Romania hunting for green certificate alternative

Sophie Udubasceanu

10-Dec-2014

The Romanian government could rethink its support system for renewable electricity through green certificates, one which has been enveloped in controversy, a source close to the matter has told ICIS.

Romanian renewable energy producers sell certificates to other energy suppliers that do not produce enough green energy to comply with mandatory annual quotas for this kind of generation.

However the potential to make money this way has already deflated after changes to regulation cut demand for the certificates and crashed the market. A smaller-than-expected increase in the most recent quota brought massive oversupply to the market, causing the price of a single green certificate to plummet to its minimum ( see EDEM 31 March 2014 ).

According to the source, the government’s energy department has now made statements suggesting the green certificate scheme could be replaced. The energy department was unavailable for comment.

No exact details have come to light on what alternatives are on the agenda, but one possibility is a feed-in tariff system.

This would guarantee renewable energy producers a fixed price for the electricity they deliver to the grid, generally paid by other users of the grid.

The source argued the government would have to set a fixed budget for any feed-in tariffs, as is the case for the green certificate system.

Yet feed-in-tariff systems in other European markets, like Greece and Bulgaria, have become unsustainable, putting a big drain on the funds of the companies obliged to pay the tariffs.

Smaller installations are already awaiting the implementation of a feed-in tariff scheme. The energy regulator ANRE told ICIS on Tuesday that a project to introduce feed-in tariffs for units under 500kW was released in July. But the government is yet to approve the draft bill.

A second alternative to the green certificate system could be to follow the path of the UK’s contracts-for-difference programme. This would spend government money on a limited number of green energy projects to prevent a renewable investment boom. The funding would fluctuate to reflect the price of electricity in the wholesale market.

In a 20-year energy strategy document released by the energy department on Friday, the government identified unstable regulation as a key barrier to investments, pointing to the green certificate system as an example.

There have been numerous changes to the green certificate system so far.

Renewable producers took a first hit in July last year when the government postponed some certificates that were due to be allocated to producers until 2017-2018.

The government then cut the amount of subsidy for all new installations as of 1 January this year, saying the funding had been too generous.

There was a smaller-than-expected increase to the most recent quota that dictates how many certificates other energy producers must buy to meet targets. This created a massive oversupply in the market and caused the price of a single green certificates to plummet to a set minimum.

The most recent auction on the market operator’s platform shows 159 offers against four bids. Sophie Udubasceanu


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