Brussels wants subsidies verification

5. 12. 2016 | Source: BusinessInfo.cz

Plant operators and banks fear what screening for outsized support might mean.

One drama is over, but another is on the horizon for renewable energy operators. Starting with the good news first, the European Commission has confirmed that support awarded to green power plants put into operation prior to 2013 does not contravene European law. Now the Energy Regulatory Office [ERÚ] is set to write out support amounting to CZK 37bn for 2017. “We must await the arrival of the Commission decision and look into its conditions,” said ERÚ spokesperson Michal Kebort.

The ERÚ needs to alter two price rulings, which it can process under shortened time limits. In September, it indicated that after the receipt of the notification it would be capable of offering the support within a couple of weeks.

The Commission’s decision was welcomed by renewable energy operators, the Confederation of Industry of the Czech Republic and the Czech Banking Association. But now the bad news: the renewable power plant owners are not yet at ease because the European executive body has mentioned that the notification will create a mechanism designed to ensure that the Czech state has not provided outsized subsidies.

The industry and trade ministry is now talking about a verification process that could cover support provided over the past decade. If an operator is found to have received more than it was legally permitted to obtain, the height of its subsidies could be adjusted. The ministry attempted a similar control exercise in 2013, but the screening proposal did not earn the necessary support given opposition from environmental associations and banks, the latter of which felt that the repayment of a major proportion of CZK 100m of credits awarded in the renewable energy sources sphere could be threatened. Instead, the solar tax was extended.

“Solar plants have not been involved in outsized support. Only a fraction of the plants in 2008 for example drew investment and operational support in which something [wrong] might be found. But right now we still don’t have the specific text from the Commission,” said František Smolka, co-owner of the firm Solar Global Investment.

Sources in banking circles nevertheless referred to risks flowing from the way the state decides to tackle the verification. If support was to be cut before the full repayment of loans, operators might not have enough capital to pay off awarded credits. Calculations centred on selected projects which were drawn up by Komora OZE [the Chamber of Renewable Energy Sources] for the ministry suggest that the power plants have not received excessive support. “But the screening after all leaves us with the same anxieties we had in 2013. Particularly in terms of how it might be executed. If the state was to control all plants, it would be very hard to make that practicable,” said Štěpán Chalupa, head of Komora OZE.

Originally published in E15 weekly, economic and business newsmagazine. Author: Jan Stuchlík

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