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Insights Romania: Latest update on renewable energy legislation in Romania

Romania: Latest update on renewable energy legislation in Romania

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​In a nutshell:

After renewable energy transactions proved to be hardly predictable in Romania in 2016, and following an unexpectedly strong increase in the energy price on the Romanian energy exchange in early 2017, the Romanian Energy Regulatory Authority has made efforts to establish more balance on the energy and GC1 market. In response to investors’ claims regarding the sale of GCs, the above-mentioned increase in the energy price, and a number of violations by energy suppliers of contracts with energy producers, the Romanian government resolved to amend Law No. 220/2008 as regards renewable energy. The amendment,

proposed by the Romanian Energy Regulatory Authority, has implemented a change in the incentive mechanism, in particular
by appropriately adjusting the price and transaction framework applicable to GC trading.
Emergency ordinance No. 24/2017 has implemented, among others, the following important changes to the existing funding system:

 

The issue of green certificates has been further postponed

The issuing of GCs for solar energy, postponed in 2013 until 2017, was further postponed until 31/12/2024; the postponed certificates will be issued to energy producers proportionately in the period from 01/01/2025 to 31/12/2030. The postponed GCs for wind and hydro energy will be issued from 01/01/2018 to 31/12/2025.

 

Changed criteria for determining the annual quota of GCs to be purchased by grid operators

A so-called “Fixed Quota” has been determined in order to improve the allocation of costs between producers and end consumers. The annual Fixed Quota is determined by dividing the number of GCs estimated to be issued in the period 2017–2031 (including postponed GCs) by the number of years until the end of the state aid mechanism. This Fixed Quota will be revised and, if need be, modified by the Energy Regulation Authority every 2 years, taking into consideration the number of GCs actually issued in a given period.

 

Fixed Quota March–December 2017

The Energy Regulation Authority has set the Fixed Quota at 11,233,667 GCs. Consequently, the mandatory purchase quota in the abovementioned period is 0.358 GZ/MWh.

 

Limiting cost impact on end consumers

The average impact on the amounts invoiced by grid operators
to end consumers has been limited to EUR 11.1/MWh. If the Energy Regulatory Authority finds out that the impact exceeds the above threshold, the mandatory GC purchase quota will be recalculated by way of reduction.

 

GC validity period

The currently applicable GC validity period of 12 months has been changed so that all GCs issued after 01/04/2017 will be valid until 21/03/2032.

 

Valuation of GCs

All GCs issued after 01/04/2017 are to be recognised as energy
producers’ assets after their sale and not, as before, at the date of issue.

 

Expansion of the market for GCs

Two new markets: the “Centralised Anonymous Market for GCs” and the “Centralised Market for Energy from Renewable Energy Sources supported by GCs” have been made available since 01/09/2017. At the same time it has been forbidden to further extend the existing bilateral contracts for the sale of GCs or to increase the number of GCs for sale under the existing contracts.


Only one GC transaction is allowed between the producer (seller) and the operator (purchaser), except for cases where the purchaser has not met its purchase quota. In such a case, the producer may purchase the required GCs on the market.

 

What is to be expected next?

The following further changes or the expansion of the green
certificate funding mechanism are planned:


  • Extending the funding mechanism for an additional period if producers install storage capacities in the existing power plants;
  • New legislation on incentives for the production of energy from biomass and biogas or for highly efficient production of heat and power in combined heat and power plants with a capacity of up to 2 MW;
  • Expanding the funding mechanism to support the modernisation of the existing plants up to a national threshold of 4400 MW.


Furthermore, the Energy Regulatory Authority has recognised the issue of bilateral contracts on the public market OPCOM, so the option of granting qualified approvals for the conclusion of simple bilateral power supply contracts is being currently examined.

 

Finally, the government has budgeted a total of about EUR 20 million of state subsidies for the erection of CHP plants with an annual capacity of max. 8 MW.

_____________________
1 GC – Green certificates.

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