A phenomenon of the period before 2010 was the large-scale construction of solar power plant projects in the Czech Republic. Thanks to European subsidies, poor transposition of European directives and the lack of regulation, the construction of solar projects became an ideal opportunity for speculators to cash in on subsidies and profit from the incomprehensibly unfavourable supply of green electricity to the grid.
This was not a random speculative masterstroke, but a system that apparently everyone in the energy sector knew about. Before 2010, one in five companies building solar projects in the Czech Republic was owned by an anonymous owner. The law was so imperfect that it was not a barrier to subsidy payments.
In addition to the many poor quality projects and the lack of a national strategy in terms of regional energy planning or a national plan for transforming the energy mix, the problem was mainly the overly benevolent rules for permitting planned solar plants. As a result, subsidy-driven solar parks were built by a number of entrepreneurs who were not serious about renewables and were only interested in taking advantage of short-term subsidy opportunities.
A serious mistake of the state was the overly generous payments for electricity supplied by solar power plants. Around 2010, the state itself realised this and decided to reimburse the generous payments only for projects completed before 2011, i.e. commissioned no later than 31 December 2010. Other projects were to receive roughly half the payments. This led, of course, to frantic efforts to complete projects at any cost, falsification of permits or corruption related to the effort to obtain the necessary “papers” by New Year’s Eve. It was here that the term solar barons was coined, and it is still popular with many politicians today. Unfortunately, the corrupt behaviour of Czech speculators has also damaged the reputation of solar project construction in general. The phrase ‘solar barons’ is still used as an argument by every opponent of the energy transition or climate change denier.
On New Year’s Eve 2010, about 20 companies received a stamp and a permit to operate. The most famous case is that of the power plants of the family of the well-known billionaire Zdeněk Zemek. As the police investigation confirmed, some of the power plants were completed only in disguise, raising the question of how the owners managed to obtain the necessary permits.
Police have prosecuted and charged dozens of business people – entrepreneurs, managers, and workers – in connection with subsidy fraud and corruption in the permitting of solar projects, but also dozens of people on the regulator’s side, from permitters to senior officials to technical auditors.
The Zemek case resonated most in public. Not only did they not get off the hook, but the family members paid for their fraudulent behaviour with detention. It was the “Saša – Sun” and “Zdeněk – Sun” power plants of brothers Alexander and Zdeněk Zemek. According to the court, they illegally obtained licenses on the basis of false audit reports. At the same time, they obtained the right to a favourable purchase price for solar electricity supplied to the public grid. Thus, instead of future passive income, the father Zdenek Sr. arranged for his sons to receive unconditional sentences of six years and nine months each.
However, this is only the most obvious case. Due to pressure from the public and CEZ shareholders, the police went to work and brought a number of other companies to court. They ended up in insolvency and their managers behind bars. Dozens of state officials who failed in their duties or allowed themselves to be corrupted have also been punished.
