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Energy Newsletter from Bucharest - October 2014

Status of the Green Certificates Support Scheme

1. Annual RSE and Green Certificates (“GC”) quotas.

According to the regulations in force, the percentage of the total electric energy benefiting from the Support Scheme is set at a fix value only until 2013 (14%). Although the initial estimation of the quota was at the level of 15% for 2014, such quota was already designated at 11.1 % via a Government Decision in March 2014.

As a result, the number GCs for 2014 are in excess (their estimated number was calculated based on the 15% quota and not on 11.1%). Due to excess of GCs, the transaction price is currently at its legal minimum value of EUR 29.28/GC.

According to a methodology issued in June 2014 by ANRE, the mandatory quota of GC acquisition can be lower that the number of GCs available on the market by adjusting such acquisition quota based on the relation between produced RSE and RSE benefiting from the Support Scheme. In practice, if the RSE produced is higher than the RSE calculated as benefiting from the Support Scheme, the mandatory acquisition quota for GCs shall be diminished.

2. New regulation on Bilateral Energy Agreements transactions.

As of January 1st, 2015, new transaction regulations shall become applicable to the market of bilateral energy agreements, via a regulation adopted by ANRE Order No. 78 from August 14th, 2014 (hereinafter, the “Regulation”). OPCOM shall prepare the procedures and participation conventions further to public debates, at least 45 days prior to the entry into force of the Regulation.

The Regulation establishes three ways of concluding bilateral energy agreements, with the aim of preventing the participants from altering the agreements:

(i) Extended auction,

(ii) Continuous negotiation, and

(iii) Processing agreements.

The participants to the bilateral energy agreements market shall enter transactions either on the basis of agreements previously published by the centralised bilateral energy agreements market operator (hereinafter, the “Market Operator”) which can be proposed based on a framework agreement, or by standardised agreements, devised for each of the means of transaction described in the above paragraph.

According to the Regulation, the initiator of a proposed agreement shall be able to insert specific clauses (additional to the framework agreement)) only in respect to payments terms and conditions, guarantees and financial penalties. The Regulation expressly forbids the insertion of specific clauses that alter the framework agreement in relation to hourly quantities, established price and/or duration of delivery. Specific clauses referring to further modifications based on mutual agreement or formula and/or altering the offered price, as well as clauses referring to additional services, are also forbidden.

In respect to the market of bilateral GCs agreements, it should be noted that such agreements are still attributed by public auction only.

3. Legislative initiatives.

3.1. Additional restrictions on photovoltaic power plants location.

According to a proposed amendment to Law No. 220/2008, building permits for photovoltaic power plants should be issued only for plots of land that are non-productive or degraded and cannot be improved or terraformed, as well as plots of land which are polluted and unusable and cannot be decontaminated, situated outside or inside the city limits.

The amendment described above is still in the legal circuit of adoption, currently under debate by parliamentary specialised commissions.

3.2. Facilities for major RES producers.

The Department for Energy from the Ministry of Economy has prepared a project to modify Law No. 220/2008, with the aim of ensuring a non-discriminatory application of the Support Scheme to RES producers of over 125 MW.

According to the legal initiative, major RES producers under the accreditation procedures by the European Commission should receive additional GCs for the duration of the process. Moreover, accreditation from the European Commission could be accessed individually by operators of RES capacities of over 250 MW.

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