Saturday, August 06, 2011

Ministry Halts Biogas Subsidies - Prague Post

Ministry halts biogas subsidies - Business - The Prague Post

Ministry halts biogas subsidies: Official explanation for the cancellation of energy funds is nothing but hot airTweet
Posted: August 3, 2011


(Video is an example of Czech biogas.)

By Emily Thompson - Staff Writer
Farmers' representatives claim the sudden halt to funding erodes the confidence of potential investors in renewable resources.

Biogas plants producing electric energy from agricultural waste and energy crops have been bubbling up on farms across the country in recent years, buoyed by the same generous government support given to other renewable energy industries, but the Agriculture Ministry took a pin to the biogas sector July 22 when it canceled subsidies for building new plants.

The decision, which came on the heels of a municipal court ruling against taxes on solar plants intended to offset the cost of solar subsidies, will affect farmers planning biogas operations and change the shape of the sector for better or worse.

"The aim was to respond to the risk of disproportionate growth in purchasing subsidized energy," said Tereza Dvorácková, spokeswoman for the Agriculture Ministry. "Another reason was financial savings."

Dvorácková added that both facility construction and energy buy-back was being funded.

As renewable energy of any type is often more expensive to produce, some politicians and analysts have warned purchasing too much of it for the public grid could cause consumer prices to skyrocket.

Since 2007, when the support for biogas plants began, the Agriculture Ministry has provided funding for 146 plants with a price tag of 2.7 billion Kc ($161 million), of which 72 have already been built and paid for, the ministry said. In total, including nonagricultural landfill biogas plants, there were 273 biogas plants in the country in July of this year, with an installed capacity of 150 megawatts, according to the Czech Biogas Association.

Farmers' representatives say the negative effect of cutting off the funding so suddenly - right in the middle of accepting applications for the next round of grants - reaches beyond farmers and agricultural companies with plans for a plant and has eroded the confidence of all potential investors in renewable energy resources in the country.

Jan Veleba, president of the Czech Agrarian Chamber, expressed this view and even suspects foul play on the part of large energy companies and politicians, who he says colluded to cut the legs out from under the competition.

"We consider it a scam that they stopped administering support - the result of work by the energy lobby to protect their monopoly," Veleba said. "We have indications that this happened at the urging of Prime Minister Necas and that this step is not an expression of the free will of the agriculture minister."

At a time when the solar-subsidy debacle is playing out in the court system and will likely lead to a slew of arbitration from investors whom it now appears were unconstitutionally taxed, state support for renewable energy is a politically sensitive subject. Jan Štambaský of the Czech Biogas Association said this is the reason for a lack of political will to continue subsidies for biogas. He does, however see a silver lining in the decision to halt funds for new plants.

"It will put pressure on the suppliers of the technology to biogas plants because right now the equipment may be more expensive than is necessary," he said. "If suppliers know the producers have one-third of their investment subsidized by the government, we don't believe the prices they charge are really the correct ones. The positive side of this is that the prices will decrease a bit and be more realistic."

Looking forward, Štambaský said though biogas is an important tool for the agricultural industry, more emphasis should be placed on producing biogas from biowaste in landfills. He estimates the 800,000 tons of waste that piles up in Czech landfills each year could be diverted to biogas plants to produce up to 5 percent of the country's electricity needs.

Currently, biogas from all sources accounts for nearly 10 percent of all renewable energy production, which makes up about 6 percent of total energy production. With the Czech Republic pledging to reach 13 percent energy production from renewable resources as part of the EU 2020 goals, biogas is not likely to evaporate anytime soon, with or without government subsidies.

"It will slow down this year and next," Štambaský said, "but it's still a good business."

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