Businesses seek profits where the wind blows

Newsroom 17/11/2008 | 17:14

Investors have slowed the rhythm of investments in real estate projects, a field seen until recently as a new El Dorado, and have shifted their finances towards wind energy projects, drawn by the high profit rates in this field. This year the value of announced wind energy projects reaches billions of euro, meaning several thousand megawatts and tens of thousands of square meters of properties, mostly in Dobrogea region, all almost defying the credit crunch.
“Currently there it is a favorable context for wind energy projects. Because investors are not putting their money in properties, the energy sector has became a new business opportunity field, one that is considered much safer,” said Nicolae Opris, vice-president of the Romania Energy Regulatory Authority (ANRE).
Dobrogea has put Romania on the map of significant wind energy producers, on paper at least. But as big chunks of land in the area have already been acquired by wind energy investors and the energy transport capacity to the rest of Romania is low, investors will have to turn to other areas of the country such as Braila, Galati or the Moldova region.
This can only lead to the development of these regions, more jobs and business opportunities for the developers that will handle the maintenance of these projects.
Market specialists say that if Romania benefits from the country's wind energy potential, green certificate production will surpass local market needs and the surplus could be sold on the international markets, where there is high demand.

Wind farms deal with the blow of low success rates
The Romanian authorities have received requests for the energy transportation system of over 12,000 MW, but have approved the installation of only 2,000 MW, from which 300 MW to 400 MW will enter in production next year.
“There are two limits that must be taken into consideration – those of the energy transport system and those of the wind energy producers which must be able to deliver the energy on time. If we surpass these limits, I think we can have wind energy production of maximum 2,000 MW by 2012,” said Jean Constantinescu, a former ANRE president.
Just a few projects will succeed, with the success rate of wind energy projects pronounced by experts as low also due to the high fragmenting rate of fields.
“The success rate of European wind farm projects is on average 20-30 percent. Many developers do not take into consideration the protected areas or capacity limitation, factors that could lead to the failure of a project. It is a mirage what's happening now in Romania, the idea of unlimited opportunities to invest in the wind energy sector,” said Alexandru Teodorescu, managing director at Wind Expert.
According to him, investment in one MW of wind power reaches approximately EUR 1.5 million to EUR 1.7 million, costs being dependant on location and wind potential.
“On average, equipment makes up around 80 percent of total costs while 5 percent to 13 percent represents consultancy expenses,” added Teodorescu.

Mammoth energy companies gust onto local market
The number of companies interested in splashing their cash on wind farm is constantly increasing. On the list are internationally known names like Enel (Italy), Energias de Portugal, CEZ (Czech Republic), Iberdrola (Spain), Petrom and Butan Gaz (Romania).
The most recent investment in the wind energy sector in Romania came from Energias de Portugal group (EDP) which acquired two wind energy projects, totaling a capacity of 736MW for EUR 84 million. The company plans to operate a wind farm of 225 MW in Romania in the next two years, for which it has all the permits needed.
This is the fourth major transaction made official after CEZ's acquisition of Continental Wind Partner projects, the purchase of Rokura and NEK projects by Iberdrola Renovables and ENEL's acquisition of Blue Line Impex.
The Danish company Scan Energy might also install wind turbines in Romania by 2012. It has signed a EUR 500 million contract with the German company Nordex for the delivery of 170 wind turbines, which are to be installed in several countries including Romania. The Indian group Suzlon Energy has also signed a contract with Portuguese company Martifer for the delivery of 29 wind turbines, with a total capacity of 60.9 MW for projects in Romania. The company's objective is to have wind farms with an installed power of 400 MW on the local market by 2012.
Another RWE group, the second largest utility company in Germany is analyzing several projects. “RWE is interested in investing on the Romanian energy market, especially in the construction of new thermo power plants, nuclear energy, but renewable energy as well. We have two-three projects which we are analyzing, including renewables,” said Andreas Hollander, responsible for development on regional level.
Market specialists expect that local oil companies, like gas producers, will start to analyze power generation projects more carefully, because their resources are becoming more and more limited and the best solution is to have both gas and wind turbines.
Petrom's head has called for stronger support for power generation from alternative sources, as Romania's dependence on imported energy might increase in the future.
“The energy demand at global level might increase by 50 percent. Energy resources, such as coal, oil and gas, are limited and the dependency on imports is expected to increase. Romania has great potential to produce energy from alternative resources such as wind energy,” said Mariana Gheorghe, Petrom's CEO.

Local businesspeople seek energetic profits
Dinu Patriciu, Gigi Becali, Dorinel Umbrarescu and the Voiculescu and Dragan families are just some of the local businesspeople to have spotted the potential profit from investing in wind energy projects. Becali owns 10,000 hectares in the Dobrogea region for a wind farm, with investment estimated at EUR 1 billion. The local businessman plans draw enlist foreign investors to put their money in such a project.
Tulcea is targeted by EnergoBit, a company from Cluj, for a wind farm project. The company has leased 67 hectares of land in Tulcea for the next 47 years and has an investment budget for this project of EUR 50 million. Company officials expect to recover the investment in the next 8 to 12 years. “We estimate that after we complete this investment, company turnover could increase by 30 percent,” said Stefan Gadola, vice-president of EnergoBit. Works are planned to start next year and are expected to be completed in 2011.
The company is considering developing wind farms in other regions throughout the country as well, and is analyzing locations such as Cluj and Satu-Mare. ButanGas, owned by the Dragan family, will invest EUR 8 million in a wind energy project of 4.5 MW situated in Apuseni Mountains.
“It is a pilot project for which we have already completed the feasibility studies. Depending on the results of this project, we will decide if we will continue to invest in wind energy. We estimate that this project will be completed in two years. Work will start at the beginning of next year,” said Florin Preda, general manager of ButanGas Romania.

By Dana Ciuraru

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