Developers, manufacturers, investors and other renewable energy industry stakeholders need to know where the next big market is going to be so that they can adjust their business decisions accordingly.
Since 2003, global consultancy Ernst & Young has released its Country Attractiveness Indices, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.
Here is the firm’s assessment of Romania.
Eastern Europe’s Renewables Haven
Romania, already the shining star of renewables in Eastern Europe, may benefit further from a slow exodus of institutional investors from Bulgaria following dramatic subsidy cuts in the country. A favorable regulatory environment, combined with a lack of investment outlets in other sectors, has already led to a rapid increase in RE capacity in Romania, although policy-makers should also be alert to the perils of overgenerous incentive schemes in the face of stringent austerity measures.
Further Amendments to Energy Legislation
Since Romania’s introduction to the CAI two years ago, the country’s legislative framework covering renewable energy has undergone significant development. The amendments to Law 220/2008, which were approved in late 2011 and became applicable earlier this year, have provided strong indications that the renewables market in Romania seeks to mirror the interest of investors in the region, as well as supporting a very attractive GC incentive scheme.
In July, yet further amendments were made to this legislation, including the following key revisions:
- The introduction of a methodology to identify the benchmark IRR for specific technologies as part of the “overcompensation” assessment principle
- The creation of a “last resort” guarantee fund mechanism to buy unsold GCs from producers at a price no lower than the minimum legal value (currently €28.17/GC), funded by equivalent payments from those entities that fail to fulfill their quarterly mandatory quota
- The number of GCs allocated for each technology cannot be decreased before 1 January 2014 for solar projects and 1 January 2015 for other technologies, after which the allocation may be reduced in the case of overcompensationAs an exception to this, power plants with a commercial operations date falling before 1 January 2013 will receive the initially approved number of GCs
- The obligation on energy supplier to report quarterly the fulfilment of mandatory GC acquisition quotas
- Power plants less than 10MW will benefit from simplified procedures for authorization
Q3 also saw the introduction of a new energy law (Law 123/2012) as a further step toward the liberalization of the energy market and alignment with EU efforts to harmonize electricity and gas markets across the EU-27.
The new law seeks to ensure that transactions are performed on the competitive market in a “transparent, public, centralized and non-discriminatory manner.” However, the obligation of power producers to trade on centralized electricity operator (OPCOM) platforms has caused some concern for clean energy producers, as this limits the possibility of selling power directly through bilateral agreements. An inability to close PPAs may result in some projects becoming unbankable.
The Minister of Economy has, however, admitted that the law is far from perfect. A recent public statement indicates that an amendment to Law 123/2012 was being prepared by the authorities, expected to provide greater clarity and speed up the financing of renewables projects.
Wind Market Remains Active
Wind energy has experienced significant growth since the start of the GC scheme, from just 12MW in 2009 to 1,440MW in September 2012. A further 600MW is currently under construction and expected to come online by the end of 2013.Q3 saw the Fantanele-Cogealac wind farm become the largest in Europe, with 540MW of the total 600MW now connected to the grid. Project developer, CEZ, is looking to install as much as 1.5GW of wind power in the country by 2016, while France’s Filasa International announced in August its intention to invest around €1.4b across 10 wind farms.
Other utilities such as Enel, Steag GmbH, and EDP have also become active in the wind sector, while turbine manufacturer, Vestas, has located its new Eastern European hub in Bucharest.
Solar still playing catch-up
Uptake of solar projects in the country is still relatively slow, with only 5MW of installed capacity. However, the sector is expected to experience significant growth in the medium term due to the attractive incentive scheme (6GCs/MW), shorter construction schedule and smoother development process.
Lead image: Romania flag via Shutterstock