Investors Plan To Sue Czech Government Over Solar Power Revenue Tax

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A group of renewable energy investors plan to sue the government of Czech Republic over a controversial tax on solar energy projects. The investors say that they feel duped by the policies of the government which had initially attracted investments in the solar energy sector through supportive policies.

Investors plan to sue Czech government over solar power revenue tax
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Credit: Arz | Public Domain

Eight international investors associated with the International PhotoVoltaic Investors Club (IPVIC) have announced that they will file a notice of arbitration against the Czech government. The investors will seek monetary compensation against the introduction of “retroactive and discriminatory measures, such as a solar levy of 26% on the revenues of solar installations.”

The group had challenged the tax measure at the Czech Constitutional Court but did not get the desired result. Frank Schulte, IPVIC’s General Secretary, claims that the group is left with no choice but to sue the government for monetary compensation. The arbitration claim is based on specific stipulations in bilateral treaties on the promotion and protection of investments and the Energy Charter Treaty.

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Everyone recognises that the cost of solar power generation has fallen significantly over the last few years. As a result, several governments in the developed and traditional markets, like Europe, have either reduced the subsidies or the feed-in tariffs for solar power projects. Even some new and developing markets, like India, have reduced the feed-in tariffs for power plants (India continues to offer substantial subsidies to power plants though).

While most of us would agree that solar power is now in a much better position to challenge the conventional power sources in terms of cost, governments across the world must ensure that they do not make substantial changes in their solar power policies as knee-jerk reactions to the continuously changing market conditions. Yes, the capital cost of installing a solar photovoltaic power plant has come down significantly over the last few years (mainly due to the sliding prices of raw materials), but the recent developments around anti-dumping investigations across the globe may have a substantial impact on the prices in the future.

The United States government has already implemented import duties on Chinese solar modules while the EU has proposed steep anti-dumping duties as well. These duties may be implemented retroactively and thus even the established solar power plants would not be spared. India has proposed limiting the capacity that can use imported equipment. The largest suppliers of solar modules, Chinese manufacturers, are in a very poor financial condition with several companies shut down and others defaulting on millions of dollars of loans.

Given these conditions, it would not be wise for the governments to withdraw support for the solar power project developers who are expected to face increased expenditure and limited choices. Additionally, the governments must also take a long-term view regarding the energy mix of the future. With a global emissions reduction treaty looming in the very near future, governments must look to support and expand renewable energy infrastructure instead of implementing policies and measures which could scare away  potential investors.

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Mridul Chadha

Mridul currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.

Mridul Chadha has 425 posts and counting. See all posts by Mridul Chadha