Wind producers in Romania in the red over legal changes

Newsroom 25/02/2014 | 17:54

The wind projects are currently generating losses for investors after the government rescheduled the issuance of some green certificates last summer, said on Tuesday Razvan Grecu, vice president strategy at France’s utility GDF Suez, during a roundtable on transparency and predictability in policy-making, organized by the Foreign Investors’ Council (FIC), the business advocacy group.

The government’s decisions to change the support scheme has stopped the investment binge in the renewable sector, which has soared over ten fold in capacities in four years, and attracted investments over EUR 5 billion by the end of 2013.

The vice president explained that the government’s reaction was disproportionate and has made the regulation of the sector unpredictable.

“One of the main issues in that the new regulation framework enforces retroactive measures. Practically, some revenues of ours are delayed this year, although the system should have been operational for 15 years,” said Grecu.

He added that in the case of wind, which dominates the sector with 2.503MW in capacities, the production cost hovers around EUR 100/MW, while revenues generated by the project stands at EUR 70/MW. The producers get money from selling the electricity output and trading one green certificate.

“The recovery of the investments by wind producers is impossible at the current electricity prices on the gross market,” said Grecu.

The government could have reduced the incentives for producers through the over-compensation mechanism, which exists in the renewable law, according to Grecu. He explained that there is no guarantee that producers will recover the value of the green certificates in the 2017 – 2020 period.

Romania has got a new renewable law in 2008, which was enforced just at the end of 2011, due to poor communication between Romanian authorities and the European Commission, the executive arm of the EU.

The support system became fully functional in the summer in 2012 and six months later the government announced it would change it to limit the impact of incentives on the bills of households and big industry.

The government has decided this year to cut the number of green certificates for new projects, due to falling costs for technology.

According to Grecu, the construction cost for 1MW in solar and wind amounts between EUR 1.5 – 1.6 million.

Romania has gained one position to 32nd in the latest renewable energy country attractiveness index (RECAI) by professional services firm EY.

Ovidiu Posirca

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