Czechia faces billions in damages and arbitration over renewable support changes, association says

Solar industry representatives say that, following approval of an amendment to the Energy Act, Czechia faces billions in damages and arbitration. In their view, the changes, which are intended to limit some spending on renewable energy support, completely change the established rules and could have devastating consequences for the sector. The Solar Association said this today. The Ministry of Finance had previously rejected the criticism, saying the changes are primarily intended to improve monitoring mechanisms.

The Chamber of Deputies today approved an amendment to the Energy Act that introduces, among other things, more precise, individual assessments of the profitability of solar power plants with a capacity of more than 30 kilowatts that were commissioned in 2009 and 2010. Their operators will, for example, have to inform the market operator each year by 15 December whether they will be entitled to support the following year. The state plans to allocate 8.5 billion crowns to renewable energy next year, the same as this year. Under the current rules, the Ministry of Industry and Trade (MPO) had originally budgeted 31.2 billion crowns for 2025.

According to the association, changes to renewable energy support will undermine entrepreneurs’ and investors’ confidence in the state. „It is completely absurd that the government is trying to plug holes in the budget by breaking the state’s commitments to investors and violating Czech and European law. This move threatens the state with billions in losses, undermines companies’ competitiveness and delivers an unprecedented shock to banks. Three foreign investors are already preparing arbitration proceedings,” said Jan Krčmář, executive director of the Solar Association.

The association says the changes impose bureaucratic requirements that most entities will be unable to meet. Krčmář said they will burden not only large operators but also, for example, schools, municipalities, agricultural cooperatives, and small and medium-sized businesses. „The government is imposing bizarre obligations on them. For example, a nursery school head would have to know how much electricity will cost on the European market after 2030 and track down thousands of invoices and documents, or face a fine of up to 50 million and the complete loss of support,“ Krčmář said. Each report contains about 400 items, he said, and each would require checking thousands of invoices. In some cases, the association says, individual checks are practically impossible.

„The changes to support for operating the power plant proposed by the ministry will significantly affect the financial calculations behind our original investment project, which had to be financed with a loan. They will also reduce our income by hundreds of thousands of crowns a year and undermine efforts to balance our budget,” said the hospital in Hranice na Moravě.

The Ministry of Finance (MF) had previously rejected the criticism. „The primary aim is to improve the process for checking and reviewing the parameters in question, particularly for photovoltaic installations commissioned in 2009 and 2010 with a capacity of more than 30 kW. A substantial share of these operators’ revenues comes from taxpayers’ money, so the Ministry of Finance sees nothing unusual in the state wanting to conduct broader checks of this spending from the state budget,“ said Ondřej Macura from the ministry’s press department. He added that the proposed measures are intended to prevent overcompensation, which distorts the market. According to him, overcompensation also places an unnecessary burden on taxpayers.