Romania nears renewable incentive cuts

Newsroom 01/04/2013 | 10:58

Renewable energy producers should take a haircut on their green certificate support scheme, revealed the results of a market report issued by energy regulator ANRE, which says that wind, solar and small-hydro and solar are currently overcompensated and receive too many certificates.

The report reckons that the cost of certain green technologies has gone down in the past four years and the support scheme needs to be readjusted to remain in line with the Internal Return Rates (IRR) of projects that has been approved by the European Commission.

The ANRE proposals will see the allotted green certificates for new wind farms dropped from 2 to 1.5 certificates for each megawatt it produces, while refurbished wind capacities will receive 1.3 certificates.

For small-hydro capacities below 10MW, the number of certificates will be axed from 2 to 1.3 certificates.

The solar industry will take the biggest hit, as it will only receive only three certificates, half of what was previously granted. ANRE said the solar capacities are around 50 percent cheaper to build nowadays due to the advent of new technologies, also triggering a 30 percent reduction in fixed costs.

Romania reached over 2,100MW of incentivized wind capacities and around 92MW in solar by February, according to grid operator Transelectrica.

The Ponta government is said to decide on the cuts this week, but it remains to be seen if the ANRE’s proposition will be fully implemented. The center-left coalition USL has to appease both the household consumers, who are already paying higher bills and industrial players, who argue higher energy prices harm their competitiveness. However, the renewable sector has been the main investment driver in the past four years, with foreign utilities creating jobs locally to support their expansion plans.

Liviu Dragnea, deputy PM, said last week that the Energy delegate-minister Constantin Nita will come up with a reduction scheme that should be discussed this week by the government. The law will eventually be changed through a government ordinance.

“We kindly support any foreign investments, but we can’t allow these investments to lead to the pauperization of Romanians, because we all pay for these certificates. We don’t want to scrap the green certificate payments, but we could lower it and reach a balance, so that the people can afford to pay their electricity bills,” said Dragnea, quoted by Agerpres.

Meanwhile, steel mill ArcelorMittal Galati re-affirmed its concern regarding the impact of renewable subsidies on the energy prices.

“This scheme is not sustainable and threatens the continuity of the industrial activity in Romania,” said the company.

The steelmaker said that large Romanian industrial producers and also other producer are footing the bill for renewable projects that “are not competitive enough to get their revenue only from the electricity market.”

Ovidiu Posirca

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