Wednesday

23rd Aug 2017

Focus

Scandal around Slovak solar energy industry

  • Robert Fico is said to have made sure his government's solar subsidies went to friendly companies (Photo: European Commission)

When the state-owned grid operator in Slovakia in November 2009 announced it would start accepting solar power plant applications, nobody knew about it.

“The announcement was quietly placed at the bottom corner of [the operator’s] website,” the US embassy in Bratislava said in a dispatch dated one month later, and remained unnoticed until a local newspaper picked up the news.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The operator had “summarily rejected all applications submitted to that point,” according to the dispatch, and said “the application process would be restarted from scratch five days later on a first-come-first-served basis.”

“Even those companies fortunate enough to see the news that night had little more than a weekend to complete a lengthy application and secure the necessary documentation,” it adds.

In the end, the operator is reported to have accepted applications for only “part of the day.” According to Martin Simonek, an analyst at Bloomberg New Energy Finance and a Slovak national, it closed the window after half an hour.

Good business

The government at the time - as it is today - was run by Prime Minister Robert Fico from the centre-left Smer party.

Earlier that year, he and his fellow EU leaders had agreed to binding renewable energy targets. Shortly after, his government passed a law granting generous subsidies to those producing renewable energy.

“And then they said: okay, let’s make some good business,” Martin Kretter, member of the executive committee of the Slovak Association of the Photovoltaic Industry, told EUobserver.

He accused the government of rigging the application process.

“Normal people did not know about it. Only [Fico’s] friends from politics,” he adds.

There was a lot of money to be made. The subsidy, after German example, was set up in the form of a so-called feed-in-tariff: the guaranteed purchase of generated electricity for a period of time at a premium price. That price, as was the case in Slovakia in 2010, is often several times as high as the price for electricity from non-renewable sources. The time period was 15 years.

At the same time, the price for solar panels was tumbling. China had begun to invest massively and would soon all but take over the EU market. In the time span of a couple of years, the price has fallen by some three quarters.

Logically, most money was to be made in big installations. The state-owned operator, when issuing the call, put a cap of a total of 120MW on installations bigger than 1MW.

"Those 120MW were distributed among Fico's friends," Kretter says.

Solar tennis?

The US embassy refers to “a reliable source” who “alleged that the industry has been rigged by the highest levels of government to benefit Jozef Brhel, one of a group of wealthy Slovak businessmen widely thought to bankroll - and benefit from - PM Robert Fico’s Smer party.” Brhel is also a former member of parliament.

The source is reported as having said that Fico himself was pulling strings in order to create “a regulatory regime ensuring enormous profits” and to make sure those profits would go to “Brhel-backed projects.”

The US embassy says that many of the companies whose projects were approved by the operator were unknown to industry experts and “seem to be little more than shell companies.”

As an example, it names the CTC Tennis Club, which “while it has licenses allowing it to sell vegetarian food and provide car rentals, the business is not licensed to build or operate a solar power plant - or, for that matter, a tennis club.”

Fico denies

Fico's office told EUobserver that the allegations are based on "false, fabricated constructions based on subjective, untrustworthy opinions," and "absolutely in conflict with the facts."

It added that the attribution of the 120MW of big installations was done "transparently."

"[The operator] published the criteria on its official Web page and also in the state-wide daily newspapers. All those who wanted to obtain a position of approval had already had a number of months to pass through the successful process of assessment in the regional distribution system, and thus were sufficiently qualified to submit a very simple application," it said.

Solar energy in figures: Germany is king

Europe is the undisputed sun king of the world, with close to 75 percent of globally installed solar panels. But there are big differences between countries, and Germany leads the pack.

The growing pains of the solar industry

The solar industry is in disarray. But, experts say, this is nothing out of the ordinary. It is just going through a painful but necessary process.

Solar energy

Europe’s solar energy industry has been shaken by strong competition from China. EUobserver examines whether it has got what it takes to survive.

Opinion

Managing migration: a European responsibility

"The EU now needs to bring its weight to bear, to ensure non-EU countries cooperate on taking back their nationals arriving as economic migrants", writes migration commissioner Dimitris Avramopoulos.

News in Brief

  1. Air Berlin insolvency talks begin amid 'stitch-up' accusation
  2. EU calls on Serbia and Macedonia to remain calm
  3. Schulz wants US to remove nuclear weapons from Germany
  4. Ukraine and Russia to announce another ceasefire
  5. EU to investigate Monsanto-Bayer merger
  6. US will ask Nato allies to send more troops into Afghanistan
  7. Greece to be absent at event on Communism and Nazism
  8. Czechs want observer status in Eurogroup meetings

Stakeholders' Highlights

  1. European Jewish CongressEuropean Governments Must Take Stronger Action Against Terrorism
  2. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  3. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  4. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  5. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  6. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  7. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  8. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  9. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  10. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  11. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  12. ACCAAnnounces Belt & Road Research at Shanghai Conference