Romania’s wind farm association seeks EC’s arbitrage on government plans to cut support.

By bne IntelliNews May 28, 2013

Romania’s wind power association RWEA claims that the government has not received a formal endorsement from the EC for the planned amendments to the 220/2008 law on the renewable energy support, according to a RWEA press release quoted by news agency Mediafax.

The government’s statement that the EC has agreed with the amendments is misleading, RWEA says. The process of receiving the EC’s endorsement is far more complex and involves a detailed analysis on the impact of the amendments, it explains. 

Romania’s government previously claimed that it received the EC’s endorsement for the amendments and has also announced an imminent enactment of the amendments in the last week of May.

As we already reported, the government plans to delay the issuance of a part of the tradable green certificates owed to the green power generators. The postponement would apply to certificates to be issued starting as of July 2013 to end-2016, while the frozen certificates would be endorsed starting as of January 2017 for solar farms and new hydropower plants; and starting in January 2018 for wind farms.

No evaluation of the amendments in terms of end-user prices has been made, energy minister Constantin Nita admitted recently. It is even less likely that an evaluation of the impact on the internal rate of return realised by investors was carried out.

Notably, energy market regulator ANRE separately published in early April its annual recommendation on trimming down [permanently] the number of tradable green certificates – an annual process aimed at avoiding over-compensation of renewable energy producers. The recommendation, however, refers to investments to be commissioned in the future [January 2014 for solar farms and January 2015 for wind farms and other renewable energy projects].

The government is supposed to endorse ANRE’s recommendations but it has made no comment on them yet. The amendments to the 220 law would call for re-calculations of ANRE's recommendations, in principle.

The government’s attempt to amend the 220/2008 law might eventually serve to the interests of renewable energy investors in an indirect way – by delaying the adjustments for overcompensation drafted by ANRE. RWEA can easily appeal the amendments to the 220/2008 law at the EC and the whole process will likely be frozen for at least six months – possibly by the end of the year. The government can enforce meanwhile ANRE’s recommendations based on the existing 220 law – but it can also delay the enforcement.

We expect large industrial consumers to exert, however, tough pressures for the enactment of at least the overcompensation correction – which is insufficient as it cannot act retroactively but is still a step forward in reducing the rise in end-user energy prices.

 

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