Czech Republic has designed the worst Feed in Tariff Subsidy Scheme for Solar Energy in the World.The FIT which boosted the returns for green investors to about 40% or more per year has led to a massive boom in solar installations.This has made the government sit up and decide to sharply cut the Green Subsidies being given to Solar Plants.While FIT will be cut by 50% next year for new solar installations,the government also plans to rein in the supernormal profits being enjoyed by investors in solar plants.The government is planning a number of measures to increase the payback period of solar  investment to 15 years as was planned earlier and which was reduced to 2-4 years now.The measures that are being planned are .

1) Tax on Solar Subsidies – The Czech Government which used to give a tax holiday to solar energy revenues will be withdrawn and a new tax rate will be introduced.

2) No more Free Carbon Credits – The administration will generate revenue through selling the carbon credits rather than giving it free to Renewable Energy Producers.This will remove another source of return for solar investors.

3) Rent for Power Plants on Agricultural Lands – The Government also plans to impose a Fee on Solar Power Plants that are built on Agricultural Lands.

Czech is facing a massive economic problem due to the increase in electricity prices at a time of Fiscal Compression.This has been mainly an outcome of huge subsidies being given to the solar energy producers.With almost 1.6 GW of Solar Energy being installed by 2010,the government had no other option than to clamp down and clawback some of the super-normal profits being given to solar investors.

Czech OKs tax, CO2 credit sales to fund solar costs – Reuters

The Czech government on Wednesday approved a plan to tax solar plants and use the proceeds of future sales of carbon credits, meant for firms, to keep power price hikes for homes and businesses at less than 10 percent in 2011.

The proposal is its latest effort to rein in a booming solar sector, which has raised fears of sky-high power prices because of generous subsidies for solar plants.

“The government has agreed that the financing will come from various sources,” Prime Minister Petr Necas told reporters.

“It will consist of … introducing a (tax) on subsidies that have been provided for solar energy; increasing the fees for taking agricultural land out of production; and the use of the carbon emission credits.”