Austria: Romania: Wind Of Change On The Romanian Renewable Energy Market - Part II

In the Legal Insights edition of 18 March 2013, we presented the potential changes to the Romanian renewable energy scheme, resulting from an unofficial working draft Government Emergency Ordinance (GEO) circulated on the market. This Tuesday (2 April 2013), a draft Government Emergency Ordinance on the amendment of Law no. 220/2008 was officially published on the website of the Ministry of Economy. The public is invited to submit comment within the next 30 days, to the e-mail address dezbateri_publice@minind.ro.

This official draft is substantially different than the one analyzed in the March 18 issue of our Legal Insights.

These are the key provisions of the official draft, which may be altered during the public debate. It is expected that the industry and the business associations will react strongly, with the next 30 days being crucial for the Romanian renewable energy sector.

Temporary reduction of the number of green certificates (GCs) granted to certain technologies

Between 1 July 2013 and 31 December 2016, the issuance of the full number of GCs/MWh will be temporary deferred for certain technologies, as follows:

The deferred GCs shall be issued starting on 1 January 2017 (for new HPPs and solar) and 1 January 2018 (for wind).

The recovery of the deferred GCs will be done in tranches, according to a methodology to be adopted by way of secondary legislation put forward by the Romanian energy market regulator ANRE.

Limitation of installed capacity

If the annual total installed capacity from renewable energy sources forecasted in the National Renewable Energy Action Plan ("NREAP") is reached during the course of a year, ANRE will deny the accreditation of other renewable capacities until the next year (when accreditation will also be done within the limits of the NREAP for the respective year).

The NREAP was submitted by Romania in mid 2010, as requested by the European Directive 2009/28/EC, as an instrument that should set out the national renewable energy targets and the adequate measures needed to reach the respective targets. According to Directive 2009/28/EC, the NREAP may be revised by the respective member state every two years if it was not able to meet the indicative trajectory assumed for reaching the 2020 renewable energy target.

The annual total installed capacity from renewable sources until 2020 (NREAP dated mid 2010) is provided below.

Note that according to the data as of 1 April 2013 posted on Transelectrica website, the total installed capacity from renewable sources (including large HPPs) is 8,714 MW.

Financial guarantees

The network operators may request financial guarantees upon issuing grid connection permits (avize tehnice de racordare - ATR). The amount of the financial guarantees and the use thereof will be further determined by the regulator.

Penalties for not reaching the GCs acquisition quota. Guarantee fund

• The penalty for electricity suppliers failing to reach the GCs acquisition quota every three months is set at the level of the maximum GCs price, approved and published by ANRE for the respective year. 

• The guarantee fund designed to guarantee the operation of the GCs market is maintained, based on the same principles as detailed in the current legislation. 

• The penalties applied to suppliers for not having met their GCs acquisition quota will not be included in the electricity bill to final consumers.

Monitoring and applicability of overcompensation measures

• The overcompensation monitoring will be done twice a year (as compared to the current annual monitoring). The first monitoring report that could result in the measures detailed below shall cover the year 2012. On 29 March 2013, the Romanian regulator published on its website the monitoring report 2012 which established  the reduction in the number of GCs for certain technologies, as follows: new wind projects: 1.5 GCs instead of 2 GCs; new HPPs, installed power≤ 10 MW: 2.3 GCs instead of 3 GCs; solar projects: 3 GCs instead of 6 GCs. 

• The measures aimed at correcting the overcompensation (ie reduction of the number of green certificates allocated to the respective technology) shall be applicable to new entrants. The draft provides for clearer sequences, as follows: (i) ANRE publishes the monitoring report within 90 days after the end of the half-year reporting period; (ii) should the monitoring conclude that overcompensation has occurred for certain technologies, ANRE shall propose to the Government measures for reducing the number of GCs within 30 days upon the publication of the monitoring report; (iii) such measures for reducing the number of GCs shall be approved by way of Government decision within 60 days of having received ANRE's proposal and shall be applicable to new entrants accredited by ANRE after the entry into force of the respective Government decision. 

• The deferred application of a potential reduction in the number of GCs (as a result of the overcompensation mechanism) until 1 January 2015 (for renewable sources, except for solar) or 1 January 2014 (for solar) was eliminated.

Exemption for large consumers

Half of the energy consumed by large final consumers with an annual consumption in excess of 150,000 MWh will be exempted from paying the value of GCs; the 150,000 MWh -threshold may be subsequently modified by the Government.

Miscellaneous

• The operational plants that benefitted from state aid before 1 January 2013 will no longer be exempted from a potential reduction of GCs number due to the accumulation of the GCs with other state aid measures. 

• Renewable electricity producers operating renewable power plants of up to 5 MW may execute PPAs directly with electricity traders (this is a derogation from the prohibition to OTC electricity trading provided by Law 123/2012 - Energy Law). 

• Renewable electricity may be traded by way of regulated contracts, according to regulations to be adopted by ANRE.

The new measures will be applied after notification to and clearance from the European Commission.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.