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Green Energy in Romania - Now & Future

Outline of current regulations and market


Production of electric energy from renewable sources (“ERS”) was regulated in Romania in 2008 by legislation that became fully applicable starting in 2012. A support scheme was introduced for ERS, whereby for each MW of produced and delivered energy, the ERS producers receive a number of green certificates (“GC”) which they can trade on a specialized market for a price within a minimum and a maximum level guaranteed by law. Electric energy suppliers are obliged to buy certain quotas of green certificates (“GCQ”), as established by the Romanian Energy Regulating Authority (“ANRE”) on yearly basis.


GC are traded on the GC market operated by the Romanian Gas and Energy Market Operator (“OPCOM”) at a price ranging from EUR 27 to EUR 55 per GC in the period 2008-2025. The entire scheme is applicable to power plants authorized by ANRE until end of 2016 and set to expire on March 31, 2032.


The scheme was amended several times, the number of GCs awarded being reduced for new capacities (from 2014 onwards) and postponed for older power plants until the end of 2020. From January 2021, ERS producers receive both current GCs (number/MW varies depending on the year of authorization) plus the postponed GCs from the past, on a monthly basis, in a number calculated as total no. of postponed GCs divided by no. of months left until end of authorization. 


Green Certificate Market

Currently, the number of awarded GCs is not covered by the annual GCQs and as such, GCs are transactioned currently at a price of  approx. EUR 28.7/GC (142,2107 RON / 1 GC) on 2 different OPCOM markets:


1.         Spot Market (PCSCV)

  • Anonymous market, transactions according to calendar set by OPCOM in advance for 1 year, 2-5 sessions/month
  • Offers are made for up to 10k GC per offer, number of offers from the same producer in one trading session is unlimited
  • Offers to buy and Offers to sell placed in one trading session are automatically matched by OPCOM platform in such a way as to ensure transactions concluded by all trading session participants pro-rata to the GC quantity they offered to sell/buy
  • In practice, some 14 million GCs are offered for sale at each trading session, but maximum hundreds of thousands are sold
  • Quick procedures for invoicing and cashing in the price of GC (5 working days)
  • By law, energy suppliers are obliged to purchase from the Spot Market minimum the same number of GCs as they purchase via bilateral agreements

 2.         Term Market (PCTCV)

  •  Anonymous, similar to Spot Market, but offers and requests are filed for a specific date
  • Transactions every working day

Bilateral Agreements for GC are not allowed for power plants exceeding 1 MW.


Green Energy Market

Green energy is traded on regulated markets also organized by OPCOM, without any difference from traditional source energy:


1.         Bilateral agreements

2.         Day-Ahead Market (PZU)

  •  Engross market, firm offers for next day
  • Price is regulated freely by demand/offer (recently energy has been transactioned at approx. EUR 200/MW in respect to approx. EUR 45 /MW in 2019)
  •  Since 17.06.2021, functions in Interim Coupling at European level


Why is the market attractive now

  • Demand for energy is on the rise
  • Return of postponed GCs allow in theory for greater gains if sold
  • Prices of energy on the PZU are increasing 
  • Even under temporary supplementary taxation regime (see below), threshold for taxation is still reasonable, i.e. EUR 91/MW
  • There is a high interest in acquisition of solar power plants authorized before end of 2013 (6 GC/MW plus 2 postponed GC/MW produced between 2013-2021) and between 2013 and 2016 (3 GC/MW plus 2 postponed GC/MW produced between 2013-2021)
  •  The main buyers are big suppliers of energy (Enel, Engie etc.)
  •  Price/MW for existing PV plants: EUR 800k - 1.2 mil.


What are the current risks

  • No support scheme for new capacities (authorized after end of 2016)
  • Amassing GC and not being able to sell them on the centralized markets until expiry
  • Taxation. Given the big increase of energy prices, the Romanian Government adopted social measures (29.10.2021) in order to protect vulnerable consumers and ruled that, in the period between 1 Nov.2021 until 31 March 2022 the gains of energy producers obtained from energy prices above EUR 91/1MW will be taxed with 80%. This legal provision, even though temporary, may create a precedent for future energy taxation
  • Current legislation is rather restrictive in respect to acquisition of agricultural land plots for new ERS capacities 


Expected changes for the future

While Romania was 7th in the EU ranking of percentage of ERS in 2019, it has declined since in comparison to other EU states. In 2020, Romania has reached the objective of 24% ERS out of the total energy consumption. The new objective for 2030 is of 30.7%, achievable by addition of 7 GW capacity of ERS while such target should be revised in 2023 to 34%.


In 2020, wind energy counted for 12.4%, solar energy for 3.4% and hydro energy for 27.6% from the total production of ERS. As the main contributor to Romanian ERS is still the hydro energy (with a limited growing capacity), new increase of ERS percentage begs for new support for investors in other ERS capacities (wind/solar/hydrogen), and as such new legislation should be expected in the near future.


Romanian ERS Policy

After limitation of the green certificate support scheme and in consideration of the EU targets of green energy, Romania adopted several policies that announce new support, facilities and investments in the green energy sector.


On the basis of the Integrated National Energy and Climate Plan (PNIESC), National Recovery and Resilience Plan (PNRR) – energy section and Modernisation Fund – covering a 10-year period and valued over EUR 10 billion, the aim is to facilitate access for the investors to grants and financial instruments, as well as financing auctions for contracts for differences in order to facilitate new ERS capacities.


Integrated National Energy and Climate Plan (PNIESC)

  • Approved in April 2020, it estimates new ERS capacities of 7,000 MW by 2030 (wind, solar, geothermal and biomass)
  • Funding estimated to range between EUR 14.5 billion and EUR 22.6 billion, which should be covered by EU available funding
  • Interim targets for ERS consumption increase in the period 2020-2030: 18% by 2022, 43% by 2025, 65% by 2027
  • Memorandum & guidelines adopted on the basis of the PNIESC estimate support of EUR 125 billion/year for ERS
  • To be revised in 2023 in order to establish a new target of 34% ERS out of total energy consumption


National Recovery and Resilience Plan (PNRR)

  • Approved in October 2021, it allocates EUR 460 mil for new ERS capacities plus and additional EUR 280 mil for industry of production/ assembly/ recycling of batteries, cells and photovoltaic panels as well as new electric storage capacities
  • EUR 1 mil allocated for development of a national strategy for hydrogen, related action plan and amendment of legal framework
  • New energy law to be adopted by Q2 2023 to regulate contract for differences (CfD) as main support scheme for investments in ERS production, direct negotiation of Power Purchase Agreements (PPAs) by all ERS producers, simplification of authorisation processes for ERS
  • Envisages an added capacity of 3,000 MW from ERS (wind & solar) by Q2 2026


Expected Support & Legislation

Contract for Differences (CfD)

  • CfDs determine a striking price of electricity that the producer is entitled to. Electricity is sold in the market and the producer receives the difference between the selling price and the striking price
  • Concept introduced by national legislation in 2020
  • System is being developed with assistance of European Bank for Reconstruction and Development
  • After entering into force of new energy law, estimated signed CfDs for 1,500 MW of installed capacity by June 30th, 2023 and an additional 2,000 MW until Q2 2025 (PNRR)
  • CfDs are not financed via PNRR
  • Power Purchase Agreements (PPAs)
  • As per the PNRR, bilateral Power Purchase Agreements are envisaged to be signed by ERS producers, outside of the centralised market, negotiated freely and directly with energy suppliers or final consumers, before starting the construction of the ERS capacity 


Support for new ERS capacities

  • Under PNRR, EUR 460 mil is allocated for installing new wind & solar ERS capacities on the basis of public auctions
  • 950 MW to be installed and connected to the grid by Q2 2024
  • Offering procedures to roll out until Q1 2022
  • State aid up to EUR 15 mil / enterprise, up to 100% of eligible costs


New legislation for acquisition of agricultural land

  • Current legislation prevents construction on agricultural land outside of city limits
  • New law proposal aims to introduce an exception for photovoltaic power plants on a surface exceeding 10 hectares

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