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© ICIS HEREN - Prague raises taxes on booming solar industry

2010-11-12

The Czech Republic`s lower house, the Chamber of Deputies, has approved further legislation to help Prague cover the cost of its booming solar industry. A 26% tax on power sales from solar plants over 30kW was approved by parliamentarians late on Tuesday (9th November), as was an increase in fees on solar plants built on fertile rural land. The tax will remain in place for the next three years. The allocation of EU allowances (EUAs) to power producers that generate for third parties will also be taxed at 32% in 2011 and 2012. Usually these carbon allocations are free. A vote from the upper house - the Senate - and presidential approval is expected to take place soon. Last week legislation was approved on reducing state subsidies on solar plants that come online after next March (see EDEM 5 November 2010). Because the subsidies were originally so generous, the country is now the third-largest in the EU by installed solar capacity - despite the country not being particularly sun-prone. According to local media, Prague is hoping to raise koruny (Kc) 1.7bn (€69m) from the hike in fees for solar units on agricultural land and a further Kc4.2bn from the 26% tax on sales. The so-called "gift tax" on the EUAs is expected to raise Kc4.8bn. The Czech government hopes that collectively the cash raised will stop end-user power prices increasing by no more than 5.5% year on year. State-owned power incumbent ČEZ is also likely to be hit hard by the new legislation. It was unwilling to comment on the outcome of the vote. (THE ICIS HEREN REPORTS - EDEM 14.218 / 10 November 2010)

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