German utility E.ON has suspended all its investment plans in local wind capacities in the wake of the government’s attempt to scale back the incentives granted to renewable energy producers.
Under the government emergency ordinance that is currently being debated, the support for wind producers will be dropped from two to one green certificate.
“We had projects for 200MW in wind, and planned to implement and build 120MW, and they’re all on hold right now because of the discussions,” said Frank Hajdinjak, CEO of E.ON Romania. He added that the investment program will be dropped if the cuts get through.
The incentives for wind will return to the level prior to November 2011 and experts argue the cuts are not dramatic because a large share of investors drew up their business plans based on one certificate, which was provided for in the previous renewable legislation.
The generous support scheme and good natural conditions have attracted massive investments worth around EUR 3.5 billion in the wind sector, mainly driven by foreign utilities active locally.
The country had reached more than 2GW of wind capacities by April.
Calling for higher distribution tariffs
Last year, the company allocated the largest share of its EUR 85 million investment program to modernizing the gas and electricity grid. The company will maintain a similar investment figure this year and is calling for a 10 percent increase in the gas distribution tariffs, which would translate into a 3 percent hike in the final gas price.
Gas prices for household consumers are expected to go up by 10 percent this year, under a liberalization program agreed with international lenders.
The utility grew its turnover to EUR 1.2 billion and reported a slight increase in the sales volumes of electricity and power, to 34TWh.
According to Hajdinjak, the turnover will “slightly decrease” this year because of falling gas volumes. “For gas, we expect a reduction of 10 to 15 percent for the whole year, while for electricity it will be about stable,” said Hajdinjak.
Earlier this year the utility opened a technical services arm that will cater for E.ON’s gas and power distribution business in Romania and also for other companies.
E.ON also inaugurated a business services center in Cluj, which provides accounting and HR services for all the companies within the E.ON Group. The firm expects to reach 200 employees in the Cluj-based center this year, rising to some 500 people in the coming years.
E.ON handles the supply and distribution of gas and power to around 3 million customers in northern Romania, and has 6,200 employees.
The company has invested over EUR 1 billion in the eight years since it entered the local market. During this period, it has granted EUR 5.2 million to CSR programs, out of which EUR 1.3 million were allotted in 2012.