Turning down the light

SLOVAKIA is experiencing a boom in the construction of solar power stations. Following the adoption of a law last year to support generation of electricity from renewable resources investors came up with hundreds of projects in which, thanks to the generosity of that support, methods to harness the sun’s rays to generate power predominated. But the higher-than-expected interest surprised the government, which has now responded by tightening licensing requirements for new solar power station projects. It says this has been done in order to avoid complications in power distribution and the stability of the national transmission network. But investors and energy experts have reacted with dismay, claiming that the energy sector, with its relatively long-term returns on investment, needs stable conditions for doing business.

On March 17, a new solar power plant in Kľúčovec, near Dunajská Streda, was put into service. It was one of the first to emerge from the renewable energy pipeline. Slightly ahead of it, at the end of 2009, a solar power station with an installed capacity of 950.4 kWp (kilowatts-peak, a measure of maximum generating output under ideal conditions) in Buzitka was also connected to the grid.

SolarLand Holding SK I says on its website that the Kľúčovec photovoltaic power plant, with an installed capacity of 445 kWp, can generate electricity to cover the needs of 150 households with an annual average consumption of 3,500 kilowatt hours.

“We currently have 40 projects prepared, of which eight already have valid construction permits,” Juraj Celler, deputy chairman of the board of directors of SolarLand Holding SK I, told the Hospodárske Noviny financial daily, adding that this type of mid-sized power station costs approximately €1.6 million.

Solar power plant projects have mushroomed across Slovakia as investors have taken advantage of the law on support of renewable energy sources which came into effect September 1, 2009. The law was prompted by Slovakia’s commitment to source 14 percent of its energy needs from renewables such as biomass, hydroelectric, wind and solar power by 2020. The law introduced financial and administrative support mechanisms for producers of electricity from renewable sources, as well as from combined heat and power plants. It increased from one to 15 years the period during which guaranteed prices would be paid to so-called ‘green’ energy producers.

In late September the Regulatory Office for Network Industries (ÚRSO) set new purchase prices for electrical energy generated from renewable sources. According to this regulation, producers of electricity generated from solar energy get the most, the SITA newswire reported. Prices range from €425 to €430 per megawatt hour (MWh) depending on the installed capacity of the solar power plant. The price of power generated by wind farms was set at just over €80 per MWh, while the price of electricity generated from geothermal sources is over €195 per MWh. Hydroelectric plants with an installed capacity of up to 1 MW get over €109 per MWh of electricity generated, while the price of the same amount of power generated by hydroelectric plants with an installed capacity of between 1 and 5 MW was set at almost €98 MWh. The price of biomass-based power ranges from €113 to €126 per MWh.

Investors immediately presented a number of projects to construct solar power stations with aggregate installed capacity amounting to hundreds of megawatts. But on November 27 the national transmission network operator, Slovenská Elektrizačná Prenosová Sústava (SEPS), announced via its website that, as the authority responsible for maintaining balance between consumption and production of electricity in Slovakia, it would issue go-aheads to solar energy projects with an installed capacity of between 1 MW and 4 MW only up to an aggregate installed capacity of 120 MW.

“SEPS has decided on an aggregate installed capacity of 120 MW on the basis of a study elaborated by Žilina University,” SEPS spokesman Igor Gallo told The Slovak Spectator.

This limit was used up in less than a week. By December 3, 2009, SEPS had received a total of 97 applications for go-aheads. The limit of 120 MW was reached after the 57th application was opened so SEPS returned the remaining 40 envelopes to investors unopened. The prospects of these remaining projects being realised now look dim.

“SEPS plans to evaluate the influence of solar power stations on the transmission network at the end of 2011,” Gallo said.

This was not the last step to curb the enthusiasm of investors in solar power generation. In early March the Slovak parliament adopted a revision to the law on support of renewable energy sources which lowered the limit on installed capacity for which investors do not need a licence from the Economy Ministry from 1 MW to 100 kW (or 0.1 MW). Even those plants which fall beneath the 100 kW limit can only claim an exemption if they are built on the roofs of buildings. The law comes into effect as of May 1.

The Slovak Renewable Energy Agency (SKREA), an NGO which was set up to support the development of renewable energy generation in Slovakia, and which specialises mainly in the area of solar photovoltaic energy generation, has criticised the revision to the law as well as its adoption in parliament as non-transparent and unfair.

“The revision uncompromisingly restricts the development of business in photovoltaics in Slovakia and is happening only a few months after the law on support of renewable energy sources, which is supposed to secure the development of renewable energy sources in line with Slovakia’s obligations towards the European Union,” Zuzana Voderadská from SKREA commented.

SKREA said it regards the revision and the way it was passed as being ‘below the belt’. It also questioned the plausibility of a law which only a few months after its adoption was revised by the same government, so that conditions originally intended to support the photovoltaic solar energy market now discriminate against it.

“The combination of this revision with the 120 MW limit set by SEPS will result in complete paralysis in the photovoltaic market until the end of 2011 at least,” SKREA stated.

But other energy specialists agree that the original law was too generous to investors in the photovoltaic market.

“The system, according to the original law, gave too much encouragement to investors to start building solar power stations,” said Vojtech Hollan, the spokesperson of the Energy Centre Bratislava, a non-governmental consulting organisation which promotes the rational use of energy and utilisation of renewable sources of energy. This, he said, resulted in a situation in which investors without proper experience of energy production submitted projects based only on the prospect of a fast, stable and certain profit.

As Peter Marčan from the Energy Security Institute said at a workshop organised by the institute on March 24, the current level of support makes investments in photovoltaic power stations attractive. The prices for which distributors purchase electricity generated from solar energy are high, the cost of the technologies they use fell by as much as 40 percent in 2009, and the installation of solar panels is easy and fast. But in the end, he said, it will be the consumer who pays all the costs connected with the production and distribution of green energy.

Slovenské Elektrárne (SE), Slovakia’s dominant power producer, does not view the legislative environment in the country regarding renewable energy resources to be easy to navigate.

“From the viewpoint of SE experts, projects of renewable energy resources have one basic limitation,” Jana Burdová, the spokesperson of Slovenské Elektrárne (SE) told The Slovak Spectator. “This stems from lack of a long-term strategy of support from the legislative aspect. During the time being the state defines this support via setting of tariff prices which distributors pay producers for electricity depending on the particular kind of renewable energy resources used for its production. For each company this defines the basis for further decisions to be made on the focus and development of its activities.”

SE, which already uses biomass and water for production of power, also wants to further harness energy from the sun. It is preparing two solar power stations to be located near or within the premises of its power stations in Mochovce and Nováky.

“We are negotiating with distribution companies about conditions for phasing in our facilities in the west and the east of Slovakia,” said Burdová. “We assume that we will put both photovoltaic power stations, with an installed capacity of 1 MW, into operation in October this year.”

The fate of renewables in Slovakia

The Economy Ministry sees a place for renewable energy sources within the energy production mix in Slovakia. With regards to meeting the 14-percent commitment of Slovakia, Miroslav Jarábek, the head of the Power Industry and Fuels Department at the Economy Ministry, said at the workshop organised by the Energy Security Institute that his department sees huge potential for using biomass for the production of heat, but “not to produce electricity at any price in regions and push it into the grid.”

“Because it may happen that when we build all the power generation facilities that have been announced so far then we will end up with excess capacity some time between 2028 and 2035,” he explained. “But people will always need heating.”