Deloitte: Cutting Czech renewables support could lead to plant closures and major losses

The government’s proposed cuts to subsidies for supported energy sources (POZE) could, according to the solar industry, lead to the closure of up to two gigawatts (GW) of existing photovoltaic power plants (PV plants) and put the construction of further facilities at risk. As a result, public budgets would lose around CZK 141 billion in revenue by 2030. The problems could also spread to other sectors, including banking. This is according to a study by Deloitte published by the Solar Association. The Czech News Agency (ČTK) is seeking comment from the Ministry of Finance and other experts.

The state has paid subsidies for POZE since 2006, disbursing a total of more than CZK 538 billion by the end of last year. Consumers have paid billions of crowns more through their electricity bills.

Next year, the government plans to allocate CZK 8.5 billion from the state budget to support renewable energy sources, the same amount as this year. The Ministry of Industry and Trade (MPO) had originally budgeted CZK 31.2 billion for 2025 under the current rules. The cabinet has proposed, for example, individually assessing the profitability of operating solar power plants, particularly those commissioned in 2009 and 2010. The government will also pay support at a lower level than before. The current rate of return of 8.4 percent for power plants commissioned between 2006 and 2012 could, according to the Ministry of Finance, be cut to as low as 6.3 percent in line with European rules.

However, operators cannot do without more substantial operating support, according to the Solar Association, because revenue from energy sales alone is not enough. The study warns that investors may be unable to pay rent, repay bank loans and meet other obligations. If they become insolvent, operators also risk having their licence to supply electricity to the grid revoked by the Energy Regulatory Office (ERÚ). The study says this would result in the removal from the grid of solar plants with a total capacity of up to two GW and prevent the construction of up to 3.6 GW of new solar capacity.

„At present, approximately 72 percent of investments in new large-scale PV plants are made by investors who already own and operate PV plants in the Czech Republic. The cancellation or reduction of operating support therefore threatens not only the existence of plants already built, but also the future investment activity of PV plant owners,“ the study says.

According to the study, halting the construction of new solar plants would also affect GDP and households, with the impact running into tens of billions of crowns. The association says the negative effects would spill over into other sectors as well. According to the study, banks could face defaults on CZK 30 billion in loans for existing PV plants. Another consequence would be a weakening of Czech companies’ competitiveness due to a shortage of so-called green energy.

„To meet the needs of existing Czech companies, new renewable energy sources need to be built very quickly. Instead, the state has decided to eliminate even those already in operation,“ said Jan Krčmář, executive director of the Solar Association.

He warned that the proposal would also affect investor confidence. Three foreign solar investors—Enery, Voltaic Network and Photon Energy Group—have already announced plans to sue the Czech Republic.

The proposed measures for POZE are now before the Chamber of Deputies, with the cabinet expected to give final approval before the state budget’s third reading.

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