Analysis - Romania plans new cuts to incentive system

ROMANIA: Romanian wind energy investors are bracing for more bad news as the government eyes new cuts to the country's renewable energy incentive programme.

Fantanele-Cogaelac wind farm in Romania, owned by Czech CEZ Group
Fantanele-Cogaelac wind farm in Romania, owned by Czech CEZ Group

Earlier this year it was estimated that more than 900MW of new wind capacity could come online this year, bringing the country's total capacity to more than 2.8GW. However, as the year has gone on this forecast has steadily fallen.

A draft Romanian government decision would reduce the number of green certificates issued for wind farms in the period up to 2017 to 1.5 per megawatt hour of production from two certificates at present. It would also cut the incentive to 0.75 certificate/MWh from 2018 onwards, compared to the single certificate currently foreseen for that time period.

The planned reduction — which would apply to wind farms coming online after the law is enacted — comes after Romanian energy regulator ANRE found investors were overcompensated by the country's current incentives.

Should it be approved without significant changes, the law would represent the second major negative development for the Romanian industry. Indeed, Robert Cruceru, a lawyer at Wolf Theiss, noted that wind farms awarded an incentive under the new system would also be subject to certificate payment delays laid down in a recent ordinance.

In practical terms, this means that until March 2017, new wind power plants would only receive 0.5 certificates upfront, recovering the missing certificate in the 2018-2020 period.

If all goes well, they would receive 1.5 certificates for the remaining nine months of 2017 before receiving 0.75 certificates for the remainder of the incentive lifetime.

Romania's wind energy association and other renewable associations are lobbying to change the law. Developments on the regulatory front have already helped put a brake on growth of the country's once booming wind market.

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