Romania — Obstacles remain, but two events suggest that the nation of 22 million, long powered by coal and large-scale hydroelectric plants, is finally ready to start fulfilling its widely recognised clean energy potential.
June saw the grid connection of the first turbines at the Fantanele wind farm, which together with its adjacent sister-project at Cogealac will create a 600 MW facility — Europe’s biggest onshore wind complex — when fully commissioned (see sidebar, below).
In July the Romanian parliament finally enacted the country’s renewable energy promotion law — first drawn up in 2008 but stuck in the legislative mud since then — which removed what many saw as a serious obstacle to investment in major renewables projects.
The sheer scale of Fantanele-Cogealac means that even connection of the first few dozen turbines was enough to revolutionise wind power in Romania overnight. The 67 MW online at Fantanele by the end of June compares to just 14 MW of installed wind capacity in the whole country at the end of 2009.
The Romanian Wind Energy Association (AREE) is confident the wind sector is poised for a period of strong growth, with 650 MW possible by the end of this year and the potential for 5 GW of installed capacity by 2020. “I believe we could establish a new record growth in Europe,” said Dana Duica, executive director at AREE.
The annual wind potential of Romania is estimated at 23 TWh, with some of the best conditions in Europe available in the country’s south-east. The Black Sea also gives Romania the possibility of an offshore industry, though because huge facilities such as Fantanele are already under way near the coast, grid congestion issues may delay large-scale offshore development.
But unlocking this potential requires major investment, and final enaction of the renewable energy legislation, with the extra certainty it brings to the market, was a step that had been eagerly sought.
When first published in November 2008, Romania’s Law 220 attracted widespread acclaim for its progressive approach. Indeed, Rod Christie, GE Energy’s president for central and eastern Europe, was quoted shortly afterwards praising it as potentially the best in Europe.
Unfortunately, ‘potentially’ was the crucial word for too long. For various reasons, including delays to secondary legislation and concerns over compliance with EU state aid rules, the law remained unenacted for almost two years until July, when a beefed-up, amended version finally made it through the Bucharest parliament.
Rather than feed-in tariffs, Romania has opted for a system of tradable ‘green certificates’ awarded for power produced and delivered to the distribution network from renewable sources.
Power suppliers are obliged to meet annual quotas for the purchase of green certificates related to the percentage of renewables in their total supply mix. The grid operator issues green certificates for renewable generation, ensuring that producers benefit both from the sale of the power itself and the value of the accompanying certificate.
The certificates can be traded on a platform run by Opcom, the national energy market operator. The law sets a minimum value of €27 per certificate and a ceiling of €55 (US$35—$72), index-linked to inflation and guaranteed until 2025.
The legislation offers various levels of incentives to different sources of renewable energy. Wind, for example, will attract two green certificates for each MWh produced until 2017 and one from 2018 onwards.
Power generated from biomass and biogas will be awarded three green certificates per MWh, with an additional certificate on offer for high-efficiency co-generation.
The ‘green quotas’ applied to power distributors are increased under the amended law, rising in steps from 10% in 2011 to a final level of 20% in 2020 (compared with a ceiling of 16.8% in the original legislation).
Duica said the law represents “a positive change for the industry in general, which improves the support mechanism for all technologies”.
From wind’s perspective, she said the development of robust legislation was an important step forward. “Foreign investors have been keen to have a safe legislative framework, which is now very close to being enforced,” she said.
“A market looks promising when there is a good incentive combined with investor-friendly conditions, such as clear and transparent administrative procedures. Romania still has to work on that, but overall the wind farm operator gets a satisfying return,” she added.
The transparency of administrative procedures was one of the issues raised by an EU-backed study of wind development in Romania. The recommendations of the Wind Barriers project, published earlier this year, include improved transparency in the decision-making process for grid connections, amending the planning procedure to attract developers and speeding up the approval process for Environmental Impact Assessments.
“It’s basically a matter of streamlining decision-making processes in a country that does not have much experience with renewable energy grid integration and project development,” said Dorina Iuga, project manager at the European Wind Energy Association, commenting on the findings.
The scale and pace of its ramp-up in Romania inevitably means that wind grabs most of the attention of foreign observers, but the country has significant potential for development of other renewable energy sources as it races to meet its EU target of 24% share of consumption from renewables by 2020 — a goal it says it is on course to achieve.
Alternatives to Wind
Forests that cover more than a quarter of the country and a large agricultural sector mean Romania offers plentiful sources of fuel for exploitation as biomass.
The country already has an installed biomass capacity of more than 4000 MW, almost exclusively used for heating. According to the European Bank for Reconstruction and Development (EBRD), district heating systems offer the best opportunity for short-term deployment of new resources.
Earlier this year it was announced that the first biomass plant in Romania to produce electricity from a wicker plantation will be built in Timis County in the west of the country, using private investment from Germany.
Romania also offers considerable untapped resources in the field of geothermal energy, where it is estimated to hold the third-highest potential in Europe.
Areas of particular promise include the country’s western and southern plains and the southern Carpathians. The country already has more than 200 geothermal wells and an installed capacity of 145 MWt, though many sites are used solely for recreation.
The country’s minster of the environment said earlier this year that the government would encourage development of the geothermal infrastructure, and in April, a €2 million (US$2.6 million) tomato-growing facility heated by geothermal water was unveiled in the town of Livada.
Romania’s decision to award six green certificates for each MWh of electricity produced through solar reflects the paltry level of PV penetration in Romania, with barely 500 kW installed despite good insolation values in southern regions of the country.
Something of a European pioneer in solar technologies until the 1990s, Romania saw the sector wither on the back of low-quality products and a lack of incentives. But in June the country celebrated the opening by the Renovatio Group of a €10 million ($13 million) PV manufacturing facility in Satu Mare, which will produce panels for distribution in southern Europe.
Sidebar: Wind Market Soars
When Czech energy group CEZ completes the €1bn ($1.3 billion) Fantanele-Cogealac wind complex, its combined 600 MW will be almost double the capacity of Whitelee, Scotland, currently Europe’s largest onshore wind facility.
Fantanele’s 139 turbines with a total capacity of 347.5 MW are due to be connected to the grid this year, with the second phase at Cogealac adding a further 252.5 MW in 2011. The two sites will help turn Dobrogea, near Romania’s Black Sea coast, into Europe’s onshore wind capital, generating enough electricity to power 400,000 homes.
When complete, the Fantanele-Cogealac complex will hit 600 MX (Credit: CEZ)
Romania’s wind momentum increased when Spanish group Iberdrola Renovables was earlier this year granted a licence to connect up to 1.5 GW to the network. This allows Iberdrola to push ahead plans to develop 50 wind farms in south-east Romania between 2011 and 2017.
Petrom, the Romanian oil and gas group, has bought a 45 MW wind farm, also in Dobrogea, and will invest €100 million ($130 million) in the project, adding to a scale of activity that underlines Romania’s credentials to become a leading wind market in eastern Europe.
GE Energy, which will supply 240 of its 2.5xl turbines to Fantanele-Cogealac, said Romania represents a “terrific opportunity” for development. The company, also involved in significant power and energy projects elsewhere in the country, said the average time taken to grant wind permits — 15 months — makes Romania the third-best performer in Europe after Finland and Austria.
Some room for improvement remains, said a spokeswoman for GE Energy. “For investment decisions to be made, it is important for developers to have clear estimates of connection costs, timeframes and connection deadlines,” she said.
The scale of the expansion will inevitably put heavy new demands on Romania’s grid. However, Transelectrica has said it is confident it can integrate at least 4GW without serious problems.