By Ing. Bronislav BechNIk, Ph.D.

Moratorium

3rd February 2010 Czech transmission system operator EPS requested all main distribution systems operators (EZ, E-ON, PRE) to stop permitting of new renewable energy power plants due to virtual risk of instability of electricity grid caused by intermittent renewable sources, especially photovoltaic and wind. Distribution System Operators (DSO) met the requirement 16th February 2010.

Despite many previous promises, the moratorium is still in force. According to the statements of the energy cartel SRES (Czech Association of Regulated Energy Companies, members are EZ, E-ON, PRE and   EPS) the moratorium will be closed after amendment of respective legislation, especially Act No. 458/2000 Coll. (Energy Act) and Act No. 180/2005 Coll. (Act on Promotion of RES).

Both of the mentioned amendments are announced this year. Ministry of Industry and Trade is in close cooperation with Energy Regulatory Office and SRES to prepare amendments of respective legislation. Unfortunately adoption of the amendments is not anticipated before September 2011.

24th March 2011 The cartel SRES stated that the moratorium will continue until September at least. Impact of actually installed photovoltaic and wind power plants onto reliability and stability of transmission and distribution grids will be analyzed over the following months from April to August 2011. The findings of the analysis will be published in September 2011. Based on the findings the moratorium will be eventually revoked. Besides of that the SRES argues actual installed capacity of photovoltaic power plants is higher than limit in NREAP for 2020 (see below).

Potential market is reduced to off-grid systems. New market opportunities in the Czech Republic are sought for photovoltaic without subsidies by Czech RE Agency. On the other hand, parity with price of electricity for households is expected in the coming years. Unfortunately it is impossible to connect PV system without permission of the distribution system operator even if the installed capacity is in the order of kilowatts.

Legislative Changes during the Second Half of 2010

Any discussion of legislation in the parliament is accompanied with a negative media campaign against photovoltaics. Many people in the Czech Republic, for example, believe that the lighting onto photovoltaic panels with electricity produced by diesel generator could be economically viable when feed-in tariff is about 40 ct/kWh, because such information was published in mainstream media.

25th August 2010 The government approved the National Renewable Energy Action Plan (NREAP). For photovoltaics is in the NREAP defined a target of 1,650 MWp in 2010. For the following years, the target is incremented by 5 MWp yearly up to 1,695 MWp in 2020. In the upcoming amendment of Act No. 180/2005 Coll., the target of NREAP is used as a cap, regardless that NREAP was by European Commission intended as a guidance and the values should be minimum targets.

Cumulative installed power of PV power plants reached 1,820 MWp in 2010. Actually the installed power of PV is close to 1,900 MWp (installed power of all power plants is about 20 GWel). The target for 2020 was actually exceeded by more than 200 MWp. The earliest date of revision of the National Action Plan is expected at the end of 2011.

22nd October 2010 ERO Decree No. 300/2010 Coll. amending Decree No 475/2005 Coll. provides a new values of technical and economical parameters used for calculation of Feed-in Tariff (FiT). The overview of parameter values development shows that the values in the last year have tightened dramatically, see Table 1.

October 2010 Energy Regulatory Office approved the change in Rules of Operation of the Distribution System (PPDS) No. 2 / 2010 EZ (21. 10.), E-ON (26. 10.) and PRE (27. 10.). They define the rules for putting power plants into the service--from the power plant connection to the grid through the test operation to continuous operation and closure of the relevant treaties.

3rd November 2010 The parliament approved the so-called ‘little fast’ amendment to Act No. 180/2005 Coll. The amendment is withdrawing support for installations on land and for systems over 30 kWp from 1st March 2011. For off-grid systems, the support is withdrawn from 1st January 2011, but the operator could connect the power plant to the grid until 1st December 2011 to obtain support as of 2011.

12th November 2010 The parliament passed an amendment to Act No. 586/1992 Coll. on Income Tax. The amendment removes the possibility for exemption from income tax in year of putting into operation and in following 5 years (the so-called tax holidays) for all producers of electricity from renewable sources. Moreover, the amendment introduces an obligation of 20 years constant depreciation rate.

14th November 2010 The parliament approved the government‘s further amendment of Act No. 180/2005 Coll. The amendment introduces a multi-source funding support for electricity from RES due to fears of an unacceptable rise in electricity prices. First, the amendment introduces special taxation of photovoltaic power plants installed in 2009 and 2010 the rate of 26% from purchase price and 28% from green bonus. Second, it introduces a gift tax on the price of emission allowances in 2011 and 2012. Third, the amendment increases the fees for the exemption of land from agricultural land fund, on average, four times. At the same time E-ON announced reduction of electricity prices by up to 20% for small business customers, for households it was announced a reduction of 10%.

Actual Conditions as of March 2011

Actually the feed-in tariff is 7.50 CZK/ kWh (0.31 /kWh or 0.43 US$/kWh, according to the actual exchange rate) and green bonus is 6.50 CZK/kWh (0.27 /kWh or 0.37 US$/kWh). De jure the remuneration is applicable only for systems up to 30 kWp installed on buildings (roofs and facades). De facto considering the moratorium, no new system can be connected to the grid. Moreover, there is no longer support for ground-mounted systems and for systems over 30 kWp in the Czech Republic.

So-called ‘solar tax’ is applied to revenues of PV power plants with installed power over 30 kWp and commissioned in 2009 and 2010. The ‘solar tax’ is 26% of feed-in tariff and 28% of green bonus and will be levied in years 2011 through 2013. Even with the ‘solar tax’ photovoltaic is still profitable especially for ground-mounted PV power plants over 1 MWp, with payback time less than 15 years.

Energy Regulatory Office (ERU) provided 12,898 licences by March 1st 2011 with total licensed power 1,958.38 MWp. Installed power really connected is smaller, by preliminary information it is actually just below 1,900 MWp.

Ing. Bronislav Bechnk, Ph.D., is Senior Expert of Czech RE Agency, a non-profit organization which promotes savings, renewable energy sources and sustainability (www.czrea.org). Bechnk is a member of the editorial board of the professional online magazine TZB-info and guarantor of Renewable Energy and Savings section of the magazine. He is also an external staffer of the Brno University of Technology, Faculty of Civil Engineering.