Government refusing to honour €35 million photovoltaic contract

The government is refusing to honour a €35 million contract awarded to the Alberta Photovoltaic Consortium before the March 2013, after claiming that the contract will oblige taxpayers to fork out €11 million more to the private firm on feed-in tariffs for energy sold to Enemalta from solar panels.

According to the contract, the feed-in tariff payable to Alberta, which will install PV panels over government building roofs, is much higher than the cost of energy per kilowatt-hours that normal residences pay.

The 25-year contract covers the installation of photovoltaic panels on the roofs of government buildings nationwide.

But an energy ministry spokesperson who spoke to MaltaToday described the contract as “shocking” because it “ignores the tariff structure and only favours the contractor.”

The Muscat administration is seeking legal advice on the contract awarded by former resources minister George Pullicino on an expression of interest his ministry had issued for the PV project. The contract binds the government to pay Alberta 22c per kWh of energy produced from the solar panels, when normal customers are paid a 16c per kWh feed-in tariff. 

This works out at 6c9 more than the normal feed-in tariff, and is equivalent to €11 million more than would be expected with a normal tariff structure.

Interest in the EOI came from 15 companies, with the final contract binding the government for 25 years.

In December 2012, shadow environment minister Leo Brincat raised questions in the House over the €10 million solar panel project awarded to the Alberta-Solarig consortium, demanding the publication of the agreement. Brincat had said the agreement announced in September 2012 had been for the generation of 6.5MW of energy, and three months later, scaled down to 4.5 megawatts.

Solarig will develop more than 45 rooftop PV installations (67,000 square metres) on Maltese public buildings, after signing the concession agreement in consortium with a Maltese company, for the technical design, construction and operation of these facilities.

But while residential feed-in tariffs for the production of solar power sold to the national grid can be changed, as it is stipulated by legal notice, Alberta’s feed-in tariff was locked in for the 25-year duration.

The contents of the contract were scrutinised only recently and ministry officials pointed out the “one-sided conditions in the contract” had favoured the consortium. 

However from a legal point of view, the government faces a problem, since it is legally bound to accept and implement the contract and procrastination on its part could lead to litigation.