PV subsidies under scrutiny November, 2009: Incredibly high returns have resulted in much more PV capacity than expected in the Czech Republic. Politicians want to slash the generous support – but due to a government crisis this may have to wait until 2011 © Michael Kottmeier / photon-pictures.com  This PV system in Prague – built in 1999 with colored solar cells from Czech company Solartec s.r.o. – foreshadowed the Czech PV industry’s ambitious plans. Now the industry fears it may lose political support. Investors in the Czech Republic are making too much money on PV. At least that’s what the Ministry for Industry and Trade (MPO) says – which in turn has triggered an uproar from the Czech PV industry. At their current level, subsidies for solar electricity are »no longer a necessary state guarantee for the industry’s existence, but rather a guarantee of profits without taking into consideration the market situation,« wrote MPO spokesperson Tomáš Bartovský on Aug. 25. Currently, Czech system operators receive about 50 euro cents (73¢) per kWh for a period of 20 years – and that in a country with irradiation levels that are comparable to Germany. Since module and system prices have decreased considerably in recent months, operator profits are now edging into the double-digit domain. The goal isn’t to revoke the feed-in law, underscored Bartovský in an interview with PHOTON International. Rather, the ministry has discovered that the rate of return for solar electricity producers far exceeds the amount that can be earned with electricity from wind, hydroelectric, and biomass. The Ministry for the Environment (MZP), which is contributing to the development of the draft legislation, agrees with this point of view. »Support for PV systems is to be adjusted so that its rate of return conforms with that of other renewable energy sources,« says Petr Holub, director of the MZP’s Department for Sustainable Energy and Transport. 100 MW milestone reached Czech PV growth statistics seem to corroborate the different ministries claims. PV’s growth puts all other renewable technologies to shame: as of Sept. 1, the Czech Energy Agency (ERU) counted 2,583 PV systems with a total power of 102.71 MW. That’s twice as many as at the start of the year. In the same period of time, only five wind parks were built with a total nominal power of just 30 MW. And the growth of installed biomass power is also growing much slower than PV: 20.3 MW of biomass have come online since the start of the year. In light of this rather unbalanced development, it would appear that an adjustment to the subsidy levels is more than appropriate, agrees Karel Merhaut, vice chair of the League for Ecological Alternatives (LEA), a non-profit advisory platform for the support of renewable energies. »PV’s advantage is considerable,« he claims. But he’d rather see stronger subsidization of other renewables than a cut in solar electricity support. Even though the expansion rates in Germany’s small eastern neighbor are impressive, they can’t compare with Bavaria – the bordering southern German state is somewhat smaller in size but a bit more populated than the Czech Republic (12.5 million vs. 10.4 million). Bavaria installed 426 MW of PV power last year (see PI 1/2009, p. 30). »The current market is still too young,« says Merhaut, emphasizing that there was no significant PV growth in the Czech Republic until 2007. If the MPO has its way, »it’s like changing the rules at the beginning of the game,« he adds. Many PV companies in the Czech Republic therefore feel the ministry’s plans are »a dirty trick« designed to stifle a market that is just starting to flourish. The MPO, as well as larger energy providers, have a traditional dislike for renewable energies, claims Merhaut. Political chaos stymies new law The current Minister of Industry’s curriculum vitae shows a close relationship with the traditional energy industry: Vladimír Tošovský spent his entire career thus far working at the state energy company, and its successor company, as well as leading the state transmission system operator CEPS a.s. It seems unlikely that he’ll be able to pass any new law that trims solar subsidization before the year is out. »It may be possible to reach a compromise on this question in 2009, but subsidies won’t change next year,« says MZP official Petr Holub. That’s due to the ongoing political crisis in the Czech Republic. Since the Conservative/Green Party coalition collapsed in early 2009, an interim government has ruled the country. That government is made of civil servants and business representatives – among them Tošovský – put together by the head of the Czech office for statistics, Jan Fischer, upon request from the country’s president. Several attempts have been made, and failed, to open the path to new elections by dissolving the parliament. Thus the Czechs won’t be voting on Oct. 9, or in November, but rather apparently not until the regular election schedule next spring. Until then, the government selected by the president will have to have its reform plans approved by parliament, where it won’t be able to rely on a majority vote. Moreover, most Czechs don’t want to scare off investors. »We are obligated to guarantee investment protection,« according to MZP’s Holub. Anywhere from 5- to 30-percent cut possible The ERU has also given its two cents on this debate. Every year, this independent regulator sets the feed-in tariffs and the »green bonus,« which is paid for the kilowatt-hours consumed in-house. ERU bases its tariffs on investment costs and electricity price developments in the country. In November 2008, when ERU set the feed-in tariffs for 2009, the assumption was a system price of around €5,000 ($7,310) per kW (see PI 1/2009, p. 28). In the interim, investment costs are closer to an average of €3,500 ($5,120), according to market sources. This price development is a reflection of the module price crash, which is also being felt in Bohemia and Moravia. This fall in prices raises issues with two paragraphs in the Czech Renewable Energy Law: one paragraph calls for a maximum annual degression rate of 5 percent. The other says that the goal of feed-in remuneration is to ensure that investors can pay off their systems in 15 years. Thus the ERU has already said that it could imagine a degression rate of 15 to 20 percent, if the law is changed accordingly, says Petr Klímek, who has been active in the Czech PV market since its beginning, and is currently responsible for sales of the Czech subsidiary of inverter manufacturer Fronius International GmbH. Klímek believes that the MPO plans to introduce an even higher degression rate. Considering the figures used by Bartovský in his announcement, Klímek’s assumption seems reasonable: solar module prices have dropped by 40 percent, and therefore some PV projects are experiencing payback periods of just around 5 years, claims the MPO spokesperson. If the ministry wants to return to the 15-year rhythm, tariffs will have to be cut by about one-third. Still, both LEA’s Merhaut and Klímek feel that’s an exaggeration. »Cutting subsidies by 9 percent, as in Germany, would already cause problems for installers,« says Merhaut. Klímek draws the line at 20 percent, as does Gerhard Travnicek, the head of German wholesaler IBC Solar’s new office in Prague. »That would result in levels comparable to Germany,« he estimates. A €3,500 ($5,118) per kW system that delivers an annual yield of 900 kWh per kW, could still produce a 6 percent rate of return with subsidies that are 20 percent lower than their current level. If the framework of the current law is exhausted – which is what the industry expects will happen – prices in 2010 will decrease by about 5 percent. Electricity from a system with less than 30 kW of power would then receive 12.25 CZK (70.57¢) per kWh, while larger solar power plants will receive 12.15 CZK (70¢). The green bonus would then equal 11.3 CZK (65.1¢) or 11.22 CZK (64.6¢). At such prices, PV will remain a lucrative business in the Czech Republic during 2010. Neelke Wagner © PHOTON International, November 2009 Duplicate only with allowance of PHOTON Europe GmbH, Aachen, Germany  back