A major Chinese investor has entered the Czech energy market. The Exim Bank of China, an official, state-owned pro-export bank, has indirectly purchased Energy 21, a Czech company that is one of the largest photovoltaic plant operators in Central and Eastern Europe with 61 MW of installed capacity. Therefore, China has made the first foreign investment of this scale in the Czech Republic since the “solar tax” was extended.
The largest privately held Czech photovoltaic company, Energy 21, has a new owner. Its sole owner has become the China CEE Investment Co-operation Fund, which was established by the Exim Bank of China, which also has a majority share in the fund. The China CEE Fund purchased this solar energy company from the investment firm Mid Europa Partners, which owned it from 2010 and developed it into the largest independent operator of photovoltaic power plants in Central and Eastern Europe with an installed capacity of 61 MW.
The previous owner was Mid Europa Partners, an independent private equity fund active in Central and Eastern Europe. Its decision to pull out of the solar energy sector in the Czech Republic was certainly influenced by events of late 2015, when the chairwoman of the Energy Regulatory Office (ERO), Alena Vitásková, refused to issue a price decision establishing legally guaranteed support for renewable energy and went away on holiday. The Czech government had to come in and deal with the situation by issuing an extraordinary governmental regulation, which clearly stated that support for renewable sources is in accordance with Czech and EU law. On the basis of this statement, ERO deputy chairman Jen Nehoda issued a price decision on 29 December 2015. “Investors, however, encountered unstable conditions in the renewables sector in previous years as well. In 2010 the then government introduced a 26% solar tax, which reduced revenue guarantees for solar power plants in the following three years. Then in 2013 the government extended this tax at a rate of 10% to cover the entire lifetime of solar projects that went online in 2010. These repeated interventions in the stability of the renewables sector in recent years have essentially pulled the brakes on the development of a modern energy industry in the Czech Republic,” stated Martin Sedlák, director of the Alliance for Energy Self-Sufficiency, about the possible reasons for the change in ownership of this solar power producer.
Although foreign investors have been interested in the Czech solar energy market for quite some time, since the extension of the solar tax and with the long-term instability resulting from the Energy Regulatory Office’s interventions and changes in laws on support for renewables, this deal is the first of such magnitude. “The sale of Energy 21 is the first major photovoltaic business deal in recent years. Although many foreign investors have expressed interest, the Chinese are the first to dare enter the Czech solar energy market. The Czech government should urgently take steps to stabilize the renewables investment climate in the Czech Republic. Further interventions in guaranteed conditions or threats of shutting off support, as we witnessed late last year, will only lead to losses on investments and the tarnishing of the Czech Republic’s good name internationally,”concluded Sedlák.