On 26 September 2016, the Czech Regulatory Office (ERO) issued Price Decision No. 5/2016 (the “Decision”), which set out rules for the provision of state aid to certain renewable energy sources in 2017 pursuant to Art. 165/2012 Coll. on Supported Energy Sources.[1] Financial support is provided to achieve the goals set out in the Renewable Energy Directive[2] and the National Action Plan for the Czech Republic.[3] The Decision was issued after repeated controversies following the lengthy notification process for state aid for renewable energy sources with the European Commission. Consequently, the Czech Regulatory Office decided that the support provided in accordance with the Decision would not be paid to operators of energy sources for which financial state support was not approved by the European Commission as of 26 September 2016. Such an exclusion means that most operators of renewable energy sources will be unable to claim this support.

The controversies arose in 2015 when the Czech Regulatory Office refused to issue a Price Decision due to the lack of notification of the European Commission for the majority of renewable energy sources. The Price Decision for 2016[4] was later issued in the absence of the ERO chairwoman Ms Vitásková, allowing operators of energy sources without proper notification to obtain financial support in 2016. According to Ms Vitásková, such a practice led this year to the illegal provision of financial support totalling approx. CZK 42 billion.[5]

The controversy was to be resolved this year as the Czech Ministry of Industry and Trade, which is responsible for the notification process for energy sources, planned to complete the processes with the European Commission for all renewable energy sources. However, only schemes for electricity and heat generation from hydropower and biogas plants[6] have been approved so far this year.

The Czech Ministry of Industry and Trade issued a statement following the publication of the Decision, saying that other notifications would be completed in early 2017. The Czech Regulatory Office confirmed that once the notification process is successfully completed and state aid for other energy sources is approved, the Office is willing to issue new Price Decisions which would include energy sources newly approved for the provision of state aid. Similarly, the Office issued an Amended Price Decision No. 5/2015[7] following the successful notification of hydropower and biogas plants.[8]

Given the above, the financial support under the Decision may be obtained only for renewable energy power plants that started operation after 1 January 2013 and small hydropower plants and biogas power plants put into operation after 1 January 2016. The financial support is provided by the Czech electricity and gas market operator (OTE) pursuant to the Price Decisions since 2013.[9] The Czech Government[10] has decided to provide over CZK 26 billion[11] to support electricity and heat generation in 2017. The remainder of the financial support is provided by consumers via payments in support of renewable energy resources.

Other changes also include an increase in ‘green’ bonuses for current electricity generating plants and a regulatory 2% indexation of buyout prices. Support for small hydropower plants has been decreased due to the lower investment costs following regulatory changes.