Romanian renewable producers fear further revenue cuts

Romanian renewable energy producers fear a further chunk of their revenues might be taken away, while green energy companies in the country teeter on the brink of bankruptcy.

The renewable industry has been severely affected by regulatory instability and a number of government decisions that weighed on renewable producers’ revenues. Under Romania’s renewable power support scheme, producers are given a set amount of green certificates per megawatt-hour delivered, depending on the technology. These are sold to energy suppliers, who are required to comply with an annual quota set by regulator ANRE. The cost is passed on to end-users.

Over the last three years the government has revised the quotas well below expectations. The quota defines demand in the sector, so as demand for the certificates was effectively swept away, revenues tumbled in comparison to projections.

The market’s substantial oversupply locked prices to their set minimum. Data from OPCOM indicates that at the most recent monthly auction for certificates, held in April, there were 71 offers and only four corresponding bids.

Revenue cuts

Speaking to ICIS on Friday, the Head of the Romanian Photovoltaic Industry Association (RPIA), Ciprian Glodeanu, voiced concerns over the possibility of further cuts to the minimum price of a green certificate. Glodeanu said several sources from government authorities had spoken of a plan to bring the price of a single green certificate from its current value of new lei 132.404 or €29.59 to €20.00.

“If this idea of a €20.00 minimum price [for a green certificate] will be [implemented], then it will be a disaster for everyone, including those that have already contracted certificates in advance,” he said, pointing out such a move essentially represents a 30% reduction in revenues.

The energy regulator ANRE was unable to comment on the matter by Friday afternoon.

Mihai Versescu, secretary general at the country’s association of renewable energy producers (PATRES), also confirmed to ICIS that he was aware of discussions within energy authorities on bringing down the price floor of green certificates. Versescu said that one of the PATRES members said that such a move could easily pave the way for a lawsuit against the government.

Glodeanu said he hoped such cuts would not happen and would never actually become a firm proposal.

Romanian renewable electricity producers are determined to continue fighting for the green energy sector. “I still have hope that the government of technocrats will take some decisions to bring some balance and respect basic principles,” Glodeanu added.

‘The green bankruptcy’

The claims of potential further cuts to the incomes of renewable producers follow an open letter from PATRES published on Wednesday. PATRES called on the government to “halt the green bankruptcy” and recommended a few regulatory changes to help keep the green energy sector afloat.

PATRES proposed enforcing the law that was first approved when the support scheme was introduced, or revising the law by adjusting the green certificates quota in order to cover all certificates issued.

PATRES also recommended extending the one-year validity period for certificates, taxing certificates at the point of sale rather than issuance, and reintroducing the trading of bilateral contracts outside of the platform run by market operator OPCOM. Romania banned bilateral trade outside of OPCOM in September 2012.

Glodeanu confirmed that the RPIA group also supported PATRES’ recommendations.

“Currently we witness a total lack of decisions that will lead to insolvencies and mass bankruptcy starting this year,” PATRES warned in the open letter.

The government’s resistance to upward adjustments in the green certificates quota most likely stems from fear of the impact on end-users bills. sophie.udubasceanu@icis.com