CEZ's total investment in the adjacent 347.5 MW Fantanele and 252.5 MW Cogealac wind farm sites, the first of which will use GE Energy's new 2.5 MW turbine model, is expected to reach about EUR 1.1 billion. Fantanele and Cogealac are located in Romania's Dobrogea province in the south-eastern part of the country, about 17 kilometres from the Black Sea.
Construction of civil and electrical work was to begin last month, with turbines to be erected in phases, starting in April. Fantanele should be operational by the end of next year, with Cogealac coming online by end 2010. Once complete, CWP says the project will account for about 30% of Romania's renewable energy market.
CWP is managing the construction of the project, which was originally developed for renewable energy investor Good Energies, a unit of the Switzerland-based conglomerate Cover Group. Good Energies, which owns a 21% stake in Continental Wind, has already procured the 139 GE turbines for the first phase of the project through a framework agreement reached last year with GE for a total of 150 turbines. The remaining 11 turbines under the agreement will be used for other projects backed by Good Energies. It will be up to CEZ to secure turbines for the Cogealac site, a process it says is underway.
While the Romanian project is large by any standards, Andrew Lee of Good Energies foresees no problems with the country's grid absorbing its power, highlighting some of the site characteristics that made it ideal for locating a wind plant. "You have a huge open plain with a flat countryside, with no people and a 400 kV transmission line running down part of the site that is a main artery in the grid left by the Russians."
Lee says Good Energies would have liked to hold on to the 600 MW Romanian wind farm project for longer, but was forced to sell given the Romanian wind market's lack of transparency. "We are independent and do everything on a normal project basis and therefore for financing, you need transparency on tariffs. In Romania, the incentive regime expires in 2012. Project finance banks are not in the business of taking on that much risk," he says, referring to the short time span in which the purchase price of wind power in Romania is supported in law.
While draft legislation to institute a new incentive system has been circulating for some time and is sure to be approved eventually, given Romania's participation in the European Union, no law has been forthcoming. With general elections called in Romania for November, the details of structuring a national market for renewable energy are far from being a top priority for the government. The current market is based on awarding green certificates to renewables generators that sellers of electricity must buy to comply with a law requiring them to include a proportion of green power in their sales. The system is generally seen as satisfactory by market players and is likely to be improved when a new and extended regime is unveiled.
CEZ is already present in the Romanian market, where it acquired electricity distributor Eletrica Oltenia and its 1.4 million customers in 2005. State-controlled CEZ, which is also the largest listed company in Central Europe, said it is continuing to eye opportunities in Romania, including in its renewable energy business in general and wind specifically.
While it hands over this Romanian investment opportunity to CEZ, Continental Wind Partners is continuing to develop wind projects in the country and is poised to be there when an improved market incentive program is in place. "In Romania, I feel confident on about 500 MW of projects in development," says Adam de Sola Pool, CEO of Continental Wind Partners and one of four founding partners who set up the company in 2006. "We actually have much more than that, but in the early stage, projects can come and go."
As they wait for clarity on the incentive front in Romania, Lee says the next Good Energies-backed Continental Wind Partners project to reach construction will be a 160 MW wind farm project in Duszniki, Poland. The Duszniki project is part of a 1000 MW development pipeline that Good Energies holds in Poland.