Czech senate trims renewable subsidies in bid to cut prices

Companies producing electricity from renewable sources of energy will be left with less state support after the Czech senate approved scrapping some renewable subsidies from January 2014 on Friday.

Solar power stations installed as of 2014 will be denied any state support while wind, hydro and biomass power plants will be eligible if they have construction permits in place before the end of this year and start commercial operation by 2016, according to information provided by a senate spokeswoman on Friday.

However, the changes will not affect subsidies for hydro plants with less than 10MW installed capacity which will still be eligible for subsidies in 2014.

The bill also decreased the upper limit of the state support for renewables to Czech koruny (Kc) 495.00/MWh (€19.18/MWh) from Kc583.00/MWh.

The measure is believed to result in cheaper electricity prices for industrial customers and households and should take some pressure off the state budget. The renewable industry should also become more competitive.

The senate’s decision comes despite the country producing 2.9TWh of electricity from renewables in the second quarter of this year, doubling the amount from the previous quarter, according to information provided by the Czech parliament.

Traders have told ICIS that previous incentives given to the photovoltaic producers were too generous ( see EDEM 20 August 2013 ).

”It worked two ways – as a solar producer, either you had guaranteed fixed price which was above the market or you had a market price plus the fixed premium. So they were making more money than those producing from other sources of energy,” a Czech market participant said. Karolina Zagrodna