The future of the local solar industry is on the line, as the authorities intend to ban photovoltaic parks on agricultural land, part of a wider program to reduce support for renewable producers, which may end up seeing solar energy get a bloody nose.
By Ovidiu Posirca
Although solar power has been awarded the lion’s share of renewable incentives, the country hasn’t registered a boom in this field of the likes enjoyed by the wind sector. There were 177MW of incentivized solar capacities by April, while wind reached more than 2 GW.
Solar panels threat blown out of proportion
The agricultural land use ban announcement came as a second blow for the beleaguered solar sector, which will see its incentives cut in half to three certificates, under an amendment that will be discussed next week by the Ponta government.
The bill is set to be enforced from July and the authorities want to include a provision that prohibits the building of photovoltaic parks on arable land.
“It’s a matter of days until the legislation is changed and the setting up of solar panels on arable land will no longer be allowed,” said Daniel Constantin, agriculture minister, on May 20, quoted by Agerpres newswire.
Robert Cruceru, executive director of the Romanian Photovoltaic Industry Association (RPIA), commented that the authorities actually aim to block solar projects built on agricultural land from receiving green certificates.
“If this provision is implemented in its current form, it will impact a large share of the projects under development, because as there is no such ban in the current legislation, investors have headed for the areas with the highest potential for solar radiations,” Cruceru told BR.
Cosmin Stavaru, partner at law firm Bulboaca & Asociatii, commented that photovoltaic projects are heavily reliant on green certificates, which makes the sector riskier. This has seen lenders reluctant to finance such projects.
“The ban on installing solar panels on agricultural land should be nuanced, in order not to become an excessive restriction, unjustified by practical purposes, which will uselessly block investments in the Romanian economy,” Stavaru told BR.
He suggested that secondary legislation should be passed or clarified in order to spot and regulate alternative locations for photovoltaic parks and simplified procedures in obtaining and securing the rights over these areas. “In this way such projects would also be more bankable,” said Stavaru.
There is no official data on the agricultural land covered by solar panels. The RPIA representative estimates that local solar installations cover 300 to 400 hectares.
Stavaru of Bulboaca & Asociatii points out that the announced photovoltaic parks do not appear to “practically threaten” the availability of agricultural land, as there is a surplus of uncultivated farm land. In addition, investments in solar capacities are set to slow down in the coming years.
According to Valeriu Tabara, the former agriculture minister, Romania has 8.4 to 8.6 million hectares of arable land. Furthermore, some 3 million hectares lie uncultivated.
The Bulboaca & Asociatii official explained that the reasoning behind such a measure is reflected in the sustainable development strategies of several countries including Italy and Bulgaria, which aim to promote investments in agriculture too, not only those in renewable energy.
He added that 1 MW of electricity from photovoltaic sources requires installations set up on 2 to 2.5 hectares.
Thinking solar on a smaller scale
Dragos Atanasiu, senior manager of deals, PwC Romania, commented that if such a provision were to be enforced, it would increase the overall amount of investment, given the reduction of surfaces deemed eligible for solar installations.
“However, those willing to build ‘roof-top’ projects to balance their own energy consumption will not have problems connecting to the system or to dispatching,” Atanasiu told BR. He reckons that more projects like this could emerge if the proposed measures are passed.
Farmland is the best option for investors willing to develop industrial-sized projects and the alternatives will require smaller installations set up in locations that are harder to secure.
Stavaru of Bulboaca & Asocatii cited roofs of buildings, or urban areas with industrial uses such as old industrial platforms or roofs of active industrial units as locations that could support solar power generation.
He added that pasture lands and meadows could be viable too but it is hard to remove them from the agricultural circuit.
Gauging the future of solar
Solar seems to be the worst hit by the emergency government ordinance (OUG) that will amend the renewable law 220/2008.
Stavaru of Bulboaca & Asociatii said the OUG contains some “troublesome” provisions such as the suspension of two green certificates for solar producers, a tighter monitoring of incentivized renewable producers, which will be checked twice a year, and the ban on solar installations on farmland.
Nevertheless, he commented that investments in solar will continue at “a much lower pace”, despite the reduction by half of the green certificate scheme, as the price of solar panels continues to plummet.
At present, the European Commission is in a trade dispute with China and aims to impose import duties on solar panels made in the Asian country.
According to Reuters newswire, the anti-dumping duties will average out at 47 percent and will be enforced from June 6 for a trial period, but could be dropped if the two economic powers strike a deal.
Germany has told the European Commission, the executive arm of the EU, that it will not back such an initiative.
The Alliance for Affordable Solar Energy (AFASE) warned that imposing preliminary anti-dumping measures on Chinese photovoltaic products will lead to higher prices, falling demand and green job losses.
The AFASE has gathered some 530 European solar companies which represent over 60,000 jobs and have a turnover of EUR 20.9 billion. The association has attacked the EU ProSun group, which argues that higher imposed tariffs will create new jobs, saying there is no scientific evidence for such a position.
Sascha Möhring, CEO of Möhring Energie, said: “The PV market is already blocked and the discussion of new projects is extremely limited. This situation will only worsen with the imposition of duties.”
Prognos, an independent research institute, said that duties of 60 percent would cost the EU economy up to 242,000 jobs and EUR 27 billion over the next three years.