Romania to cut green certificates

10. June 2013 | Markets & Trends, Investor news, Industry & Suppliers, Global PV markets, Financial & Legal Affairs | By:  Vladimir Pekic

The Romanian government has approved legislation that will severely cut PV incentives for investors. Critics say the move could lead to a halt in foreign investment for the country's solar market.

Romania 8.75 MW PV plant

Critics say the new government ordinance will make Romania's PV market "unstable and unreliable."

The Romanian government announced a new emergency government ordinance on June 7 that will lead to the unexpected suspension of two out of six green certificates awarded to photovoltaic energy generators and which industry officials believe could lead to the cancellation of many PV projects.

The new ordinance modifies Romania’s earlier system that granted investors six green certificates per megawatt hour fed into the national grid if they completed their projects by the end of 2013. These certificates can then be traded in a price range of between a floor value of €27 ($35.70) and a cap value of €55 ($72.72), subject to indexation.

As a result of these changes, which begin July 1, the Romanian Energy Regulatory Authority (ANRE) will still issue PV solar plants six green certificates but withhold two of them until March 2017. Significantly, this provision does not include any guarantees that the two withheld certificates will eventually be recovered, which is a major source of concern for the industry. This new ordinance is expected to go into force on July 1, provided the European Commission is notified beforehand.

Ciprian Glodeanu, president of the Romanian Photovoltaic Industry Association (RPIA), told pv magazine: "It could be construed that according to this ordinance, a reduction of the green certificates for PV could occur even in the course of 2013. Nevertheless, it is not clear yet if the government would adopt any decision to reduce the green certificates for PV during this year. Such a reduction ... would obviously conflict with all public statements given so far by the representatives of the Romanian Energy Regulatory Authority, the energy minister and the prime minister, according to which there would be no reduction of green certificates before Jan. 1, 2014.

"We consider that this ordinance is abusive, against the Romanian constitution and breaches the principle stated under the Energy Charter Treaty, which was ratified by Romania back in 1998," Glodeanu added. "Also, it is a clear sign sent by the government that it has no clear vision regarding the renewable energy sector, which, by the enactment of this ordinance, will become unstable and unreliable."

Interestingly, as late as July 2012, the current government coalition supported law No. 134/2012, which stated that there would be no reduction of green certificates before Jan. 1, 2014, for PV and Jan. 1, 2015, for other technologies. "We do not understand what happened in these 10 to 11 months that triggered the government to change its opinion and to significantly alter the trust of investors in the Romanian business environment with these abusive measures. In these unpredictable and non-transparent circumstances, it is difficult to assess if investors will continue investing in the Romanian PV sector or if banks would keep on lending funds for such projects," Glodeanu warned.

RPIA expects that "most probably a lot of projects will be cancelled," which will decrease foreign direct investment in Romania. Last year almost 50% of such investment in the country came from renewable energy projects. In addition, other projects will not be able to serve their debts to the banks, creating additional pressure for banks that are still struggling to find a solution for the non-performing loans granted during the real estate boom.

Glodeanu said the ordinance violated two principles under the Energy Charter Treaty: fair and equal treatment of investors and discrimination. "We are expecting to see some international litigation against the abusive measurements taken under the ordinance and unfortunately such litigation would end up in Romanian tax payers paying millions of euros for the mistakes of the Romanian authorities."

Further complicating the issue is a report published by ANRE in March that recommended the reduction of the total number of green certificates for PV energy from six to three.

Glodeanu said the government "should definitely take into consideration that ... a reduction to three green certificates makes PV projects unattractive and not bankable."

The RPIA president added that if two out of three green certificates are suspended until March 2017, PV project development based on green certificates would essentially cease to exist.

Edited by Edgar Meza


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