“The Romanian energy market saw this year many delays in ongoing projects, especially those in wind energy, which were initiated by private investors who struggled to find the necessary financial resources.” This is Carmen Neagu’s, country executive for Romania, Bulgaria and Moldova at US firm GE Energy, analysis of the effects that the economic and political crisis has had on the local energy market.
Another factor in these delays is the regulatory instability. Market players point out that up until now the secondary regulations, intended to implement the law on supporting renewable energy projects, law nr. 220, have not been enforced.
The American Giant has inked a major deal on the local market with energy firm CEZ to supply the Czech company with all the necessary turbines for the 600 MW wind farm which is currently under construction in Fantanele and Cogealac, in Dobrogea. However, the crisis has changed the balance of power at the negotiation table, tipping it in favor of the buyers, who are now bargaining for every extra cent.
“Indeed we’re seeing prices decline, reflecting the current market conditions, but it is still quite difficult to make a price evolution forecast because our technologies need additional investments to make them competitive,” Neagu told BR.
The crisis has also left its mark on delivery schedules, delaying some projects even further. The GE Energy official said that deliveries of wind turbines are currently dependent on the financial credibility of the project and the bank’s financing structure. “For those projects which enjoy definite financing, solutions can be found to ensure delivery within 10 to 12 months, depending on the project’s stage in terms of approval and on the financing structure.”
Yet despite the crisis, a small wind farm project was completed this year. “We realized the first project financed by environmental funds. It is a project of four wind turbines in the Tulcea area from an independent developer. As we see, smaller-scale projects are starting to find support and financing solutions,” said Neagu.
And while in Romania wind farm projects haven’t been the beacon of opportunity that they were considered last year, GE energy officials have already identified new opportunities on neighboring markets. Neagu told BR that she believes energy policy has given impetus to renewable energy projects in Bulgaria for the medium and long term, thereby assuring investors of stability. “We can foresee a developing trend for renewable energy projects in South Eastern Europe for the next three-four years. It must also be considered that at some point the national energy systems will impose some restrictions in terms of installed capacity level,” added the country executive.
High demand for cogeneration technologies
Despite the difficulties companies have faced this year, GE Energy forecasts that the cogeneration segment will grow significantly in the next period. One reason for this optimistic prediction is the appearance in the Official Bulletin of the support scheme for efficient cogeneration.
“2011 will probably be the year for taking decisions on these investments because the Romanian Energy Regulatory Authority (ANRE) has limited the capacity that can be supported by these schemes to about 4,000 MW, so there will be spirited competition to qualify,” said Neagu. The support scheme envisages financial support on a sliding scale over a ten year period.
Aside from that, cogeneration technologies are interesting both to industrial consumers as well as to households. For an industrial consumer who needs steam in the technological process, cogeneration is the best solution for energy bill reduction. For households, things are more nuanced because the thermo power plants are currently administered by local authorities who have no possibility of investing, thus putting pressure on the faster adoption of a private partnership law.
So a range of wind turbines and cogeneration technologies is on the market, the demand is constantly increasing year by year, but in this economic equation things get stuck on a key point: finding the money.