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Too good to be true? Assessing one year of the Investment Plan for Europe


If it seems too good to be true, it probably isn’t – a thought that inevitably comes to mind seeing the European Commission and the European Investment Bank congratulating themselves for the great job they’ve done.

One and a half years after the launch of the European Fund for Strategic Investment (EFSI) – a three years initiative promoted by the Juncker Commission to catalyse new investments in Europe for EUR 315 billion – both institutions were eager to highlight investment sums facilitated through the fund and a few selected showcase projects.

But on the eve of an extension of the Investment Plan for Europe up to 2020 and in particular in light of the EU’s climate commitment sealed in Paris , a closer look seemed necessary. Did the EFSI indeed keep its promise to not only trigger large investments, but support European decarbonisation and cohesion goals?

A joint study by Bankwatch, WWF, Counter Balance and CAN Europe that’s being launched today, assesses in detail how much the EFSI has so far contributed to the EU’s climate agenda and what new investments have been made in regions which are lagging behind.

Through an analysis of the 93 projects supported by the EFSI guarantee until July 2016 the study aims at comparing the fund’s performances to both its own announced objectives and to the broader EU’s climate goals.

Best laid plans – Highlights from the study

Read the story

We’ve put together a short overview with highlights from the findings. But I want to take a closer look at the EFSI’s contribution to Europe’s climate goals.

In relation to the Commission’s announcement that a large share of the EU’s financial resources is to be climate-related, the EFSI is supposed to mobilise additional investments in the real economy and align private investments with climate and resource efficiency objectives. This constitutes a unique opportunity to foster the much-needed change towards sustainable development in the EU.

The EFSI’s fossil fuel funding

The EFSI portfolio shows a clear effort in encouraging renewables and energy efficiency projects, no doubt. Yet a concerning portion of the investments still supports fossil fuel projects.

A worrisome 15 per cent of the EFSI energy sector support was related to gas infrastructure, mostly transmission and distribution adding up to EUR 1.5 billion investments into fossil fuel infrastructure. These investments target especially Italy, Spain and Germany, at a time when those countries have repeatedly made commitments to phase out fossil fuel subsidies and where renewable alternatives to gas can further be developed.

These EFSI-supported gas infrastructure projects make gas more available and competitive and crowd out renewable energy projects and energy efficiency projects. To make sure the EFSI is not working against the EU’s long-term climate goals, more scrutiny is needed to assess whether projects are in line with the EU 2030 and 2050 climate and energy frameworks.

At the same time, the Commission’s 2050 Energy Roadmap scenarios all show a decline of EU gas consumption in absolute terms, which increases the risk that gas infrastructure becomes a ‘stranded asset’.

As a flagship initiative of the European Union, the EFSI should set a positive trend and clear fossil fuel projects off its agenda altogether.

Another look at renewables

Renewables and energy efficiency, being more prominent in the EFSI’s energy portfolio, deserve scrutiny as well. Having green energy investments supported is by no means bad, but the question that needs to be asked is whether establishing the EFSI was really needed for it, or put differently, whether the EFSI provided and additional impetus for getting the investments off the ground.

Since the creation of the EFSI, the EIB has not financed the energy sector with its existing portfolio to the same extent that it had in the past. This coincides with the high concentration of EFSI investments there. The significant drop in the EIB’s lending suggests that EFSI support may have replaced standard EIB energy lending instead of complementing it. This begs the question, was the EFSI at all necessary?

On another note, the green lending distribution appears even less progressive if broken down into countries’ allocation. The positive trend towards renewable energy investments doesn’t match the EU’s cohesion goals, with the vast majority of such projects guaranteed by EFSI located in the UK and the remaining part still focused almost exclusively on EU15 countries, leaving most of the EU13 ones behind.

If the EFSI is to play a constructive role in Europe’s decarbonisation and cohesion agendas, improvements in both the sectoral and geographical balance of investment, increased transparency, and a clear focus on genuinely sustainable projects are necessary.

Find out more in our summary story and in the full report.

Guest post: China stokes global coal growth


This article was first published on chinadialogue under a Creative Commons licence (CC BY-NC-ND 2.0).

Chinese companies and banks are continuing to drive global coal expansion, as state owned companies, backed by state loans, build coal-fired power plants across the world. This is despite commitments from China’s top leaders to deliver clean energy and low carbon infrastructure for developing countries.

The world’s largest carbon emitter aims to reposition itself as a global green power. In a joint US-China statement at the White House in September 2015, President Xi Jinping agreed to strictly control public investment for overseas projects with high pollution and carbon emissions. China won praise for promising to peak its greenhouse gas emissions by 2030 at the UN climate summit in Paris in 2015 – and trying to wean itself slowly off coal. Chinese manufacturers are now major suppliers of cheap solar and wind parts worldwide.

However, these efforts are being undercut by Chinese backed coal power plants planned and under construction from Indonesia to Pakistan, Turkey to the Balkans –as well as in Africa and Latin America. These could boost global emissions and lock developing countries into fossil fuel intensive energy systems for decades.

New data collected by chinadialogue and the CEE Bankwatch Network shows that since 2015 many new Chinese coal plant project deals have been announced and are under development. “The majority of these projects are under loan consideration by China’s policy-driven financing, and supplied by equipment from the country’s largest power generation manufacturers,” said Wawa Wang, public finance policy officer at CEE Bankwatch Network.

Chinese banks and companies are currently involved in at least 79 coal fired generation projects, with a total capacity of over 52 GW, more than the 46 GW of planned coal closures in the US by 2020.

Beijing has encouraged state owned coal companies and energy intensive industries such as concrete, steel and cement, to “go out” as part of the One Belt One Road Initiative (OBOR). This aims to open up new opportunities for Chinese companies and to build infrastructure to link China to European markets and beyond.

Who invests in coal?

KINGS OF COAL – a toolkit on coal financing in southeast Europe and Turkey.

Visit the website

New outlets

The overseas push comes as China’s power sector is struggling with severe overcapacity with the slowing economy and slashing of energy intensive industries at home. This has led to the lowest use of existing power generation capacity since 1978. Greenpeace estimates that at any given moment, more than half of China’s coal capacity lies idle.

Yet despite central government attempts to reduce its coal fired power and the toxic smog it produces, there is a surge in new approvals for power plants as a result of pushback from provincial authorities and the perverse incentives created by falling coal prices and government fixed electricity prices.

In addition, Huaneng– one of five state owned energy giants – plans to significantly boost its share of profits from overseas projects by 2020, according to its five year strategy. Its expansion will focus on coal in South and Southeast Asia, Russia and Eastern Europe; hydropower in South Asia, Africa and Europe; and wind and solar in Europe and Latin America. While the corporate strategy highlights overseas risks from war, terrorist attacks and corruption, environmental risks are not mentioned.

All this contributes to concern that China will follow developed countries’ example and simply export its carbon emissions as it moves up the global value chain, threatening any fragile international progress on emissions reduction.

Industry insiders argue that China’s coal advance will bring tangible environmental benefits by providing more efficient technologies than countries could otherwise afford. But the number of new projects in the pipeline will counteract any modest emissions savings made by “supercritical” technology, especially since China’s new, stringent standards for domestic plants do not apply to exports.

While global coal use is thought to have fallen by 4.6% year on year through the first nine months of 2015 – urgent action is still needed to avoid locking in carbon intensive resource use in the future. A third of the new capacity in the global pipeline is coal (1161/3165 GW) according to estimates a forthcoming paper by Phillip Hannam, a scholar at the Princeton Environment Institute – and nearly 90% of this is in rapidly growing Asian economies.

China’s expansion comes as the World Bank and many developed countries have stepped back from funding dirty coal. In 2013 the World Bank strictly limited coal funding and last year OECD countries including Japan and Korea promised to end public financing of coal plants overseas except to the poorest countries.

An earlier study from the San Francisco-based Climate Policy Initiative found that China had invested as much as US$38 billion (253 billion yuan) in coal fired power plants overseas between 2010-2014 and had announced plans for another US$72 billion (480 billion yuan) worth of projects (though not all with firm commitments).

Asia – a global hotspot

China’s coal footprint is particularly large in Asia. In 2015 coal-fuelled plants accounted for 68% of generating capacity built by China in the rest of Asia, and in future this is set to rise, according to an earlier paper co-authored by Hannam. In contrast, where countries built capacity without Chinese support, coal-fired plants made up only 32% of new capacity. Worldwide, the majority of China’s support to the power sector in the global south was funnelled into coal, says the paper.

Since 2000, China has overtaken Japan to become the leading exporter of coal equipment – offering “bargain” prices to energy-starved countries and increasing its share of global coal exports from zero to 37% (85GW). It may be much higher, since, where data is missing, exports are largely attributable to China.

China is the largest supplier of equipment to India, which is expected to double its coal capacity by 2031. Chinese firms account for 60% of the equipment ordered in the private sector and are involved in at least 19 projects across the country, the largest being a massive 4,000 MW plant in Gujarat, built by Huaneng and financed by the Industrial and Commercial Bank of China (ICBC)

Coal flows along the Silk Roads

Historically, coal power financing has predominantly flowed to India, Indonesia and Vietnam – but now China is diversifying with multimillion dollar projects planned in Pakistan, Bangladesh, Cambodia and Kazakhstan. Further along the OBOR corridors, coal hotspots are emerging in Turkey and the Balkans, where local players are also active. These countries lie outside more stringent European Union environmental regulations and the limitations placed on international finance.

The money and equipment flow into countries where environmental regulations and laws are weak and corruption endemic. In Pakistan alone, China is building at least 7,800 MW of new coal capacity under the China Pakistan Economic Corridor project. This includes the excavation of the dirtiest kind of lignite coal in the Thar desert – one of the world’s largest untapped coal deposits. The projects have met with protest on the streets and in the courts. In a land mark case, a seven-year old girl has sued the government for violating the rights of her generation to a healthy life by developing coal. In her petition she argues this will dramatically increase Pakistan’s carbon emissions, while ignoring the potential of wind and solar.

The Punjab high court’s objections to the Sahiwal coal plant on environmental grounds were brushed aside in 2015, since it is being fast-tracked under the CPEC. While Pakistan is desperately short of power, the economics are dubious. Sahiwal will require billions of dollars investment in new rail infrastructure to haul imported coal 1,000 km from the port city of Karachi. Petitioners say pollution around the site has already breached national air quality limits.

No transparency

Compared to others, Chinese banks are particularly opaque: “Policy driven Chinese financial institutions have yet to adopt information disclosure and accountability policies to protect the rights of affected communities. The situation is further aggravated when there is no institutional oversight of Chinese overseas financing of energy infrastructure projects and the economic, social and environmental problems they cause,” says Wang.

The information behind the map was collected by chinadialogue and Bank Watch from company and bank annual reports and available commercial data. In many cases financial data is unavailable.

A way forward

China has no road map for phasing out overseas coal investment. “The US-China joint statement is vague and can’t be implemented,” says Yang Fuqiang, senior adviser on climate, energy and environment at The Natural Resources Defense Council, a Beijing based NGO.

He is working with a team to develop green guidelines – “an implementable policy that can be adopted by Chinese financial institutions.” They are preparing their recommendations for the government at the moment.

“Now we are trying to investigate experiences from the past two years to see what we can learn and improve because OBOR is a big global strategy, and without this, investors will face many risks, including environment and climate change risks,” says Yang. “If we don’t find solutions, we will find heavy resistance from local people.”

Chinese companies overseas are already running into environmental problems as they try to reduce carbon dioxide emissions and provide jobs for local people, said Yang. In Bangladesh, police opened fire last year on villagers opposing the illegal seizure of land for the construction of the power plant by Chinese firms on the coast.

Yang’s work at the NRDC builds on a growing movement within China to hold Chinese banks to account on their green lending credentials – and a growing interest in green finance from institutions themselves. China is the world’s largest issuer of green bonds, but unless progress is made fast, Chinese money and equipment will be used to lock in dirty fossil fuel in developing countries and tarnish China’s ambitions to become a green superpower.

Emily Franklin, Zhou Jie and Robyn Maby also contributed to the data map

[Campaign update] Montenegro’s Pljevlja coal plant is running out of time to secure financing

The Czech daily Hospodarske Noviny (English: “Economic Newspaper”) is reporting today that the Czech Export Bank (CEB) and export insurance agency EGAP may not be be able to finance the Pljevlja II lignite power plant in Montenegro due to new OECD rules entering force on 1 January 2017.

The two which have supported several fossil fuel power plants abroad over the last twenty years, already burned their fingers on the Poljarnaja gas-fired power plant in the Russian sub-Arctic Siberia where they lost 5.9 billion Czech crowns (nearly 220 million EUR). Also a CZK 12 billion loan for the Yunus Emre coal plant in Turkey is facing a range of problems and postponements and most recently the arrests of several executives of Naksan, the mother company of the Turkish project promoter, in the aftermath of the failed coup in Turkey this year.

Bankwatch analysis shows that claims of Pljevlja II’s feasibility are based on creative accounting, so there’s no reason to believe that CEB and EGAP would do any better this time. Seen in this light, the OECD rules are an opportunity, not a threat, for the CEB and EGAP to leave this climate-damaging and uneconomic project well alone.

Read more about the Pljevlja power plant and other planned coal installations in the Balkans.

Guest post: The last coal plant in the Western Balkans?


This article first appeared on BalkanInsight.

Plans for the Stanari power plant date back to at least 2006. That might not seem that long ago, but an astonishing amount has changed in the last ten years.

Political commitment to tackling climate change has grown, as has the inclusion of renewable energy targets in EU legislation.

The falling costs of renewable energy, uncertainty about future payments for greenhouse gas emissions and the costs of pollution control equipment to meet EU standards have together made new coal plants uneconomic to build.

Financing is more and more difficult to obtain as banks increasingly stop financing coal. Only a handful of EU countries, like Poland, are still planning new coal power plants. Seven EU countries are coal-free already, and five more are expected to phase out coal by 2025.

Neighbouring Croatia recently abandoned plans to build the Plomin C coal plant, freeing up time and resources to invest in its plentiful renewable resources.

Against this background, Stanari is a relic from the past even before it starts work.

Not only does it run on lignite, the most polluting and climate-damaging type of coal, but neither the Republika Srpska government, nor the plant developer, EFT, seem to have noticed that EU legislation was changing while the project was being developed.

Back in 2008, pollution levels from power plants were governed by the EU’s Large Combustion Plants Directive. But, in 2010, the Industrial Emissions Directive was approved, which stipulates stricter pollution limits.

Next year, the situation will change again, with the adoption of the new EU Best Available Techniques document, which is expected to tighten standards further and introduce limits for mercury.

Stanari may operate in line with the Republika Srpska legislation, but it is unlikely to comply with current EU standards.

Stanari is the first coal power plant to be built for decades in the Western Balkans, but it had better also be the last.

Coal is a major contributor to climate change, and there is no filter that can reduce emissions of greenhouse gases.

Coal can emit dust, sulphur dioxide and nitrous oxides, but when it comes to greenhouse gases, there is no commercially available technology that can do anything about it.

Western Balkan countries may not feel responsible for a large share of greenhouse gases globally, but, as aspiring EU members, they still need to do their share to reduce emissions.

As countries that currently use energy very inefficiently compared to most EU member states they could also save a considerable amount of money by saving energy.

There is no way round it; coal needs to be phased out.

This doesn’t mean closing all coal plants tomorrow, but stopping plans for new ones is the first place to start. Climate is not the only reason: any coal plants built now will be with us for the next 40 years. If it turns out that they are uneconomic after five or ten years, we are stuck.

That is pretty much what happened at Sostanj unit 6 in Slovenia, when it became clear, even halfway through the plant being built, that its economics were on shaky ground.

The decision to build the plant had been pushed through government with little debate and ended up a disaster. The construction costs doubled to almost 1.4 billion euros with predicted losses of 70-80 million euros a year for the state-owned holding Slovenske Elektrarne during the first few years of operation.

Regional policies defy logic

Yet this lesson is not being heeded by Western Balkan governments, particularly in Bosnia and Herzegovina, where at least four new plants are planned – Tuzla 7, Banovici, Ugljevik III, Kakanj 8, and depending on how near elections are, also Gacko II, Kongora and Bugojno.

At least one more plant, Kostolac B3, is also planned in Serbia, with several more potential projects listed in its energy strategy.

Montenegro is rushing to get the uneconomic Pljevlja II project signed before new rules prevent the Czech Export Bank from financing it. Kosovo seems similarly determined to bankrupt its residents with the notorious Kosovo C.

As a private investment, no information about Stanari’s economics is available and it remains to be seen how it will stand up under current low electricity prices.

However, some recent developments raise questions. In July, the Republika Srpska authorities were widely criticised for changing the charges for the concession so that EFT has to pay 50 million euros less over the lifetime of the concession than was previously set.

Meanwhile, in the Federation of Bosnia and Herzegovina, the country’s other entity, the feasibility of the planned Tuzla 7 and Banovici coal plants also remain a mystery despite being public-sector projects.

In a recent documentary, Banovici director Munever Cergic cited Banovici’s expected cost of generation at 50 euros per MWh – although he looked as if he had just pulled the number out of thin air.

A former director of Elektroprivreda BIH, Amer Jerlagic, said in the same documentary that this figure could not be real. He explained that as electricity prices are currently very low, it is questionable whether Tuzla 7 and Banovici are commercially viable.

In Montenegro, while more data is available for the Pljevlja II plant, the conclusion is the same. The government is pushing the project against all logic, and its attempts to make it look feasible have involved numerous unrealistic assumptions.

They include the unfounded claim that Montenegro will be able to exempt the Pljevlja plant from paying for EU carbon allowances until 2026.

What is frustrating is that all of these countries have good renewable energy potential, especially in solar power. They also have huge opportunities for energy savings, and, with strong leadership, could get ahead in de-carbonisation relatively quickly.

They have relatively small levels of demand, coupled in most cases with relatively good interconnections with neighbouring countries. Yet, as a recent analysis shows, they are still investing more than twice as much in coal as in wind power.

Given all the above, perhaps it sounds unlikely to suggest that Stanari could be the last new coal plant in the Western Balkans. But why not? Much, much stranger things have happened.

For European development bank democracy is an afterthought


Twenty six years after the fall of communism, it seems democracy is under attack in a growing number of countries in the former Soviet bloc. Many of them are still struggling with economic reforms, and it is clear that both free markets and sustainable development hinge on the full application of democratic principles.

This was clear already to the founders of the European Bank for Reconstruction and Development (EBRD) when they penned down the bank’s mandate in the spirit of 1990.

Article 1 of the EBRD’s statutes defines the bank’s mandate as promoting market economies in countries committed to multiparty democracy and pluralism, and Article 2 entrusts the bank “to promote in the full range of its activities environmentally sound and sustainable development”.

As last Thursday, September 15, marked the International Day for Democracy under the theme of “Democracy and the 2030 Agenda for Sustainable Development,” it is increasingly evident that the bank has strayed away from this mandate.

EBRD countries & democracy database

Lending volumes and democracy scores for EBRD countries of operation.

Download excel sheet

Belarus is a case in point. The EBRD’s strategy for Belarus, approved last week, departs from previous ones in its assessment of the political context in the country. Among others, it cites ‘positive steps’ that supposedly provide an opportunity for enhanced engagement with the Belarusian authorities. The document mostly refers to the increased international openness in Belarus to discuss with its international partners the state of affairs regarding democracy and human rights, the release of political prisoners in August 2015, the restrictive yet lenient approach to the application of the legal framework for human rights, as well as the presidential election, which, according to the EBRD’s assessment, “while not meeting international democratic standards, was held in an environment free from violence”.

Indeed the democracy and human rights situation in the EBRD’s regions of operations has deteriorated so badly in the last couple of years that the bank capitalises on even the smallest improvements to support its engagement with countries like Belarus, widely dubbed “Europe’s last dictatorship.”

The bank has clearly decided to ignore its own mandate, or else it would have to considerably shrink its business.


Map: EBRD lending and countries’ scores in the Freedom House ‘Freedom in the World 2015’ report. In the last 25 years, the EBRD sent almost twice as much money to countries that were labelled authoritarian and partly free than to countries that were labelled free. Hover over a country to see how much money it received from the EBRD in 2015 and between 1991 and 2015, and to see its Freedom House score. The lower the number, the more authoritarian the country, the darker its colour on the map. (Country freedom rating: Freedom House; DLending data: EBRD; Map by New Internationalist)

For example, after the bank stopped approving projects in Russia following the annexation of Crimea, Turkey became the largest recipient of EBRD financing.

The Economist Intelligence Unit’s 2015 Democracy Index ranked Turkey at the 97th place. The severe crack-down on media and academia following the recent attempted coup further degrades the democratic credentials of Recep Erdogan’s government and should warrant a serious soul-searching at the EBRD about this level of engagement with the regime.

Furthermore, Libya, which fell no less than 34 places in this index and now ranks 153rd, has recently become a shareholder of the bank, and so did China, a country not really known for multiparty democracy.

The EBRD’s approach towards Article 1 of its statute has been very inconsistent. While the bank restricts investments in Turkmenistan and Uzbekistan, other authoritarian countries are not subject to the same treatment. Its approval of Egypt as a full country of operations in October 2015 does not exhibit a great deal of concern for compliance with Article 1 and raises concerns about the messages that the bank is sending to oppressive governments.

As a result, the EBRD’s failure to impose conditions for tangible improvements in the area of democracy and human rights casts doubt that it can ensure meaningful public participation in investment projects which may have adverse social impacts.

In fact, public participation in decision-making remains pitifully low even in many of the more advanced transition countries, and too often expansion of the private sector is prioritised over the rights of communities to protect their livelihoods.

Complaints to the EBRD’s accountability mechanism on energy projects in Serbia (coal), Georgia (hydropower) and Jordan (gas) are testimonies to the bank’s inability to enforce its own policies. At the same time, Bankwatch’s experience suggests that the lack of complaints from countries with an even worse track record on human rights could be the result of complainants’ concern for their safety being an insurmountable barrier to justice and practice of their fundamental rights.

There is a range of concrete measures that the EBRD needs to take. Human rights benchmarks in country strategies, specific commitments to improve human rights assessments, transparency and public participation in decision-making on the project level, and ensuring the safety of complainants are just some of such steps.

The bank has traditionally sought to improve the investment climate, and recently it has started attaching greater importance to its policy dialogue initiatives. These should hopefully enable transparency and participation, as well as access to justice for communities affected by the projects the bank finances.

The Economist Intelligence Unit warns that democracy risks rollback in much of the EBRD region and beyond: “Eastern Europe’s score in the Democracy Index deteriorated in 2015, and, since we created the index in 2006, the region’s trajectory overall has been one of regression.”

Perhaps most striking is that no less than nine of the EBRD’s countries of operation are labelled by this index as authoritarian. And the bank’s financial support for these countries is simply astonishing: last year alone, the EBRD has granted these nine repressive regimes 2.26 billion euros – nearly a quarter of its total investment volume in 2015.

Turkey, not included in this group of countries in the index’s 2015 edition, received from the EBRD nearly EUR 2 billion last year.

If a quarter of the EBRD’s annual investments goes to countries who show little to no commitment to democracy and pluralism, the bank should seriously reconsider the operational approach to implementing its political mandate. Continuing with business as usual, investing in projects in countries ruled by dictators does not help these societies.

 

 

Guest post: Renewables kept in thrall in the Czech Republic


Power production from renewable energy sources in the Czech Republic stagnates since 2013 – the year when the support system based on feed-in tariffs was removed without any replacement. No single wind power plant was built in 2015 and only a negligible number of solar photovoltaic systems were installed on Czech roofs during the last months. While the Czech Republic reaches its (very low) EU 2020 renewable energy target in advance, the actual trend with regards to the transition to a low-carbon economy is negative.

Recently I discussed the possibility of revitalising the renewable energy sector with Dirk Vansintjan, chairman of Ecopower, a successful cooperative in Belgium that has 48,000 members and owns 13 wind turbines with an installed capacity of 23,2 MW. Dirk’s reaction to my description of the market conditions for renewables in the Czech Republic was simple and clear:

“We wouldn’t build any wind turbine under these conditions. And nobody would.”

Like in Belgium and the Czech Republic, wind power needs support schemes if external costs are not included in the price of energy produced from coal and lignite.

The first step to overcome the stagnation in the renewable energy sector in the Czech Republic must be the re-establishment of operational support for wind power plants, at least those owned by municipalities and citizens. Several mayors in the Czech Republic are considering investing into a municipality owned wind power plant, yet the last one was connected to the grid in 2009. A modern wind turbine with 3 MW of installed capacity costs around EUR 3.9 million. Such a large investment can only be approved by a municipality assembly when a reasonable rate of return can be expected. No wonder then that the last municipality-owned wind power plant was connected to the grid in 2009 even though several mayors in the Czech Republic are considering investing into one.

Considering its technical potential, roof solar photovoltaic is the second most important aspect for the renewable sector. The main obstacle for its development in the Czech Republic is an unclear set of conditions by the Energy Regulatory Office (ERO). The situation is so dire, that it isn’t possible to calculate the recovery of an investment into a new solar PV system. A proposal by ERO from January 2016 would have meant advantages for large-scale energy consumers while placing increasing costs on small consumers. A campaign led by Hnuti Duha, a Bankwatch member group in the Czech Republic, resulted in massive protests against and the withdrawal of the proposal.

Almost undeterred, the ERO office chief recently declared that they will establish an extra charge for owners of photovoltaic installations – a fixed payment, independent of the amount of electricity produced. She promised the charge won’t be high enough that owners of PV installations would have to disconnect from the grid. But for the transition to a low-carbon economy, such a promise is almost ironic. The important question is whether, with the new charge in place, it would be economically viable to install a new solar PV system. Representatives of solar PV companies should be consulted in this decision. While grid costs incurred by PV owners should be covered by them, their investments shouldn’t be disqualified even before their economic viability is being calculated.

To recover the green power sector in the Czech Republic, a lot needs to be done, most importantly the set-up of non-discriminatory conditions for renewable energy producers.