Romania's lack of installed wind capacity -- at last count amounting to about 9 MW of mainly secondhand turbines -- belies the scale of activity going on behind the scenes in the southeast European country. The fairly reasonable market incentives in place have persuaded wind project developers from a swathe of countries to the west, including Germany, Italy and Portugal, to turn their attention to Romania. The project pipeline is swelling fast. As the country with the least to do of all 27 member states to meet its target under the EU's proposed renewable energy legislation -- Romania must move from 17.8% to 24% -- it could find itself ahead of the game before the 2020 deadline.
Forecasts for likely installed capacity over the next several years vary from a low of 400 MW by 2015 forecast by independent market observer Emerging Energy Research (EER) to the government's optimistic 14,000 MW, though with no specified date. "Depending on market conditions, there could be several hundred megawatts in the next two or three years," estimates Cristian Tantareanu of the Romanian Wind Energy Association (ROWEA). By 2030 the association believes 3000-4000 MW of wind plant will be installed.
"Romania's market is being distributed between the early birds. They are looking at sites and securing land, maybe doing some wind studies," says Lutz Kindermann of German developer WPD, which plans to operate in Romania through a joint venture with a local partner. It has identified sites for potential development and hopes to begin building its first projects within three years. As well as developers, lots of real estate investors have also been snapping up land, aware of its new value, notes Kindermann. "They try to sell it as a wind farm, although they have absolutely no expertise," he says.
The hotspot for prospecting activity has been the Dobrogea plateau, but other locations are increasingly coming into focus, such as the Moldavia region. Like Dobrogea, Moldavia lies in the eastern part of the country. Some developers are also looking at sites in the mountains and in the west, while opinion is divided about development on the Black Sea coastline, a tourist area prized for its beauty.
For Kindermann and others there is no doubt the next few years will see Romania's wind market take off. "But it could be that it takes another three, four or five years before the market becomes mature and you can make money," he warns. EER's Catalina Robledo is more cautious, noting difficulties in validating many developers' pipelines.
Certificate prices high
Romania's relatively new membership of the European Union provides for a more certain legal framework and reassures investors that renewable energy development will remain a priority going into the future. Since 2005, the country has operated a market for trade of green energy certificates. These can be submitted by sellers of electricity to demonstrate they are meeting a legal requirement to include a specified proportion of renewables in their power supply portfolios. The proportion was initially set at 0.7% in 2005, rising to 3.74% in 2007 and is set to reach 8.30% in 2010-2012.
Power suppliers without sufficient renewables generation of their own can meet the mandate by buying green certificates from renewables producers. The price range for green certificates has been set at EUR 0.024-0.042/kWh. With demand outstripping supply, the maximum price has held good so far.
Darius Nath of local developer Blue Line Energy, which was recently acquired by Italian utility Enel, expects the shortage of certificates to last for the next five or six years. With the physical electricity currently being sold at a rate of EUR 0.035-0.045/kWh, the total price being achieved by renewable energy producers is a healthy EUR 0.077-0.087/kWh when green certificate revenue is included. "The price is at the limit," says ROWEA's Tantareanu.
The fly in the ointment in Romania is the short time horizon of the current market structure. As yet there is no indication whether and by how much the renewable energy requirement will be raised after 2012. At that point certificate prices will crash, removing the incentive for further investment in wind power.
A new incentive program has been promised, however. "There is a draft of new regulations," says Tantareanu. "These will give investors more vision for the next ten to fifteen years." Incentives are expected to be further improved and prices for green certificates raised. EER's Robledo suggests one issue that needs to be addressed is the lack of a clear mechanism for the obligatory off-take of wind power, which has meant wind power producers have found it tough to secure power purchase agreements. "I think that's another challenge going forward," she says. "Especially for independent power producers, there needs to be some mechanism that facilitates the process."
For Italian developer Fortore Energia, used to higher rates for wind power in its home country, improved incentives will be most welcome. The company's Antonio Salandra points out that for wind projects to be profitable in Romania without some kind of additional support at the construction stage, sites have to be found where annual electricity production amounts to the equivalent of the turbine having run at full capacity for 2500 hours of the 8760 in a year. In Italy, however, returns from sites offering just 1600 to 1700 hours of full capacity operation are acceptable. "Even 1500 can be remunerative," he says.
In Romania, it is a different story. "If you're able to obtain funding to reduce construction costs by about 30-40%, then it is remunerative at 2000 hours," says Salandra. While on paper such subsidies are available, experience so far shows they are less easily obtained. "Unfortunately, there is not a very clear environment for subsidies in Romania," notes Dan Costea of Bucharest law firm Voicu & Filipescu.
The decision by Enel to buy Blue Line and its 200 MW Romanian wind project portfolio indicates that it does not see the lack of subsidies as a drawback. The utility says the sites identified provide for between 2400 hours and 2800 hours of full load operation equivalent a year, with the first projects expected to be up and running within two to three years.
Others active in Romania include Portuguese developer Martifer, due to start construction on 50 MW of wind plant this year (page 66), and the UK's Good Energies, which is working with Continental Wind Partners on projects in the country. While Good Energies has secured 150 MW of GE Energy 2.5 MW turbines for its Romania projects (Windpower Monthly, January 2008), others may put Romanian project plans on the back burner as a result of the current global turbine supply shortage, warns Stefan Schmitz of law firm Squire Sanders.
"If they have 100 MW, obviously they will put the turbines in a place where they can make the most money and best service the turbines," he says. But he adds that developers are right to get moving in Romania. "It takes two or three years to develop a project and if they start now, they just might be ready in time for when turbines become available."