Wind farms wind their way along uncertain road

With billions of euro worth of investments announced in the renewable energy sector, Romania is seeing investors back off as the lack of grid expansion and the uncertain legislation prove obstacles enough to blow their plans off course. Investors and authorities sat down and debated the main renewable energy issues at the Focus on Renewable Energy event organized by Business Review.

Dana Verdes

Half a billion euro is the volume of immediate investments the national electricity transport operator Transelectrica must  make for the thousands of megawatts worth of renewable energy projects to become reality. The announcement was made by Marian Cernat, director of the operational division at Transelectrica, during the Focus on Renewable Energy event organized by Business Review. According to Cernat, Transelectrica has currently signed contracts for 6,431 MW and has access agreements for the connection of new power plants to the power transmission grid of 5,101 MW. “Most of the signed contracts come from Transelectrica (3,302 MW), Electrica Muntenia Nord (584 MW), Enel Banat (252 MW), Enel Dobrogea (2,196 MW) and E.ON Moldova (98 MW). In addition to these figures, requests for almost 15,000 MW of installed power are still in the study phase,” said Cernat.

He added that if Romania wants to keep pace with investors’ appetite for renewable energy investments, Transelectrica should outrun the grid expansion investments by up to six years.

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Wind farm milestones

However, from project to reality investors have to travel a tricky road. Paula Corban, counsel with White & Case, outlined the major risks related to wind energy production. “Risks in seeking the construction permit reside in the fact that electricity generation capacities are treated like other types of construction, and the local authorities have insufficient knowledge about renewable energy source projects. Another important issue is that there is no coordination between local/regional authorities and the National Regulatory Authority,” said Corban.  Besides securing the land for a wind energy investment, the White & Case official said that investors must also consider the issues of grid connection.

“The grid has a limited capacity and most of the projects are focused in south-eastern Romania. And, bottom line, everything boils down to costs as connection costs are borne exclusively by investors, connectivity solutions proposed by the network operators are usually expensive and investors have to deal with a lack of transparency about costs and how cost-sharing works,” said Corban.

Wind of discontent chills investors

Speaking at the Business Review event, Dana Duica, executive director of the Romanian Association for Wind Energy (AREE), said that investors in the field have certain concerns about the application of Law 220/2008. The first issue raised by the AREE official was production monitoring to eliminate over-compensation, which will be applied from this year until 2013. In 2014 the scheme will be amended for those who invest after that date. Another problem is the overlapping of European or environmental grants obtained by investors and the renewable energy support scheme.

“We have arrived at a solution, namely to make a proportional calculation, so that investors who use European funds benefit only from a part of the support scheme,” said Duica. The association representative added that in the case of wind farms of more than 125 MW, individual notification of the European Commission will be required.

“No European state has this requirement, but Romania insists on this notification, which we consider unnecessary and which will delay investments in this sector. These are the fears of investors. Obviously, there is interest in such investments, but we must have clear and transparent legislation, not something that changes from one year to another,” said Duica. The Focus on Renewable Energy event organized by BR gathered some 80 investors and company representatives and was organized with the support of White & Case and UniCredit.