As a reaction to the situation in the Czech Republic, in December 2010 the Slovak Parliament adopted tighter rules for the solar energy sector.

Powered by extremely generous feed-in tariffs, the loose rules for the issuance of permits for these energy facilities in Czech Republic has resulted in the mushrooming of solar energy projects, particularly taking into account the limited size of Czech market. As a result, electricity prices for Czech consumers have increased significantly. By means of legislative changes, the state is trying to regulate the construction of photovoltaic and wind energy facilities, which are considered by Slovak Transmission System Operator (SEPS) to be unpredictable renewable energy sources that may influence the stability of the transmission system.

Pursuant to the Amendment to the RES Promotion Act (the Amendment), from 1 February 2011 (apart from some provisions effective as of 1 April 2011), only solar rooftop facilities or solar facilities on the exterior wall of buildings with capacity not exceeding 100kW are promoted in the form of additional payment. Promotion in the form of the transfer of liability for deviations is also reduced to 1MW of installed capacity (previously 4 MW) with respect to non-photovoltaic facilities. The regulation of the transfer of liability for deviations is even stricter regarding solar facilities: this is reduced to 100kW of installed capacity (previously 4MW). Further, according to the Amendment, the Regulatory Office shall be entitled to reduce feed-in tariffs for solar and wind energy facilities without limitation, i.e. by more than 10% in respect of the next regulation period (previous regulation). The Amendment also specifies conditions for the reconstruction and modernisation of existing devices. The total costs for reconstruction and modernisation must exceed 50% of the total investment costs of the producer. The changes in the promotion scheme will not affect projects under development with a building permit effective prior to 1 February 2011 and with a use permit issued prior to 1 July 2011.

The solar energy boom in the Slovak Republic was caused by legislation unable to react to the decreasing prices of photovoltaic components due to regulation that stated that the tariff could not be decreased by more than 10% per year, while investment costs decreased much faster. To lift this restriction, amendments to the regulation were necessary. However, the new regulation, in combination with previously introduced administrative restrictions of grid operators, sharply cuts the benefit and heavily favours small residential installations under 100 kW compared to larger commercial solar projects. This follows the trend in other European countries like Spain and Germany, which have changed their promotion schemes to favour small distribution solar owners. As a result, new solar and wind energy projects in Slovakia are on hold due to the practical impossibility of obtaining the necessary permits – and, as of 1 February 2011 and 1 April 2011 respectively, also due to the restricted promotion.

Nevertheless, with an annual solar irradiation per square meter comparable to that of southern Germany, Slovakia is still an interesting market for investors. The country’s National Action Plan for renewable energy sources, adopted in October 2010, assumed that the Slovak Republic would meet its commitment primarily by way of supporting the generation of heat by biomass and high efficiency cogeneration production. Biomass is also considered to be a prospective alternative source for electricity generation.