VZCZCXRO1433
PP RUEHIK
DE RUEHSL #0509/01 3431429
ZNR UUUUU ZZH
P R 091429Z DEC 09
FM AMEMBASSY BRATISLAVA
TO RUEHC/SECSTATE WASHDC PRIORITY 0297
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHSL/AMEMBASSY BRATISLAVA 0348

UNCLAS SECTION 01 OF 02 BRATISLAVA 000509 
 
SIPDIS 
 
STATE FOR EUR/CE M. LIBBY AND J. MOORE 
 
E.O. 12958: N/A 
TAGS: ENRG EINV ECON PGOV LO
SUBJECT: SLOVAK GOVERNMENT TURNING OUT THE LIGHTS ON SOLAR POWER 
 
BRATISLAVA 00000509  001.3 OF 002 
 
 
¶1. (SBU) SUMMARY: The enthusiastic solar energy "gold rush" in 
Slovakia has hit a series of speed bumps in recent weeks and now 
faces an uncertain future, as the Slovak government's weak 
commitment to renewable energy has been further undermined by 
outright opposition from several important players in the 
domestic energy sector.  Expected legislative changes will 
concentrate authority over the solar power industry within its 
single most determined foe, likely bringing development to a 
standstill and creating a new opportunity for corruption in a 
government that already has more than its share.  END SUMMARY. 
 
¶2. (SBU) In retrospect, it was probably a bad omen that 
Bratislava was smothered in a thick fog the day the Slovak 
Renewable Energy Association held its big solar energy 
conference last week.  An overflow crowd of several hundred 
solar power entrepreneurs gathered to take part in what one 
participant called a "gold rush" triggered by recent favorable 
legislation.  Their enthusiasm quickly soured, however, when 
Jozef Mudry of the Ministry of Economy let slip that the 
government will soon allow greatly increased oversight of the 
industry by the state-owned power transmission company, SEPS. 
 
¶3. (SBU) As a chill descended upon the room, Mudry sought to 
redirect the crowd's palpable anger by asserting that the Fico 
administration is little more than an innocent bystander--that 
blame for the industry's troubles instead rests with SEPS, which 
he said is pushing for this greater authority because "it 
doesn't like wind or solar power."  The crowd, sensing a 
"you're-either-with-us-or-against-us" situation, was unmoved. 
The discussion panel was abruptly ended a few moments later, 
after an audience member launched a string of personal attacks 
at Mudry, garnering a round of spontaneous and enthusiastic 
applause. 
 
¶4. (SBU) The proposal to tighten regulation of solar power is 
only the latest effort to rollback the Renewable Energy law that 
was approved earlier this year.  The law had thrilled advocates 
of alternative energy, who were excited that it established 
generous feed-in tariffs for a period of 15 years and mandated 
grid operators to accept electricity from small-scale producers. 
 It also came as something of a surprise, as the Slovak 
government--which remains well within its commitments under the 
Kyoto Protocol, and whose energy policy has historically been 
preoccupied with nuclear power--had previously shown little 
interest in encouraging the development of alternative energy. 
As it turns out, the law seems to have gone somewhat further 
than the Fico administration was willing to defend from 
opponents from opponents of renewable energy.  SEPS, citing a 
study that it refused to release to the public, was quickly able 
to convince the Ministry of Economy to set a seemingly arbitrary 
limit of 120 MW for solar power, or little more than one percent 
of the country's total electricity production capacity of about 
8000 MW. 
 
¶5. (SBU) In addition to its lobbying of the government, SEPS had 
instituted a de facto ban on large solar power plants by 
rejecting all applications submitted to it.  This hadn't posed 
an insurmountable problem for solar power developers, who were 
able to sidestep SEPS authority simply by keeping the size of 
their plants under 1 MW.  The proposed amendment, however, will 
reduce the size of solar power plants requiring SEPS approval 
from 1 MW to 100 KW--which, in practical terms, means that SEPS 
will have complete control over the fate of nearly all solar 
power projects in the country. 
 
¶6. (SBU) MyEnergy partner Peter Badik, along with other 
entrepreneurs we spoke to at the conference, was understandably 
dismayed about the prospect of SEPS enjoying increased authority 
over the industry.  Badik described the SEPS approval process as 
a black hole and predicted that developers will be asked for 
"unofficial payments" in order to receive the necessary permits. 
 Karel Hirman, Director of the Energy Policy Department at SIEA, 
a sort of government think tank within the Ministry of Economy, 
told us at a separate meeting that SEPS had recently adjusted 
its approval process in several ways that are "absolutely wrong" 
and intended to reduce transparency.   Although Hirman is no fan 
of solar power, he criticized SEPS for trying to make policy 
rather than simply implement it and suggested--like Badik--that 
the transmission company is seeking to create an opportunity for 
private profit. 
 
¶7. (SBU) Several participants at the conference appealed to 
Ladislav Guncaga, an official at the power utilities regulator, 
to help ensure that permits are awarded fairly.  Guncaga replied 
that the process is "100% the responsibility of SEPS" and that 
 
BRATISLAVA 00000509  002.3 OF 002 
 
 
the regulator has no ability to intervene.  Neither SEPS nor any 
of the three large distribution companies in Slovakia accepted 
invitations to appear, leading the normally mild-mannered Miro 
Zeman, director of the NGO organizing the conference, to call 
them a bunch of cowards. 
 
COMMENT 
 
¶8. (SBU) Although SEPS' antipathy toward alternative energy is 
clearly due in part to a desire to avoid costly upgrades to the 
power grid, Badik commented to us that its opposition seems 
entirely out of proportion to its interests.  Besides simple 
rent-seeking, a possible explanation is that JAVYS--the 
well-connected state-owned company seeking to break back into 
the electricity market by building two new nuclear reactors at 
Bohunice--is strongly opposed to development of the alternative 
energy sector, which it sees as a competitive threat.  The 
proposal to tighten regulation of the solar industry has been 
pushed by MP Peter Pelegrini, a member of Prime Minister Fico's 
Smer party. It is yet unclear to us, however, how these and 
other, less public, opposing interests are arrayed.  We will 
report septel on the prospects facing other forms of alternative 
energy as we seek to better understand the forces and figures 
who currently dominate the Slovak energy industry. 
EDDINS