02 July 2013

by Christian Bogaru, Managing Partner

Emergency Ordinance No. 57 of 4 June 2013 amends and completes law nr. 220/2008 concerning the system of promoting the production of energy from renewable energy sources, was published in the Official Gazette, part I, no. 335 on Friday June 7, 2013 and will apply as of 1 July 2013. It is trying to create a balanced and realistic settlement of the Romanian energy sector by weakening the speculative market and encouraging long-term investments – the kind of investments from which the Romanian State can truly benefit, contributing to the sustainable development of the energy sector.

The main changes relate to the temporary delay of granting green certificates for certain renewable energy sources. Most affected are solar power plants. Out of the 6 certificates for each 1 MWh produced and delivered by the producers of electricity, after 1st July 2013 only 4 certificates will be issued. The other remaining 2 certificates will be issued after 1st April 2017.

The changes are also applied in the case of hydroelectric and wind power plants, which up until now have had 3 green certificates for each 1 MWh produced and delivered. After 1st July 2013, the date of entry into force of the new Act, of the 3 green certificates to be received for each 1 MWh produced and delivered by new hydroelectric plants with an installed power of up to 10 MW, only two will be issued, the third will be issued after 1st April 2017. For electricity produced by wind power plants the release of one certificate out of the three currently issued will be delayed to after 1st January 2018.

The recovery of the delayed certificates will be determined by the National Regulatory Authority in the field of energy-ANRE and cannot be delayed later than  December 31, 2020.

The Ordinance provides a mechanism for exemption whereby a percentage of the quantity of electricity delivered to end users will be excempted from the application of its provisions. Qualifying conditions will be drafted in a separate document and will be subject to approval by the European Commission. This provision, designed specifically for large industrial consumers, replaces that of the initial project, according to which consumers with an annual consumption of more than 150,000 MWh, were to pay the cost of green certificates for only 50% of the energy they purchased.

The Ordinance also brings about changes relating to the  electricity produced by solar power plants located on land which, at the date of entry into force of the Ordinance, 1st July 2013, was set aside for the agricultural circuit. Under the new changes, the energy obtained from solar power plants located on such land will no longer be granted green certificates.

After 1st July 2013 production of green energy that surpasses the Transelectrica forecasts will no longer receive green certificates, while capacities exceeding the values updated annually by the National Plan of Action in the field of renewable energy (NPARE) will no longer be approved by ANRE.

The new Ordinance also introduces the possibility of selling renewable energy sustained through the support scheme through regulated  contracts.

In the preamble to the Emergency Ordinance No. 57, the Government states that the adoption of amendments is necessary to put an end to the uncontrolled growth of prices for end-users of electricity, which leads to price increases over the projected growth index and to irreversible consequences. This can determine relocation outside the Country of large production units. On the other hand, renewable energy producers and investors threatened to withdraw investments for fear of huge losses following the Ordinance.

In the form in which it was approved by the Government, the Ordinance is trying to find a balance between sustainability and development and trying to soften the current discrepancies in the energy sector. It can be argued that the support scheme was not « cut » but extended and an exemption mechanism was introduced for the industrial consumers. As for the average household consumer, it remains to be seen to what extent the provisions of the Ordinance will achieve the stated goal of the Government, namely an energy price reduction on monthly bills.