Alro pushes for renewable support scheme cuts in Romania

Newsroom 04/03/2013 | 15:50

Romanian Alro, controlled by Russian aluminum producer Vimetco, launched a virulent attack against the renewable sector, urging the government to give up support scheme for green producers, which dents the industrial competitiveness of the country through higher electricity prices.

Alro registered a loss of EUR 38 million last year, driven by soaring electricity prices. The company was also hit by lower prices on aluminum traded on the London Metal Exchange (LME) and falling output from insolvent Hidroelectrica, its main electricity supplier.

The electricity costs rose by 26 percent to RON 831 million, due to a growing volume of green certificates and the co-generation tax. The company estimates to pay USD 66 million this year for the scheme.

Alro’s aluminum production fell last year to 249,000 tons, while its turnover grew slightly to RON 2.3 billion (EUR 650 million).

“The electricity costs will grow if measures are not undertaken on the renewable energy. The support is too big and the industry can’t cope with it,” said Gheorghe Dobra, general director of Alro. He added that all the investments made by Alro to increase energy efficiency have been wiped off by the fresh costs for green energy.

Marian Nastase, president of Alro’s board, commented the investment climate has worsened for all sectors aside from the renewable industry.

The company plans to build a 250 MW co-generation power plant worth EUR 280 million in Southeastern Romania, but it will look more cautiously at this investment, given the current conditions, according to Nastase.

Nastase said the scheme is oversized and is against the free market principle.

“The renewable energy industry should stripped of the subsidies and left to compete on the free market,” said Nastase.

Alro representatives cited Span and Germany as the European members that moved to cut or adjust their scheme, to make them financially bearable during the financial crisis.

Constantin Nita, the delegate-minister for energy, said last week the green certificate support scheme will be modified.

“I know it’s not a pleasant subject, especially for investors, but I have to be clear on this: we can’t destroy the Romanian industry just for the sake of the renewable energy – we need to find a balance,” said Nita, quoted by Ziarul Financiar daily. “Those that invested in renewable energy must acknowledge that we are in a vise.”

Nastase of Alro said the cuts should be made on wind projects, which currently generate the largest output, although officials announced plans to cut green certificates in solar and small-hydro. Around 5.5 million green certificates were issued last year and more than half were granted to wind assets.

Ovidiu Posirca

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