CMS CEE Expert Guide to Solar Panel Installation in Czech Republic

In the Czech Republic, a rooftop PV system is usually developed and operated by a third-party developer or directly by the building owner or its affiliates. It is also possible for the building owner to develop the PV system and lease it to a third party, but this is not very common in the Czech market. 

Third-party developers need to secure the right to use the roof in order to install and operate the PV system. This is usually done by establishing an easement or lease over the property. An easement is considered a stronger legal instrument and must be registered with the Czech Land Registry, while the registration of a lease is optional and not commonly done. The establishment of a 'right to build' (právo stavby) and its registration in the Czech Land Registry can also be seen as an alternative option, although it is not yet widespread in the market. 

If the PV system is owned by a third party, the electricity produced by the PV system is sold to the owner of the building or its tenants under a Power Purchase Agreement (PPA) with the PV system operator. The operator can also sell its (surplus) production to a third party, usually an electricity trader. This requires an agreement with the grid operator. The PV system operator pays rent and other fees to the building owner, which can be offset against the consideration under the PPA, and is generally responsible for the repair and maintenance of the roof, as well as the operation and management of the PV system. The term of on-site PPAs with the building owner is often in the region of 10-15 years, but can be shorter or longer depending on the economics of the project. The terms of the PPA with the electricity traders, including the term, vary. 

Where a rooftop PV system is developed by the building owner, it is usually procured by contracting a third-party contractor for the development and a third-party supplier for the O&M services. If the electricity is to be sold to a third party, an electricity sale agreement will be required. Such third party is often the operator of the local distribution network within the industrial park, who then offers the electricity to the tenants consuming the electricity in the park.

In general, the required construction law permits consist of a zoning permit and a building permit (or a combination of them), a permit for use (possibly also a trial operation period permit) and, if necessary, an environmental impact assessment. For PV systems with an installed capacity of up to 50 kW, neither a zoning nor building permit is required.

From the point of view of energy law, the competent authorities are mainly represented by 

• Energy Regulatory Office (the main regulatory body in the sector that issues licences to produce electricity and deals with consumer protection);
• Ministry of Industry and Trade (issues state authorisations for new power sources with an installed capacity over 1 MW);
• OTE, a.s. (administers the operation of energy markets, and issues/registers guarantees of origins); and
• State Energy Inspectorate (an administrative authority carrying out inspections relating to the operation of projects and energy efficiency regulation). 

Other major electricity market participants are represented by the operators of regional distribution grids (ČEZ Distribuce, EG.D., PREdistribuce) and the operator of the electricity transmission grid (ČEPS). 

Building authorities are the relevant authorities from the construction law perspective especially in terms of issuing construction law permits.

Various regulatory requirements need to be met to set up rooftop PV systems. The most important from the energy regulatory perspective include obtaining a state authorisation to construct a new energy source (required for projects above 1MW) and a licence to produce electricity issued by the Energy Regulatory Office at the commissioning stage of project development.

Producers of electricity from renewable energy sources have priority for connection to the transmission or distribution grid, subject to available grid capacity and other conditions. Connection may be refused if there is a demonstrable lack of capacity in the distribution grid or if the reliable and secure operation of the distribution or transmission grid is threatened. 

The main steps in the distribution connection process from a legal perspective can be summarised as follows (although different rules and procedures may apply for connection to the national transmission grid):

1. submission of the application for connection to the grid to the relevant distribution grid operator and its initial assessment (a "connectivity study" may also be required, in particular if it is clear, given all the circumstances, that the PV system for which the applicant is seeking connection will affect the operation of the transmission or distribution grid, or if the PV system is requested to be connected at a voltage level of high voltage or higher);
2. examination of the application by the distribution grid operator and preparation of the draft (future) connection agreement; and
3. payment by the applicant of the first part of the share of the eligible costs within 15 days of the conclusion of the (future) grid connection agreement, structured as an advance payment of 50% of the value of the share of the eligible costs, up to a maximum of CZK 50m (approx. EUR 2m);
4. submission of the project documentation to the distribution grid operator and its review;
5. implementation phase within the period specified in the (future) grid connection agreement; and
6. commissioning the PV system and its operation test ("first parallel connection").

In simple cases, in particular where the zoning or building permit can be granted on the basis of the documents submitted by the applicant, the building authority will decide without undue delay, and at the latest within 60 days of the start of the procedure. In particularly complex cases, the statutory limit for a decision of the building authority is 90 days. 

In practice, these deadlines are often exceeded, especially in more complex situations, and the approval phases can last from six to nine months or longer. The statutory time limits may also be interrupted if an incomplete application is submitted. Once a building permit has been issued, other parties may appeal against it within 15 days (parties with the right to appeal may include the owner of the land on which the project is to be built, the owner of a construction on the land on which the project is to be built, and persons with a right of ownership or easement over adjacent land or buildings).

The legal process is fairly straightforward and the timing usually depends on the commercial positions of the parties during the negotiation of the lease or easement agreement. Regarding the easement, once the easement agreement has been signed, it must be submitted to the Land Registry and registered; the registration process takes approximately three to four weeks.

In the event of a change of ownership of the property, the rights and obligations under the lease will pass to the new owner and generally neither party can terminate the agreement because of the change of ownership.

The treatment of the PV system at the end of the lease is usually expressly agreed in the lease. It is quite common in PPAs on the Czech market that PV systems are usually transferred to the customer for a residual or symbolic value, or removed from the property.

There are no specific statutory requirements in this respect. Any sharing of costs or benefits depends on the mutual agreement of the parties involved.

There is currently no such regulation in place in the Czech Republic.

The most common obstacle to developing a rooftop or any other PV plant is associated with securing sufficient grid connection capacity with the operator of the local or regional electricity grid. If the economics of the project are based on obtaining a government subsidy, the uncertainties may relate to the eligibility for the subsidy and the level of subsidy ultimately granted.

There are (subsidy) support schemes. These arise under the regulatory framework relevant for electricity production and sale as set out primarily in the Energy Act and the Supported Sources Act. Both acts set out the basic rules relating to electricity and the RES industry while the details are specified in subordinate legislation (e.g. regulation and decrees). There is also a fairly large variety of public subsidy funds dedicated to financing RES projects, such as the Modernisation Fund, the Operational Programme for the Environment and the New Green Savings Programme. The allocation of these funds is usually managed by the Ministry of the Environment, the Ministry of Industry and Trade or special agencies controlled by the government. The subsidy programmes and rules for qualifying often vary, so it is recommended to check the up-to-date status at the outset of the development of each project.