Wind remains king in Romania with over 2,000MW of incentivized installation

With the government planning to cut the green certificate support scheme for some renewable technologies from July, a look at the specifics of photovoltaic and biomass projects, in which investors’ interest has accelerated in the past two years.Constantin Nita, Romania's...

Select Your Countries:
Albania
Bosnia and Herzegovina
Bulgaria
Croatia
Cyprus
FYROM
Greece
Montenegro
Romania
Serbia
Slovenia
Turkey
   

    
Select SIX industries you would like to appear:
Aerospace & Defense Agribusiness & Forestry Auto Industry
Capital markets Chemicals Construction & Materials
Economy & Statistics Environment Energy & Utilities
Financial Services Food and Beverage Franchising
Gaming Infrastructure Machinery & Appliances
Marketing & Advertising European Union Metals & Mining
Paper & Packaging Pharmaceuticals Real Estate
Retail Shipping Science
Telecoms, IT, Electronics, Media & Internet Textile & Clothing Tobacco
Tourism Transportation Wood and Furniture
Other        
Note: You can always change your choice later by unchecking the appropriate box or uncustomize all..        

Getting started

The first thing you need to do is choose a news reader, if you already don't have one. This is a piece of software that checks feeds you have requested and lets you read any new articles that have been added. There are various types of news reader. You should choose one that will work with your computer’s operating system.



When you have chosen a news reader, you can decide what content you want to keep up to date with. Please choose from below:

Albania Bosnia and Herzegovina Bulgaria Croatia
Cyprus FYROM Greece Montenegro
Romania Serbia Slovenia Turkey
INTERVIEWS BY BALKANS.COM      

Problems ?

Alternatively, you can paste one of the BBN RSS URLs into a new feed in your news reader.


http://www.balkans.com/rss/english/albania.rss
http://www.balkans.com/rss/english/bulgaria.rss
http://www.balkans.com/rss/english/cyprus.rss
http://www.balkans.com/rss/english/greece.rss
http://www.balkans.com/rss/english/romania.rss
http://www.balkans.com/rss/english/slovenia.rss
http://www.balkans.com/rss/english/bosnia.rss
http://www.balkans.com/rss/english/croatia.rss
http://www.balkans.com/rss/english/macedonia.rss
http://www.balkans.com/rss/english/montenegro.rss
http://www.balkans.com/rss/english/serbia.rss
http://www.balkans.com/rss/english/turkey.rss

Find more about RSS FEEDS !
Name:  Surname: 
Country:  Company name:
Email (Username): (If you would like to change your email address please notify us at news@balkans.com.)
Password:  Confirm password: 
Visak koda  
   
     

MY ALERTS

MAKE NEW ALERT

 E-mail article  Print  Save Additional News in English Još vesti na Srpskom Επιπλέον ειδήσεις στα Ελληνικά  Text

Wind remains king in Romania with over 2,000MW of incentivized installation



Balkans.com Business News Correspondent - 14.05.2013

With the government planning to cut the green certificate support scheme for some renewable technologies from July, a look at the specifics of photovoltaic and biomass projects, in which investors’ interest has accelerated in the past two years.
Constantin Nita, Romania's delegate-minister for energy, said the cuts to be borne by renewable producers are being made in a key move designed to rein in electricity prices for households and big industrial consumers. Industry players have made known in the past few months that they run the risk of having to close local operations due to footing the bill for green producers. Nita warned that leaving the support scheme unchanged would cost Romanian consumers around EUR 1 billion in 2014.
Under the proposed reduction, photovoltaic projects will receive three certificates, out of which one will be recovered from 2017 from a special basket of the energy regulator ANRE.
Romania's solar was previously granted six certificates, which has triggered an influx of investments from European and Asian companies. Meanwhile, investments in biomass projects are expected to pick up, as this technology has not been impacted by the cuts and is still granted between two and three certificates.
Wind remains king in Romania with over 2,000MW of incentivized installation, accounting for more than EUR 3.5 billion in direct investments, while hydroelectric plants have reached 430MW.
Capricious biomassAccording to consultants, biomass projects are more complex and bear higher risk, which may have deterred large investments in this sector.
Bogdan Belciu, partner, management consulting services, at the professional services firm PwC Romania, reckons the support scheme has so far encouraged investments in solar and wind energy.
“Biomass renewable energy capacities require vegetal fuel, which is after all a commodity and comes at a price, whereas wind and sunlight come free of charge. Therefore it is more cost effective for investors to pursue projects that have lower operational costs,” Belciu told BR. He added that most biomass energy plants have incorporated cogeneration technology that produces both electricity and heat, to make them more effective.
Ramona Volciuc-Ionescu, counsel at the law firm DLA Piper, said that biomass power plants present operational risks similar to conventional plants. She cited the difficult access to financing and the regulatory risks as factors that have made the sector less attractive.
The main challenges raised by the biomass sector include the insufficient incentives for producers of energy crops, along with the poor organization of the agricultural waste collection system and the underdeveloped legislation to promote the obtaining of forest waste, according to Cosmin Stavaru, partner at the law firm Bulboaca & Asociatii.
“There is also a long-term sustainability assessment that biomass should trigger, which is the environmental impact of large-scale biomass production and the competition with other agricultural outputs such as food products,” Stavaru told BR.
Romania has a little over 42MW of biomass plants, most of them using agricultural or forestry waste. The largest player is Austria’s Holzindustrie Schwieghofer, with 21MW in installed capacities. The company has four wood-processing sites in Romania.
Bio investments have registered lower growth rates as they involve the setting up of real factories, requiring more time for planning and execution, according to Ilias Papageorgiadis, CEO of More Group of Companies and president of the Romanian Association of Biomass and Biogas (ARBIO).
“Because until recently the sector was not well organized, only random investors had proceeded in the implementation of their projects and the installed capacity in Romania has just exceeded 40 MW,” Papageorgiadis told BR. “We estimate that this figure will increase by 50 percent this year, but the real explosion will take place over 2014-2016, assuming the investment conditions do not deteriorate.”
This spring, Romania’s Adrem Invest, a technical engineering firm, kicked off building works on a EUR 90 million biomass-fueled cogeneration plant in the north-eastern Romanian city of Suceva. The plant is the first of its kind in Romania and will provide cheaper heating for people still connected to the centralized system.
Corneliu Bodea, vice-president of Adrem Invest, explained that finding the right location with biomass nearby is critical for this investment. In addition, the producer needs to secure clients for its electricity and heating output.
“One of the biggest errors in Romania has been the disconnection of household consumers from the centralized heating system, which makes this technology less attractive. Nevertheless, I think that in the coming years, the cogeneration biomass sector will grow significantly,” Bodea told BR.
Belciu of PwC Romania suggested that the vast surfaces of unused agricultural land could be used to grow plants with high caloric potential, suitable for biomass.
“Taking into consideration the current intricate land-ownership structure in Romania, turning unused land plots into biomass cultures will not be easy,” warned Belciu.
ARBIO aims to reach 500 small projects under 0.5 MW and 100 projects over 0.5MW, which will create around 20 to 40 jobs each. The organization’s president says the biggest advantage of biomass is the Feed in Tariff that applies for installations below 2 MW. Small producers therefore have the option to choose between green certificates and a fixed price.
Cloudy days for solarThe proposed reduction of solar incentives by half has brought the photovoltaic sector close to a standstill, says Doru Voicu, president of the administration board of the Romanian Photovoltaic Industry Association (RPIA).
“I think that until it’s clear what will be modified, we will not see a relaunch of investment, and this will happen only if the changes are balanced, clear, and offer predictability,” Voicu told BR. He added that three certificates will not be attractive for solar investments, suggesting that 4.2 to 4.3 certificates could secure “a future” for the sector.
Stavaru of Bulboaca & Asociatii said the proposed cuts in solar may “look dramatic”, but the baseline for the cut is very high compared to the current investment costs per MW.
“Photovoltaic might be the renewable source with the largest fall in technology costs in the last few years, having dropped by approximately 50-60 percent between 2010 and 2013. Also, the support for solar was or is to be reduced in many other EU countries, so Romania may still preserve a competitive advantage,” said Stavaru.
The RPIA president added that solar runs a total cost of EUR 1.8 to EUR 1.9 million per MW.
But Volciuc-Ionescu of DLA Piper commented that investors’ interest in photovoltaic will “decrease substantially” if the ANRE cuts go through.
“There will still be some small-scale investments until the end of 2016, but this will also depend on whether the support scheme is amended this year and the changes made,” said the DLA Piper counsel. She added that the solar industry relies heavily on the cash flow deriving from the sale of green certificates, which represent more than 80 percent of total revenues, and less on the price of electricity.
Voicu of RPIA goes even further, warning that some existing projects may face bankruptcy, as the financing and contracts for selling green certificates have already been sealed.
The trading price of one green certificate stood at EUR 44.8 in April, according to the electricity market operator OPCOM. The figure has decreased constantly in the past year, due to the growing number of issued certificates.
Shifting interestConsultants told BR that biomass is not likely to serve as a safe harbor for investors, after the incentives in other sectors, mainly solar, are cut.
Papageorgiadis of ARBIO says there is no competition between technologies.
“Some 70 percent of the investors active in Romania do not have expertise in more than one technology, so if they leave the photovoltaic sector (which I hope will not happen) they will simply leave Romania and not switch to a different sector,” says the ARBIO president.
In the past four years, wind has registered a “Chinese style” growth in Romania, as one consultant put it.
Stavaru predicts we will not see wind investors turning to biomass in search of higher returns.
“At least for wind the situation does not look dramatic because many investors have decided to invest in Romanian wind projects based on a business plan with one certificate conceived under the old renewable legislation prior to 2011,” stated Stavaru.
He commented that investors in solar that are also specialized in biomass may switch to biomass due to its more favorable support.
Passing the financing testAt present, the financing of renewable projects has been put on hold, as both bankers and investors are expecting a final decision on cuts.
“At present, we are in a situation in which we are reconsidering the strategy on renewable energy,” Ioana Gheorghiade, executive director in the public sector and infrastructure financing department at BCR, told BR.
The bank, which is the largest lender in Romania, has built a portfolio of EUR 220 million worth of financing in the renewable sector. It includes wind, photovoltaic and small-hydro.
“We have several biomass projects under review and we want to include this type of project in our portfolio. However, investor interest has not been that strong; we saw there was less interest than in other areas,” stated Gheorghiade.
She commented that Erste Group, BCR’s parent, has financed extensive biomass and biogas projects in the Czech Republic, which were linked to agricultural producers. She added that this kind of cooperation is not too visible locally.
So far, banks have largely financed only wind and solar projects, given the more generous support scheme and the higher degree of availability of wind and solar resources compared to biomass.
“A biomass facility may be difficult to project finance for, mainly due to the specifics of the supply chain,” said Stavaru.
He forecasts that biomass capacities will double to 80MW this year, while solar might exceed 150MW. Voicu of RPIA reckons solar will not surpass 250MW this year, given the planned reduction of the support scheme and the possible enforcement of anti-dumping prices for Chinese-made solar panels.
The measure announced by the European Commission has already sent prices of solar panels up 15 percent since the start of the year, according to Voicu. Source;Business review Romania


LATEST NEWS ON BALKANS.COM

Related News in English

Povezane vesti na srpskom

Συναφείς Ειδήσεις στα Ελληνικά

Email