of the Chamber of Deputies and ANO’s shadow prime minister Karel Havlíček said his movement would support the Senate version. He said the Senate version, without individual checks, sought to preserve what remained of trust in the state and the investment environment. Havlíček said, among other things, that the law would change the rules for 1,500 business owners.

Ivan Adamec (ODS), chair of the Economic Affairs Committee, ultimately also decided to support the Senate version without individual checks. He warned of the risk that neither version would pass and the bill would be dropped. The Senate version was therefore backed not only by deputies from ANO and SPD, but also by the Pirates, STAN and TOP 09 deputies, as well as some members of the ODS parliamentary group.

Under the plans of the amendment’s sponsors, a group of deputies led by Industry Minister Lukáš Vlček (STAN), gas-fired power plants are also to play a key role as backup capacity capable of stabilising variable output from renewable sources. The amendment stipulates that an investor in a gas-fired power plant must state in its authorisation application which supplier it expects to select for the plant. During the construction and maintenance of such a power plant, the applicant will also have to comply with requirements concerning the state’s security interests, as set by the Ministry of Industry and Trade.

According to the Czech Chamber of Commerce, this is a key step towards ensuring energy security and creating the conditions for new gas-fired power plants to come online. “Today’s decision comes literally at the eleventh hour. It is good that political representatives have agreed that ensuring energy security by establishing the legislative framework for new gas-fired power plants is crucial. Any further delay would postpone investment, threaten grid stability and risk higher energy prices for businesses and households,” said Zdeněk Zajíček, president of the Czech Chamber of Commerce. He also stressed that lex plyn is only the first step and more must follow.

The Renewable Energy Chamber also welcomed the lex plyn amendment, saying it would free up capacity on the distribution grid for projects that are genuinely in development and prevent it from being blocked by unrealised or speculative applications. However, the chamber considers the distinction between renewable energy generators based on capacity to be misguided. “The threshold should be 1 MW rather than 15 MW. We consider the approach adopted to be discriminatory,” said chamber head Štěpán Chalupa. He also criticised the conditions for auction-based support, which he said should also apply to small hydropower plants.

The Modern Energy Union said that large solar and wind farms with capacity above 15 MW would be designated as facilities serving the energy security of Czechia, like large gas-fired power plants. This will simplify their permitting. “The result of today’s vote in the Chamber of Deputies is absolutely crucial for the use of wind and solar power in Czechia. Permitting for the construction of large renewable electricity sources will be simplified and accelerated,” said the union’s programme director, Martin Sedlák.