Konečná & Zacha
●
To be or not to be in Romania?
The perspective of Energy from Renewable
Sources
GGI EasyMeet
- Prague, 16-18 Nov. 2012 Adrian Achimescu
1. Introduction

This Presentation provides a general overview of the main rules
and principles established by the Romanian legislation in force
as at November 15, 2012 in the sector of electric energy from
renewable sources (hereinafter referred to as “ERS”).

More specifically, this Presentation describes the general legal
aspects in relation to the Romanian renewable energy market
and the measures undertaken by the Romanian Government
and the Romanian Energy Regulatory Authority (hereinafter
referred to as “ANRE”) in order to establish a support scheme
for the production and sale of ERS.
2. Legal Framework

Main Piece of Legislation: Law No. 220/2008 establishing the System for Promotion of
Energy From Renewable Sources, in its final version (hereinafter referred to as “Law 220”).

Subsequent Legislation: Orders issued by the Romanian Energy Regulatory Authority
(hereinafter referred to as “ANRE”) such as:
–
Order of ANRE No. 42/2011 approving the Regulation for accreditation of ERS producers for
application of the green certificates promotion system, as further amended and completed;
–
Order of ANRE No. 43/2011 approving the Regulation for the issuance of green certificates;
–
Order of ANRE No. 44/2011 approving the Regulation for organising and functioning of the green
certificates market;
–
Order of ANRE No. 45/2011 approving the Methodology for establishing the yearly quotas of green
certificates.
3. Objectives. Energy Quotas

Create a coherent system for promotion of the ERS production in
Romania.

Stimulate private investment in the energy production sector, attracting
foreign private investors with ERS expertise in Romania.

Meet certain European requirements regarding the quota of ERS
within the total quantity of produced and delivered electric energy
(33% in 2010, 38% in 2020).

Compulsory quotas for ERS which benefits from the green certificates
promotion scheme have increasing values starting from 12% in 2012
up to 20% in 2020.
4. Promoted Energy Sources (1)

Hydraulic energy – Max. 10MW
3 green certificates/1MW

Wind energy
2 green certificates/1MW - 2017
1 green certificate/1MW – 2017 onwards

Solar energy
6 green certificates/1MW
4. Promoted Energy Sources (2)

Geothermal energy
2 green certificates/1MW

Biomass and biogas energy
2 green certificates/1MW

Waste gas energy
1 green certificate/1MW

Waste waters energy
1 green certificate/1MW
5. Main Principles of the ERS
Promotion System

Green Certificates: The ERS promotion system established by Law 220 and its
subsequent enactments is based on the issuance, for each MWh of ERS produced and
delivered to the national electric energy grid, of a certain number of green certificates. Such
green certificates are obtained and traded by producers of ERS separately from the
produced energy, on a specific market operated by the Romanian Electric Energy Market
Operator OPCOM S.A.

State Aid: Green certificates are issued by the State as incentives for the development of
ERS production plants. For this reason the entire ERS promotion system established by
Law 220 was subject to a state aid procedure in front of the European Commission, which
issued its final approval in 2011.

Purchase of Green Certificates: Based on this support scheme, electric energy suppliers
(i.e. entities which provide electric energy to final consumers) have an obligation to acquire
green certificates pro rata with the quantities of energy delivered to the final consumers.

ERS Incomes: ERS producers generate income from 2 main sources: sale of the
produced electric energy on the electric energy market and sale of green certificates on the
green certificates market.
6. Timeframe of the Green Certificates
Support Scheme

Subject Matter: The promotion system in place for the ERS production is applicable to
ERS power plants which start operating or which are re-equipped by the end of 2016.

Time Limitations: The promotion system shall apply for:
–
15 years, for the electric energy produced in new power plants;
–
10 years, for the electric energy produced in re-equipped hydroelectric power plants
with an installed power of maximum 10 MW;
–
7 years, for the electric energy produced in power plants which were already used in
the past for the electric energy production on the territory of other states, if used in
isolated energetic systems or if they were installed and functioning before the entry
into force of Law 220 as republished (i.e. August 16, 2010), provided that the
mentioned power plants are not older than 10 years and they fully comply with the
legal provisions for environment protection; and
–
3 years, for the electric energy produced in hydroelectric power plants with an
installed power of maximum 10 MW which have not been re-equipped.
7. Issuance of Green Certificates

Energy Sources: Green certificates are issued exclusively to ERS power plants using the
renewable energy sources mentioned above. In order for other renewable sources to
benefit from such promotion system, another state aid approval procedure shall be carried
out in front of the European Commission.

Individual Approval: For projects of ERS production plants using the energy sources
mentioned above and having a total installed power exceeding 125 MW an individual state
aid authorisation needs to be obtained from the European Commission.

ERS Subject to Promotion: The number of green certificates granted to ERS producers
as mentioned above is calculated based on the total quantity of ERS produced and
delivered by one ERS production plant minus the electric energy consumed by the
respective ERS production plant for its functioning.

Testing Period: For the testing period of the ERS production plant (which mainly depends
on the technical requirements of the ERS production plant but usually does not exceeded 6
months) ERS producers shall be granted one green certificate for 1 MWh of produced and
delivered energy, irrespective of the ERS technology involved.
8. Overcompensation

Notion: Mechanism by which ANRE is authorised to reduce the
number of green certificates granted to an ERS producer which
benefited from other state subsidies for the respective ERS
production plant.

Objective: Avoid the cumulating of state support schemes.

Calculation: The number of green certificates to be granted to
ERS producers subject to overcompensation is established by
ANRE on case by case basis at the moment of qualification of
the ERS producer for the application of the green certificates
promotion system.
9. Sale of the Produced ERS and of the
Green Certificates

Producers of ERS obtain their revenues from
2 main sources:
–
the sale of the energy produced on the electric
energy market; and
–
the sale of green certificates on the green
certificates market.
9.1 Sale of ERS


Energy Market: The ERS is traded freely on the electric energy market operated by
OPCOM S.A., in market competition conditions. According to their commercial interests,
ERS producers may choose between the following trading platforms:
–
Day-Ahead Market;
–
Intra-Day Market;
–
Centralised Market for Bilateral Contracts (Public Auction Mechanism);
–
Centralised Market for Bilateral Contracts (Continuous Negotiation Mechanism).
Average Prices (approximate values):
–
Day Ahead Market: Between EUR 40 and EUR 65 per 1MWh
–
Centralised Market for Bilateral Contracts: EUR 50 per 1 MWh
9.2 Sale of Green Certificates

Green Certificates Market: The green certificates are obtained and traded separately from
the produced ERS. The producers of ERS and the energy providers are trading the green
certificates on the Centralised Green Certificates Market organised and coordinated by the
Operator of the Electric Energy Market – OPCOM S.A. in accordance with the ANRE
regulations.

Price Limitations: For the period between 2008 and 2025, the green certificates value
shall range between a minimum of EUR 27 per certificate and a maximum of EUR 55 per
certificate, as established by Law 220. However, this value of the green certificates shall be
modified yearly on the basis of the average inflation index for December of the previous
year calculated at the level of the European Union and officially communicated by
EUROSTAT.

Market Price: The value of the green certificates established by ANRE for 2012 shall range
between the minimum value of EUR 28.172 and the maximum value of EUR 57.389. In
October 2012, the average price of green certificates was of EUR 56.16.
10. Current Market Status

As a result of the entering into force of the above mentioned enactments, the
Romanian market of ERS has become very active and many projects of ERS
power plants are currently being developed. According to the statistics of the
Romanian Transport and System Operator Transelectrica S.A., ERS power
plants totalising approximately 7,000 MW will start operating in the course of
2012.

New Projects are expected to generate a slight decrease of the green
certificate’s value and also certain grid connection difficulties due to the fact
that, in certain regions, the electric energy grid infrastructure needs to be
upgraded.

Taking into account that the current price of the green certificates is close to the
maximum and that, according to ANRE, there are regions in Romania where
the existing grid infrastructure is not used at 100% of its capacity, ERS
investments in Romania are increasingly attractive for foreign and Romanian
investors.
11. Conclusion




Profitable Support Scheme (especially PV)
Rather complicated to put in practice
Very good legal and tax advice is necessary
Looking forward to working with you and your
clients in Romania
THANK YOU!