International investors are preparing to take legal action against the Czech Republic after the government announced plans to retroactively cut subsidies for renewable energy. The proposed measures could not only cause widespread insolvencies and economic damage but also violate both national and European laws.
The Czech government intends to reduce subsidies for existing renewable energy power plants retroactively. Opposition MPs, industry associations, the Chamber of Commerce, and the Solar Association have highlighted factual inaccuracies in the proposal and warned of insolvency risks for thousands of companies. The cuts would breach national and European laws, posing significant risks for the Czech state. Investors from Germany, Austria, and Switzerland have already announced plans to protect their investments through legal action. International banks are also expected to be affected. At the same time, the Czech Republic is seeking permission from Brussels to subsidize gas and nuclear power plants while extending the operating life of coal-fired power plants.
In October, Czech Finance Minister Zbyněk Stanjura presented the state budget for the coming year, drawing criticism for its significant shortfalls. The budget proposal includes plans to close these gaps by drastically reducing operating subsidies for thousands of renewable energy plants. Stanjura, alongside Industry and Trade Minister Lukáš Vlček, presented specific amendments to the Energy Act, aiming to cut subsidies for renewable energy by nearly CZK 23 billion (approximately EUR 898 million) compared to the previous year. The proposed changes would affect all subsidized energy sources connected to the grid before 2012.
“We have been warning politicians and officials for weeks that further cuts to existing feed-in tariffs threaten thousands of operators, including international investors, as well as small and medium-sized enterprises and households,” said Jan Krčmár, Managing Director of the Czech Solar Association. “The Czech Republic is already lagging far behind countries like Germany, Austria, Poland, and Romania in expanding renewable energy. Further destabilization of the sector and the alienation of domestic and foreign investors would severely hinder the urgently needed development of new projects.”
Krčmár continued, “Retroactive cuts to promised subsidies endanger existing energy generation plants and send a disastrous message that legal guarantees can be revoked at any time. Who would risk investing in the Czech Republic when they could choose more stable markets like Poland or Romania?”
The Czech parliament is set to vote on the government’s proposals in November. “We hope MPs will consider the substantive arguments we have put forward and avoid steering the Czech Republic away from its planned climate targets,” added Krčmár.
