Romania seems to be one of the most attractive CEE jurisdictions for renewable en-ergy investments, due to the generous support scheme which generated increasing enthusiasm over the past few years. Implemented in 2005, the support scheme for renewable energy (RES) consisting of tradable green certificates (GCs) combined with mandatory acquisition quotas was improved in 2008 and subsequently in 2010, but was only applicable as of mid-2011, upon state aid clearance from the European Commission (EC).

In the context of several European member states dramatically reducing their na-tional support schemes, the wind of change has started to blow in Romania as well, with the local market being invaded by rumors and talk about various scenarios. An unofficial working draft of the Government Emergency Ordinance (GEO) aimed at amending the law currently in force (Law no. 220/2008) was circulated on the mar-ket. This draft has not yet been made officially public, and will only be put forward for public consultation after receiving final approval in a Government session.

These are the key provisions of the working draft (which may be altered during dis-cussions with the industry, business associations, the regulator, etc.):

Limitation of installed capacity and financial guarantees

  • The transmission and distribution network operators will only issue grid connection permits for RES plants up to a 3,500 MW installed power; this limit may be further revised by the Government upon proposal by the TSO (transmission network operator), having regard to the increase of the bal-ancing capacity (this is new wording, without correspondence in the current legislation); in view of the fact that connection agreements have been exe-cuted in respect to more than 15,000 MW, it is unclear how this provision will be enforced;
  • Upon issuing of grid connection permits, network operators are allowed to request financial guarantees, whose amount and execution mode will be further determined by the energy market regulator - ANRE (this is new wording, without correspondence in the current legislation);

Value of Green Certificates

  • The maximum price of green certificates is set to EUR 30/MWh, applicable as of 1 July 2013 (this compares to the current value of EUR 55/MWh; the minimum value of EUR 27 EUR/MWh remains unchanged);

Penalties for not reaching the Green Certificates acquisition quota

  • The penalty for failure of electricity suppliers to reach the green certificates acquisition quota is set to the double of the maximum green certificates price for each non-purchased green certificate (this compares to the cur-rent legislation providing for a penalty of EUR 110);
  • The penalties applied to suppliers not having met their green certificates acquisition quota will not be included in the electricity bill to final consum-ers (this is new wording, without correspondence in the current legisla-tion);

Monitoring and applicability of overcompensation measures

  • The overcompensation monitoring will be done twice a year (this compares to the current annual monitoring);
  • The measures aimed at correcting the overcompensation (ie reduction of the number of green certificates allocated to the respective technology) and their date of entry into force are approved by Government decision (the current provisions stating that (i) overcompensation measures apply only to new entrants, and (ii) the delayed application until 2015, respectively 2014, of overcompensation adjustments are thus repealed); this new provision may be used by the Government to retroactively (ie for projects that are already operational) apply a potential decrease in the number of green certificates for a specific technology;

Exemption for large consumers

  • Large final consumers with an annual consumption in excess of 1,500 GWh will be exempted from paying the value of GCs; the 1,500 GWh-threshold may be subsequently modified by the Government;

Guarantee fund

  • ANRE may subsequently regulate a fund to guarantee the functioning of the GCs market, in case there is a significant imbalance between offer and demand of GCs (the current provisions regarding the setting-up and operation of the guarantee fund are thus proposed to be repealed);

Other provisions

  • The additional green certificate granted for cogeneration and biomass will also be considered in the calculations of overcompensation;
  • The operational plants having benefitted from state aid before 1 January 2013 will no longer be exempted from a potential reduction of GCs number due to overcompensation;
  • Producers will benefit from green certificates as of the date of the accreditation decision (compared to the current wording where the benefit is granted as of the month of issuing the accreditation decision);

General

  • The above amendments will not have retroactive effects (it is unclear what the meaning of the non-retroactive effects is, as long as the working drafts provides for certain measures that may also be applied to operational projects) and will be applied after notification to and clearance from the European Commission.

While the key provisions above have generated uncertainties and sometimes panic on the market, it is still premature to have a view on how strong the wind of change will eventually blow.