The Romanian Government recently submitted to public debate a draft of secondary legislation for the application of the law on the promotion of re-newable energy (Act No. 220/2008). The new feature of this draft secon-dary legislation is its provision of a “safety net” for the excess of green cer-tificates.

Romania has opted for a green certificates support scheme for renewable energy (as opposed to the feed-in-tariff system common among the EU-27).

Under the green certificates system each renewable energy producer is granted a number of green certificates for power fed into the electricity grid. These green certificates are tradable on competitive markets (the bilateral contracts market or centralised green certificates mar-ket). The offer side consists of renewable energy producers and the demand side of energy suppliers obliged to purchase a certain number of green certificates (known as the mandatory quota).

A criticism of this scheme raised by investors and financiers is that there is no purchaser of last resort for a possible excess of green certificates on the market. In the near future it is expected that green energy producers may not be able to sell their green certificates, given the lack of demand. Studies on the future development of the market anticipate that the of-fer of green certificates will exceed demand as early as 2016. This raises the issue of the lack of predictability of the cash flow and seriously affects bankability.

The draft secondary legislation contemplates a mechanism aiming to ensure a certain degree of compensation for the excess of green certificates. This mechanism is closely linked to the cooperation mechanisms provided by the Renewable Energy Directive (Directive 2009/28). It stipulates that the annual excess of green certificates shall be compensated from funds re-ceived by Romania from Member States on the basis of a statistical transfer (the statistical transfer consists in a transfer for statistical purposes, on paper, of a certain quota of green energy from one Member State – which has exceeded its projected target of green energy – to a Member State which cannot meet its respective target). The level of compensation is set at the medium trading value of the green certificates for the respective year. If no statistical transfer to a Member State is identified, the excess of green certificates shall be reported the following year.

Under the Romanian Renewable National Action Plan it is unlikely that any statistical transfer with other Member States will be carried out, as it will be a challenge simply to reach the na-tional targets. It is debatable whether the safety net mechanism described in the draft sec-ondary legislation will ever prove to be effective in real life.