Czech banks want EU clarity on changes to renewable energy scheme

* Banking group says members have granted 4-5 bln euros in loans

* Group worried by retroactive changes planned by Czech government

* EU assessing renewable energy installations from 2006 to 2012

By Foo Yun Chee and Robert Muller

BRUSSELS/PRAGUE, June 1 - The Czech Banking Association (CBA), whose members include the country’s biggest lenders, has urged EU state-aid regulators to clarify the legality of proposed changes to the Czech renewable energy scheme affecting billions of euros in loans.

Implemented in 2005, the Czech system grants feed-in tariffs over a period of 15 to 25 years and also provides green bonuses to electricity produced from renewable energy sources such as hydropower, wind, solar, biomass, biogas and geothermal.

Yet the banks which financed these projects have long been campaigning against proposed retroactive changes relating to tax aspects of the system, which could undermine the profitability of renewable projects and ultimately could affect the banks’ chances of getting repaid.

The proposed changes date back to 2010 but need EU approval and are worrying, the CBA said in a letter to European Competition Commissioner Margrethe Vestager dated April 19 seen by Reuters. Vestager is tasked with ensuring a level playing field in the 28-country bloc.

“The uncertain conditions are always very unpleasant for any business. The longer this uncertainty lasts, the more unpleasant the situation is, because the banks, in good faith, used substantial loan facilities,” CBA head Pavel Stepanek told Reuters.

“The main reason for my letter was to call on the appropriate European authority to shorten as much as possible the period of uncertainty regarding the notification of the state support for renewables,” Stepanek said.

CBA members have provided between about 4 billion euros ($4.5 billion) and 5 billion in loans to finance renewable energy projects.

Commission spokesman Ricardo Cardoso said the EU competition enforcer was assessing whether the scheme complies with the bloc’s rules and it was in close contact with the Czech authorities. The Czech government had no immediate comment.

The EU is looking at renewable energy installations from 2006 to end-2012. Schemes put in place since January 2013 were approved by the EU watchdog in June 2014.

France and Germany have called for Brussels to draft common rules on the design of national support schemes and that there should be no retroactive changes to existing measures.

The CBA’s members include KBC unit CSOB, Erste Group’s Ceska Sporitel, Deutsche Bank, Raiffeisenbank, Commerzbank, ING and UniCredit.