Legal Aspects of Photovoltaic Power Plants (PVPP)
From licensing and contract assignments to sanction compliance.
A photovoltaic power plant requires legal preparation ranging from land selection and permitting to connection, financing, and electricity sales. Investors must verify ownership relations, licensing obligations, supplier contracts, and the conditions of any potential subsidies. This article, prepared by our Prague-based legal team, shows how to set up a project, electricity supply agreements, and legal due diligence when purchasing an already prepared or operating PV plant under Czech legislation.
Photovoltaics as a Strategic Investment and a Legal Challenge
For top managers and investors, it is crucial to understand that installing the panels is only the final step. It is preceded by a complex process of permitting, contracting, and negotiations with distributors. The ARROWS law firm provides comprehensive legal services for PV systems, from initial land due diligence to the finalization of the grid connection, thereby protecting your investment.
If you are dealing with the construction or purchase of a PV system, do not hesitate to contact us. To set up a secure legal framework for your project, contact us at consultation@arws.cz.
This constitutes unauthorized business activity in the energy sectors. Penalties can reach tens of millions of CZK, and there is also a risk of criminal liability for statutory bodies. Do not risk penalties and have your compliance checked – contact us at consultation@arws.cz.
Connection Agreement: A Critical Point of Every Project
Securing reserved capacity from the distributor (ČEZ Distribuce, EG.D, PREdistribuce) is often the biggest bottleneck of the entire process. The connection agreement must be bulletproof. Many investors underestimate implementation deadlines. If you fail to build and commission the power plant within the deadline specified in the agreement, you will lose the reserved capacity.
Our Czech legal team will review your connection agreements and negotiate terms that reflect the actual construction schedule and protect you from losing your investment. In practice, we often see distributors dictating unilateral terms. An experienced legal team can identify and mitigate these risks.
Do you need to review an agreement with a distributor? Contact us at consultation@arws.cz.
Risks Associated with Connection and Construction
In the following table, we list the most common risks we encounter in practice and how we solve them effectively.
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Risks and Penalties |
How ARROWS Helps (consultation@arws.cz) |
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Loss of reserved capacity. Failure to meet the deadline specified in the Connection Agreement leads to forfeiture of the capacity reservation. A new application may be rejected due to a "grid capacity freeze". |
Negotiating amendments and extending deadlines. We will represent you in negotiations with the distributor and legally secure the extension of the deadline. |
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Disadvantageous contract for work with the contractor. The PV contractor fails to meet deadlines, uses low-quality components, or increases the price during construction, while the contract does not contain sufficient contractual penalties. |
Preparation and review of robust contracts for work. We will set milestones, penalties, and guarantees so that the contractor is motivated to perform on time and with high quality. |
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Problems with the building permit. The PV system is in conflict with the zoning plan or faces opposition from neighbors or affected authorities, leading to a halt in construction. |
Representation in administrative proceedings. We will handle communication with the building authority and resolve objections from participants in the proceedings. |
Acquisition of PV Projects: Why Legal Due Diligence Is Essential
Many of our clients, especially investment groups and high-net-worth individuals, choose to purchase ready-to-build projects (so-called Ready-to-Build) or operating power plants. Here, maximum caution is advised. If you buy a special purpose vehicle (SPV) that owns a PV project, you also take over all its historical liabilities, hidden defects in permits, and risks associated with the land.
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The process of transferring a business share in such a company requires a thorough legal review (Legal Due Diligence). ARROWS lawyers routinely examine legal titles to land (easements, lease agreements for 20+ years), the validity of licenses, and subsidy conditions.
Our firm has more than 150 joint-stock companies and 250 limited liability companies in its portfolio to which we provide long-term services. Thanks to this, we can effectively connect clients – if you are looking for a project to buy or an investor for your project, let us know at consultation@arws.cz.
Risks in Buying and Selling Projects (M&A)
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Risks and Penalties |
How ARROWS Helps (consultation@arws.cz) |
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Hidden defects in legal titles to land. The land under the PV system does not have properly established utility easements, or the lease agreements are terminable, which threatens the existence of the power plant. |
Real estate due diligence. We will analyze the land registry and contracts in detail to ensure legal certainty for decades to come. |
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Risk of subsidy clawback. The target company violated the conditions of the subsidy program (e.g., OP PIK, Modernisation Fund), which can lead to an obligation to return millions of CZK along with penalties. |
Audit of subsidy documentation. We will verify compliance with subsidy conditions and identify risks associated with the transfer of ownership. |
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Invalid corporate changes. Previous transfers of shares in the SPV were legally flawed, which could call into question your ownership of the entire company. |
Comprehensive corporate service. We will ensure that the share transfer takes place in accordance with the Act on Business Corporations and is indisputable. |
International Reach and Cross-Border Investments
The energy sector is heavily interconnected internationally. Many components are imported, investors are often foreign entities, and regulations stem from the EU. If your business extends beyond the borders of the Czech Republic, leverage the strength of our ARROWS International network.
Thanks to a decade of experience in building an international network, we handle cases with an international element daily. Whether it is importing technology, a foreign investor entering a Czech SPV, or expanding your energy business abroad, we are ready to support you.
Do you need legal services with an international reach? Contact us at consultation@arws.cz.
Expertise That Saves Time and Money
It is important to realize that the processes described above are much more complicated in practice. Legislation changes dynamically, and what was true six months ago may be different today. Individual steps have procedural dependencies that a layperson can easily overlook. An error in a single form for the ERÚ can mean a month's delay, during which you lose revenue from electricity generation.
Do not expose your company to unnecessary risks. For professional consultation or representation, contact us at consultation@arws.cz.
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Disclaimer:
The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 350,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (consultation@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.