October 29, 2010 / 12:56 PM / 9 years ago

Czech lower house cuts support for new solar plants

PRAGUE (Reuters) - The Czech lower house approved a bill on Friday that cuts most of the country’s exceptionally generous support for photovoltaic power plants newly built as of March 2011.

Czech lawmakers are seeking to control a solar energy boom, which has triggered fears of a steep rise in electricity prices and future power grid instability.

Generous subsidies — mainly through high regulated feed-in tariffs distributors must pay for purchases of solar power — made the Czech Republic Europe’s third-biggest solar market in terms of new capacity last year behind Italy and Germany.

This year brought a soar in new installations as investors lock in the high support before rules change.

The new law, which still requires clearance in the parliament’s upper house, limits support only to those newly built photovoltaic plants on buildings, not on land, and only to those whose capacity does not exceed 30 kW.

Existing plants built by March 2011 will keep operating under the current favorable conditions.

It scraps the subsidies altogether for “island” power plants built in 2011 that are not connected to the national grid.

“If we didn’t do anything... it would drive up the electricity prices for households by 20 percent and for industry by 23.5 percent,” Industry and Trade Minister Martin Kocourek told the lower house.

“This would be devastating for competitiveness of Czech industry,” Kocourek added.

The new law is part of wider measures that the Czech government plans to curb the photovoltaic boom and limit electricity price growth to 5.5 percent next year.

They also include abolishing 5-year tax holidays for solar plant operators as well as imposing 26 percent solar power tax and a tax for power producers on carbon dioxide credits for 2011 and 2012.

That tax will be around 30 percent, Kocourek told Reuters on Wednesday, and will mainly hit majority-state owned power group CEZ.

The parliament has already approved a law giving regulators higher flexibility in modifying the feed-in tariffs to react to changing prices of solar panels and other cost factors.

Writing by Roman Gazdik; editing by James Jukwey

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