EU go-ahead to incentives may release finance

ROMANIA: Delayed legislation introducing a more attractive incentive system for renewable-energy sources could soon open up the project-financing market for Romanian wind projects, as the new law finally appears likely to be cleared by the European Commission.

by Heather O’Brian 25 February 2011

"We have received comments from the commission and they have invited us to proceed with formal notification of the law," says Maria Manicuta, director of the renewable-energy and cogeneration division of Romanian energy regulator ANRE. "We hope for final approval in three months."

Romanian authorities have been in informal discussions over the law with the Commission since late 2009. "The process was a fiasco," Bogdan Chiritoiu, the head of Romania's Competition Council, said at a recent Greenpower wind energy conference in Bucharest. "It is not normal that you have a law in 2008 and it still cannot be implemented in 2011."

The Romanian government first approved the legislation in late 2008 and amended it last summer to make it even more generous for wind power producers by awarding them two green certificates for every MWh of electricity produced through to the end of 2017 - before reverting back to a single certificate in 2018.

Yet, Romanian authorities have been unable to implement the new incentive system while the commission has been evaluating whether it is in breach of EU state-aid restrictions. In the meantime, wind energy producers in Romania have continued to receive one green certificate for every MWh of electricity produced.

The commission's concerns that the Romanian support system may be overly generous have not been alleviated entirely. Manicuta notes that the commission has asked the Romanian authorities to monitor the system in order to prove that this is not the case.

"If we see that the support is too high, it is possible that in one or two years we could go back to parliament to modify the law," she says. But any changes in the market framework would not be retroactive, Manicuta is eager to point out. Any wind energy producers receiving two green certificates for every MWh of electricity produced would continue to do so.

To date, wind projects in Romania have been dominated by deep-pocketed utilities because banks have been reluctant to provide project-financing loans or have done so with very conservative conditions. The new law could change all this by providing a boost for would-be investors.