Czech law allowing renewable energy support cuts heads for approval

The Chamber of Deputies today advanced a government amendment to the Energy Act to its final reading. The amendment is intended to allow the government to reduce the amount of state budget funding for renewable energy sources. Known as Lex OZE III, the bill as originally submitted was primarily intended to amend the rules for storing electricity and aggregating its generation and consumption—that is, for aggregation and storage. The government wants to add its plan to limit support through amendments. Deputies today registered around four dozen amendments.

Consideration of the bill concluded today’s session of the Chamber of Deputies. Deputies will meet again next Tuesday.

Finance Minister Zbyněk Stanjura (ODS) spoke on Wednesday about the plan to reduce the state’s costs for renewable energy sources. The government wants to assess more precisely and individually the profitability of operating solar power plants, particularly those commissioned in 2009 and 2010. Subsidies will be provided only after this assessment. As it did this year, the state plans to allocate CZK 8.5 billion for renewable energy sources next year.

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. According to the Ministry of Finance, the current rate of return of 8.4 percent for plants commissioned between 2006 and 2012 can be reduced to as low as 6.3 percent in line with European rules.

The opposition ANO movement has warned against these changes. Its shadow government leader, Karel Havlíček, said they undermine investor confidence in the Czech Republic. According to the Solar Association, the changes could lead to some operators going bankrupt.

Ivan Adamec (ODS), chair of the Economic Affairs Committee, who submitted amendments that would enable the support cuts, pointed out today that this does not mean he will vote for them. He assured deputies that the committee would examine them very carefully. He noted that after a press conference was held one day, he submitted the proposals the next day as a government deputy.

According to the Ministry of Industry, the amendment should improve the management of power balance in the grid and, for example, allow customers to regulate their consumption in line with current energy prices. Czech legislation has so far lacked rules governing these conditions, which has hampered development. The amendment should also provide customers with an independent electricity price comparison tool and other consumer protection measures.

The price comparison tool will make it possible to compare offers for electricity and gas supplies, including contracts with spot prices. It will be intended for customers taking electricity at low voltage and for gas customers with annual consumption of up to 630 MWh, meaning primarily households. Under the law, it will be an information system of public administration. The Energy Regulatory Office will manage the price comparison tool. The amended law should also prohibit electricity traders from making a contract conditional on a customer agreeing not to share electricity or to a limit on the amount they can share.