article, 5th February 2010, Hospodářské noviny

Unless changes are made soon to rules governing subsidies for purchase prices of electricity generated from solar power plants, the Czech Republic could face sharp rises in electricity prices. By 2012 enormous increases in the production of solar electricity will force the cost for households up by 19% in comparison with 2009. Domestic firms will be even harder hit by the generous support system for green energy and may have to prepare themselves for price increases of as much as 50% within the next six years.

If prices rise, we run the risk that large corporations, who saw the relatively cheap electricity as one of the reasons for locating their subsidiaries in the Czech Republic, will start to consider moving production out of the country. The departure of foreign capital would obviously deliver a further blow to our public finances, which would suffer from the loss of tax income while coming under pressure from increased social expenditure. Sudden increases in electricity prices also introduce the macroeconomic risk of high inflation. Support for investments into photovoltaic systems thus undermines the competitiveness of the Czech economy and threatens jobs in regions dependent on industries with high energy needs.

To counter this, the Government has submitted an amendment to Parliament, empowering the Energy Regulatory Office to reduce the purchase price of green electricity by more than the current 5%. If this proposal is adopted, customers will save 325 billion CZK over the next twenty years, which they would otherwise have to pay out quite unnecessarily. However, should the Parliament refuse to change the system, the present state support rules will enable investors to collect an unbelievable 983 billion CZK by 2036. A lucrative investment into photovoltaic systems would definitely be the deal of the century.