In November, the Czech parliament voted to halve feed-in tariffs for PV installations over 30 kW connected to the grid in 2011. In a country that will now have more than 1.2 GW of installed capacity, compared to just 50 MW two years ago, this drastic change in policy is sure to end only one way -- poorly. Though the obvious comparison to the Spanish bust of 2009 has been beaten to death, it is, without a doubt, accurate in this instance.
Czech officials had set a goal of 1.63 GW of installed capacity by 2020, and they have almost achieved it ten years ahead of schedule. Congratulations should be in order, right? Not quite. While the country has almost reached its goal for installed capacity by offering some of the most generous FIT rates in Europe, the subsequent gold rush of PV development has caused electricity rates to rise and prompted widespread grid instability. Thus, in an effort to curb the development and all the unwanted problems it brings with it, the Czech Republic will cut off its domestic solar market at the knees. Considering the Czech Republic will be one of the top five national markets this year, this is a disastrous move for the country, and bad news for the rest of the solar industry.
Clearly, the Czech feed-in tariff scheme went awry. What could officials have done to avoid the impending bust? First, they should have offered much lower FIT rates that were more in-line with their solar aspirations. Of course, hindsight is always 20/20. They could also have followed the Italian model -- gradual reduction of FITs with an eye toward long-term growth.
With a goal of 8 GW by 2020, Italy certainly has more room to grow than the Czech Republic. Looking to slow development to a sustainable pace, the Italians installed a 1.2 GW cap in 2010. This cap was reached early in the year, and many developers missed out due to classically Italian ‘procedural delays.’ Fortunately, there was a 14-month grace period during which systems could be connected and still receive the 2010 FIT rates, which sustained solar development for the remainder of 2010. Now, with more than 3 GW connected to the grid in Italy, officials have planned to decrease FIT rates gradually throughout 2011. While development may slow, it will not stop altogether.
A more in-depth look at the Czech, Italian, and Spanish booms (and in some cases, busts) can be found in the December issue of PV News, in addition to the exclusive European and North American solar feed-in tariff trackers. Also featured is a piece by Shayle Kann about utility PV procurement strategies, a comprehensive industry news digest, utility-scale PV pipeline updates, and large-scale project tracker.
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Full European and North American Feed-In Tariff Trackers are updated in every issue of PV News.