Romanian government plans to cut renewable incentives

Newsroom 30/08/2013 | 13:47

The renewable sector in Romania is bracing for a new hit, as the government plans to cut the number of green certificates for new renewable projects coming online starting next year, citing falling technology prices and the renewable incentives reduction trend registered in EU markets.

The bill, which has been published by the Ministry of Economy, outlines a gradual reduction of the green certificates in small-hydro, solar and wind projects. The bill is up for debate for 10 days.

In small-hydro authorities plan to shave 0.7 green certificates off every one megawatt fed into the grid, ending up with 2.3 certificates. The incentives for solar farms will be cut in half to three certificates.

The wind sector, which has attracted the biggest share of investments in recent year, delayed the cut. These projects will lose 0.5 percent certificates up to 2017 and 0.25 certificates in 2018. Thus, wind producers will receive 1.5 green certificates up to 2017 and 0.75 certificates from 2018.

By axing the incentives, the government claims the share of renewable output paid by consumers will go down, which should increase the competitivity of large industrial consumers.

In the government’s scenario, three certificates granted to 100MW of solar in the next 15 years will lead to savings of EUR 95 million for consumers, with each certificate traded at EUR 45. In wind, the savings amount to EUR 47 million in the same conditions.

“In the condition of the reduction of green certificates according to the proposed measures, the investments in the renewable energy production capacities remain stimulative for investors, as the support for wind energy, which accounts for over 80 percent of the total renewable energy production in Romania, is close to the support levels in France, Germany, Greece, Bulgaria, Spain etc.,” said the bill.

Renewable takes a second blow

The government mentioned overcompensation – higher return of investments due to falling equipment prices – as one of the root causes for cutting the incentives. Wind technology fell by EUR 90,000 per MW against the reference prices included the renewable law. In the same time, solar and small-hydro installations lost EUR 1.6 million and 1.3 million, respectively for each MW.

In the face of growing electricity bills and pressure from big industry, the government deferred the issuance of some green certificates for renewable producers starting July for three and a half years.

This decision triggered a quick reaction from CEZ, the Czech utility. The company filed earlier this month a complaint at the European Commission arguing the deferred certificates create a yearly shortfall in revenues of EUR 66 million, according to Reuters newswire. CEZ holds the leading market share in wind, operating a 600MW wind farm in the Dobrogea region.

The Romanian Photovoltaic Industry Association (RPIA) filed a complaint in June, arguing the government’s decision is “abusive”.   

Romania’s renewable market is dominated by wind, which accounted for 2,163MW of incentivized capacities by June, while solar reached 378MW, according to grid operator Transelectrica.

The government says that another 2,000MW of renewable capacities have to go online in order for Romania to cover 24 percent of its final electricity consumption from renewable projects by 2020.

Ovidiu Posirca

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