THE GOVERNMENT OPENS UP THE GATES FOR INVESTORS IN RENEWABLE ENERGY, SUPPORTING THEM WITH GREEN CERTIFICATESLots of joy, but it may be for naught: "Transelectrica" won"t give investors access to its distribution grid

EMILIA OLESCU (Translated by Cosmin Ghidoveanu)
Ziarul BURSA #English Section / 14 octombrie 2011

Lots of joy, but it may be for naught: "Transelectrica" won"t give investors access to its distribution grid

After three years of waiting and knocking on the Government"s door requesting a stable legislative environment, renewable energy investors have been given the green light by the Government for drafting their business plans.

In its meeting held a few days ago, the Government approved the ordinance by which it will grant aids in the form of "green" certificates for the production of renewable energy. Therefore, the authorities will support, and even more so, encourage, investments in this sector, by issuing more than one certificate per MW of energy generated, depending on the type of renewable source used.

But the initial enthusiasm of investors, who saw their projects deadlocked by the lack of legal framework, may be short lived since "Transelectrica" will not grant them access to its distribution grid, because it does not have the necessary transport capacity.

Ioan-Valer Man, the vice-president of the "New Energy Sources" (SUNE), professional association: "The impact is extremely significant at this moment. Until now investments could not be done because investors didn"t have access to funding. Banks didn"t even talk to investors if they didn"t have a business plan, and they couldn"t draft one without these green certificates. We can now go farther with projects which are on stand-by, because banks will be a lot more permissive.

The toughest situation that we are currently faced with is access to the network of < Transelectrica >, because Romania has a limited capacity of transporting energy. Even through the law provides that < Transelectrica > must allow producers of renewable energy to access its transport network because there are numerous projects in this field, especially in Dobrogea, in the wind energy segment, whose owners can"t access the network.

Many of them drafted the projects, bought the land, secured the almost a hundred permits they needed, which are needed for producing wind energy and one, two or three years later, when they get to the stage of getting their license, they can"t obtain it because the grid can"t accommodate them".

Ion Lungu, the president of the Romanian Association of Electricity Providers (AFEER), said that the authorities will need to solve this problem: "In spite the fact that the regulations in effect stipulate that the network must take on the renewable energy which is produced, < Transelectrica > wants to be able to stop or reduce the amount of renewable energy it allows in, in order to keep the balance between production and consumption. This thing must be clarified by the regulatory authority".

Even though there will be an increase in appetite from investors in this sector, once the ordinance which completes the law no. 220/2008 which is intended to promote renewable energy, financing and environmental impact still pose major obstacles, according to the officials of "Trinergi" - a company which is developing a European project for promoting biogas together with nine other European partners. They said that banks prefer state aids in the form of fixed payments instead of green certificates, which are tradable on a market.

The vice-president of SUNE said that most investors are involved in the wind energy sector, because it involves the lowest expenses. Lately however, interest in solar energy, for which the state offers the most green certificates, as well as small hydroelectric plants has increased.

Dan Plavetti, the president of the National Authority for Regulation in the Energy Sector (ANRE) estimates that in a few years, Romania will see direct investments of 4-5 billion Euros in renewable energy, due to the approval of the emergency ordinance by the Executive.

Consumers" bills will increase by 2.5%, the ANRE expects

The promotional system set up by the Law no. 220/2008 consists of the granting of green certificates to producers which generate electricity using renewable sources, which are later sold to the end users of electricity. Producers are required to buy a certain number of green certificates a year, determined by applying the quota set by the ANRE to the volume of energy which was supplied. Trading of green certificates is made on a different market than the electricity market. Prices of green certificates will vary between 27 and 55 Euros, according to the law.

On Wednesday, after the government meeting, Dan Plavetti said that according to ANRE estimates, the new regulations may cause the energy bills of household consumers to increase by 2.5%: "At the moment, the average bill for a household consumer is somewhere around 50 lei. So, this increase of 2.5% which results from the green certificates scheme, will add 1.25 lei to the bill of a household consumer, perhaps starting from January 1st".

He added: "We have reviewed several scenarios, and this was the most probable. Obviously, it all depends on how strong the wind is going to be next year. It may be strong, or not. We have to make a forecast in the beginning of the year because we need to determine the quota of green certificates which we are going to levy to energy producers next year".

The state aid scheme through green certificates will be applied until 2021. The highest impact will be felt in 2016-2017, by which time the price of energy paid by consumers may increase by as much as 30%.

Mr. Plavetti mentioned that for certain types of technology, such as biomass or biogas, the number of green certificates is reduced by one, and respectively two.

At the request of the European Commission, the Ordinance has introduced the oversight mechanism, including the possibility of changing the number or the value of green certificates, to avoid overcompensation on a technological level, if it were to occur.

The Ministries of the Environment and of Agriculture will need to issue new regulations for producers of biomass-based renewable energy, which would certify the wood-based biomass and plant matter biomass.

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