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Romania – “Our target for 2020 is 4,000 MW but I think we will go beyond this”
Wind energy overview Installed capacity end 2011: 982 MW 2020 target: 4,000 MW
EWEA summary: Power market
Wind energy targets
ith Europe’s largest onshore wind energy farm now generating electricity, Romania has hit the wind energy headlines with force. Just at the end of 2012, the 600 megawatt Fantanele/ Cogealac wind farm in the Dobrogea region came online producing enough power for more than one million Romanian households each year. The wind farm could be considered as the pinnacle of Romania’s recent success in wind energy – the birth of Romanian wind power occurred in 2010 but by 2011 the sector was already the second largest of the EU’s newer Member States and it has one of the fastest growth rates in Europe, surpassing the 100% growth rate mark each year from 2010-2012. “There are already a lot of countries behind us who started wind power much earlier than Romania, including Austria, Greece and Belgium”, Ionel David, President of the Romanian Wind Energy Association, said. And the success story doesn’t stop here. For 2013 work is expected to start on some 1,352 MW of wind energy projects which, once online, will raise the country’s overall capacity level to 3,473 MW – over a gigawatt more than the target level outlined in the Romanian national renewable energy action plan (NREAP) for 2013 (set at 2,450 MW). By 2020, according to the Romanian NREAP, wind power should be producing 8.4 TWh of electricity per year, accounting for 11.4% of the country’s electricity demand. But just how has Romanian wind power risen so high? And, what is the picture looking ahead?
Sturdy support; foreign investor confidence One of the most important factors is undoubtedly that Romania currently has one of the most attractive support mechanisms for wind power in Europe’s emerging markets. The system, which was agreed in 2008 and fully implemented in 2011 after being approved by the European Commission, is a system with green certificates. Under its terms, two green certificates are issued per MWh, and wind power producers receive from €56-€114.8 per MWh produced, which will fall to one green certificate per MWh from 2018. “This system is very favourable, and the current promotion on green certificates is an incentive to invest soon”, David said. As a result, Romanian wind power has attracted substantial interest from outside its borders - one-third of all foreign investment in Romania can be found in the wind sector, the freshly online Fantanele/Cogealac wind farm was developed by Czech group CEZ, and several other wind farms above 100 MW have been developed by Italy’s ENEL and Portugal’s EDP Renovaveis. In fact foreign companies, many with local subsidiaries, account for over 80% of the country’s wind farms, in particular for larger projects exceeding 5 MW, which has had the added effect of boosting its attractiveness for further foreign investment. “The message that sound investments may be made in Romania seems to be getting across to investors,” Raluca Voinica from PwC said. “This is surprising considering the low business
WIND DIRECTIONS | February 2013
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environment ratings received by Romania over the Grid infrastructure is another grey area and one coming under growing pressure especially as past couple of years, in the context of the signifithe demand for connection permits continues cant and enduring economic contraction and the to rise. According to Voinica, the Romanian instability of the political regime,” she added. Transmission System Operator estimates that Another factor has played a role in foreign interthe grid can handle around 2,500-3,000 MW est in Romania – the involvement of the European of wind capacity, and yet connection permits Investment Bank (EIB) which includes a €200 milhave already been signed for 8,831 MW of wind lion loan to CEZ for the Fantanele/Cogealac project. energy capacity. “Wind power developers need However, Alessandro Boschi from the EIB stressed to invest in the grid and build the necessary subthe fact that in order to get access to EIB funding: stations and connections,” David urged. “projects must demonstrate that they can fulfil EU While the expansion of Romanian wind environment and social standards,” warning, and power can be attributed to the strong support “this is often quite challenging in Romania” mechanism, changes to the Romanian legislative Those reservations aside, the Romanian framework for wind power can be unpredictable, finance outlook seems bright for the years to come with the current high levels of foreign invest- Voinica said. “Laws covering wind power and its associated industrial sectors leave room for ment creating an environment of confidence for interpretation over aspects such as the applifuture foreign investors. “We expect that foreign cability of property tax, the treatment of assets investors will continue to capture the lion’s share for depreciation purposes and of large projects,” Voinica said. the management of the sale, Meanwhile, local companies are ac- “Foreign investors concession or leasing of plots of tive further down the supply chain will capture land by public authorities,” she and they will eventually dominate the market for smaller wind farms, the lion’s share of explained. Another hurdle for developers she added. large projects.” is one that is familiar across One other factor in the mix is that Europe: red tape. A Romanian Romania has a good wind resource wind farm needs around 85 permits and licenses with average speeds of around eight metres per which are only obtained after filling in complex second onshore and 10 m/s offshore and at an documents. The result is that permitting can altitude of 100 m or more. The Dobrogea region is take at least two or three years. considered to be the country’s most promising zone with high potential for more wind farms in particular thanks to the fact that villages are relatively large 2020 targets within easy reach distances apart leaving plenty of space for turbines, Romania is in touching distance of its 2020 David said. NREAP target of 4,000 MW. If the projects planned for both 2012 and 2013 are completed as scheduled, only 527 MW will still need to be Underlying problems installed for the target to be met – or, in other Solid wind energy growth in Romania is happenterms, just 80 MW per year over a seven year ing already, but the Romanian wind energy sector period. “It is highly probable that Romania will does have underlying problems it needs to admeet or even exceed its targets,” Voinica said. dress if growth is to continue. All it largely needs to do to get there is to mainFor David, the most pressing issue is linked to tain the current support scheme and to invest in Power Purchase Agreements (PPA) – a legal bilatgrid infrastructure development, she added. eral contract between an electricity provider and “Our target for 2020 is 4,000 MW but I think a power purchaser such as a utility. In July 2012, we will go beyond this to at least 5,000 MW,” following legal uncertainties surrounding some David said. PPAs in Romania’s electricity sector, they were Looking further into the future, as the wind banned by the government. “This has had the sector moves towards maturity, the growth rates effect of making banks reluctant to invest,” David are likely to dwindle somewhat. The underlying said. “As a result we have had to revise down our reasons for a probable slowdown in growth intargets for next year,” he added. But David is confident issues surrounding PPAs clude the development of the most economically viable locations and the fact that the government can be resolved soon. In January the EU and could well reduce its backing of the sector once the World Bank are due to monitor Romania and the National Renewable Energy Action Plans could give a green light to PPAs, he explained. “I (NREAP) targets are met, says Raluca Voinica am hopeful the issue can be resolved by midfrom PwC. February,” he said.
WIND DIRECTIONS | February 2013
Wind Directions February 2013 Pag 32 33 Romanian Statistic