Monday, August 29, 2011

Solar PV and the view of feed in tariffs from eastern Europe

When we hear about feed in tariffs in the PV solar industry in Europe, we normally think about Germany’s massively successful scheme. But we don’t hear much from the new member states in the EU.

At this summer’s Intersolar conference in San Francisco, Tomasz Slusarz from Solar PV Consulting in Brussels gave an insightful, and sometimes amusing, summary of the state of the market.

The Czech Republic’s approach to feed in tariffs is a textbook example of how not to run a scheme, he said.

“Until 2007, markets in the NMEs were very small. We saw significant growth in 2009 and 2010. In 2011 we expect 3GW cumulative capacity in this market which means 700MW-800MW installed in these countries.

“But the growth was only thanks to the Czech republic. The market grew during two years. But the market collapsed totally. 10MW were installed in 2011 only. We expect this amount next year too.”

The story of solar in the Czech Republic is a cautionary tale. Investors flocked to the Czech Republic with the promise of the highest feed in tariff in Europe. increased 17 fold between 2007 and 2009 because of a high feed-in tariff. Some 400 MW were installed in 2009 and threatened to overload their grid as the 13% renewables target was on schedule way before the 2020 deadline.

The market crashed when the government slashed FIT rates and has now turned to nuclear, said Slusarz.

“The Czech Republic now only has FITs for systems smaller than 30kW which means that the market is really slow,” said Sluzarz.

“The Czech Republic the market will be even lower - a very small market. The fact that there was such a [high] FIT that caused bad political willingness. Also, utilities are connected to the political decision makers in these countries.

“In the Czech republic they are pushing nuclear. This is one of the reasons why they are so against PV.”

But it didn’t stop there. The Czech government added a retroactive tax on power from projects commissioned between 2009 and 2010 over 30kW.

Investors were stung by the retroactive tax until 2013 of 26% for energy sold to the grid, 28% for energy consumed at source and 32% on carbon credits awarded to solar companies. The energy regulator also cut feed-in tariffs for 2011 by 50%, according to PV magazine.

The new policy had its desired effect. After the generous FIT scheme threatened to overwhelm the country’s relatively small grid, and spiked the solar market.

“In Europe the Czech government introduced a retro active tax on FIT which really diminished the credibility for NMSs for investors,” Slusarz noted.

Of his own country, Slusarz lamented: “I’m from Poland so I would love to give you good news from Poland, but unfortunately there is a big lobby for nuclear plants and no support for solar energy. However, I suppose that in 5 years the market can grow.”

Gas and nuclear may be top priorities for Poland's energy planners. Reuters reported last week that fossil fuel majors such as Chevron and Exxon Mobil are circling Poland which the US Energy Information Administration estimates has the largest proven shale gas reserves in Europe. 

In summarizing, Slusarz said that the “overheated” Czech Republic market had had its day. Slovakia had already installed 300MW of PV and was well on its way to saturation. Hungary is growing steadily at 1MW a year, while Romania remained a dark horse. Bulgaria had great potential but at above 1GW it would be difficult for the grid to have more PV installed and was vulnerable to speculation, he said.

“Poland has no market. When prices reach grid parity it will grow within 5 years maybe after it will one of the biggest markets but we have to wait because we don’t expect any support from the government.”

Even so, analysts from Executive Partners Group and Generali PPF Asset Management are advising energy investors to look east…

1 comment:

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