The Romanian Law no. 121/2014 on energy efficiency (the „Law”) was published in the country’s Official Gazette No. 574/2014. This regulatory act entails the implementation of the Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency and establishes the legislative framework for the development and application of Romania’s national energy efficiency policy.

The Law intends to increase energy efficiency in the country, with the aim of reducing energy consumption by 19% by 2020. The Energy Efficiency Department (the „Department”) is established within the National Energy Regulatory Authority in this respect as the body responsible for drafting legislative proposals, promoting the development of the energy services market, monitoring the progress of the implementation of the national energy efficiency plan, and cooperating with various authorities involved in this process.

The private sector – energy efficiency measures

The Law introduces (article 9) certain obligations imposed on business operators, which must appoint experts to perform an energy audit every four years and prepare energy efficiency improvement programmes that include short, medium and long term measures.

The business operators must also prepare and submit to the Department a statement of their total annual energy consumption by April 30th of each year. Those failing to perform energy audits until the entry into force of the Law (4 August 2014) are obliged to perform them by 5 December 2015.

By way of exception, those business operators whose annual energy consumption is more than 1,000 tonnes of oil equivalent and that have implemented a certified energy or environment management system will not be obliged to prepare an energy audit.

The specialised fund created for investments in energy efficiency will be accessible to a wide range of suppliers of energy efficiency improvement measures, ranging from energy services companies to end users. The organisation and operation of the fund is going to be further regulated by the Government.

The public sector

In order to ensure an efficient level of energy consumption in buildings (article 6 of the Law), 3% of the overall surface area of the buildings owned and occupied by the central public administration must be renovated annually in order to comply with the minimum energy performance requirements provided by the legislation in force. This measure might also be extended to the buildings owned by the local public administration.

General measures

In order to achieve energy savings, measures shall be adopted between 1 January 2014 and 31 December 2020 with the aim of achieving annual savings of 1.5% of the annual energy sales volume provided to consumers by all distributors or suppliers of energy volume, calculated as an average for three years time prior to 1 January 2013.

For this purpose, the energy policy measures aim to:

  1. train energy auditors to carry out independent energy audits;
  2. establish standards, rules and regulations for the application of energy efficiency technologies;
  3. support the development of ESCO-type energy companies (which supply services and measures in order to improve energy efficiency within the consumer’s premises/facility and which thus accept a degree of financial risk, as the payment for the services supplied is based on the improvement of energy efficiency and the ability to meet other performance criteria agreed to by the parties);
  4. create a specialised fund for investments in energy efficiency and certain financing instruments or fiscal incentives in order to apply energy efficiency techniques.

These measures will be implemented through national energy efficiency programmes, the target of energy savings achieved pursuant to them being 1% for 2014-2015, 1.25% for 2016-2017, and 1.5% for 2018-2020, with the reference base being the average annual consumption of energy in the 3 years preceding 2013.

Penalties

As concerns the penalties applicable to business operators failing to comply with the new legal provisions, substantial fines are expected to be applied, their amount varying according to the operator’s annual fuel consumption and their committed contravention. By way of example, business operators with an annual energy consumption of more than 1,000 tonnes of oil equivalent who fail to perform an energy audit every four years are subject to a fine ranging between 10,000 and 200,000 lei (ca. EUR 2,250 – 45,000).

Conclusions

The measures introduced in the energy efficiency sector have the role of stimulating this sector and are likely to contribute to the emergence and development of new entities and players with an increased specialization in providing energy efficiency services.

One can also expect banks to develop an increased interest in offering certain incentives and financial structures to players involved in this field. Consequently, Law no. 121/2014 may be a good opportunity for investors in Romania’s energy sector, who have been in an extended period of stagnation.