Problems facing the Romanian renewable power sector have cut so deep that one of the country’s wind power developers has taken the unusual step of disassembling one of its wind farms, and is believed to be planing the relocation of the turbines to another country.
Renewable energy developers have taken several hits over the last two years, with the government attracting criticism on what is now perceived as severe regulatory instability.
The generator’s financial situation was at the core of its discontent, which it blamed on several government moves.
Head of the Romanian solar industry association (RPIA) Ciprian Glodeanu previously told ICIS that investor interest had plummeted following chopping and changing of the country’s renewables support scheme.
The subsidy system allocates producers a number of green certificates for each MWh of renewable power delivered to the grid. Electricity suppliers are required to buy these certificates on the market to comply with a mandatory quota.
But in the last two years, the government has revised down the quotas well below expectations. The quota essentially defines demand in the sector. So as demand for their green certificates was effectively swept away, producers’ revenues tumbled in comparison to projections.
Glodeanu warned that some insolvency in the field could come as early as September or October this year.
But the latest twist in renewables producers’ tale of woe emerged this week, when major green producer Monssoon said it was to dismantle one of its wind farms.
The 27MW farm was installed in 2012, but was never switched on. Monsson said in a statement to ICIS that this was because of “an unfavourable regulatory context for investment in the sector”.
“Unfortunately, the major changes to renewable energy legislation do not allow the project to fit into the initially estimated economic framework, making it financially infeasible,” Monson said.
Despite its small size, the decision to tear down a project that has already been completed raises the key question of whether or not others will follow suit.
A source close to the matter told ICIS the turbines were most likely going to be moved and put back up in a different country with a more attractive subsidy scheme. Monssoon was unable to confirm plans for the physical relocation of the turbines, but did say it would take its planned Romanian investments elsewhere in Europe.
In July, RPIA along with several other lobby groups in Romania requested an urgent change to the public support schemes.
They called for an increase in the certificate quota and a halt to the licensing of new installations from September of this year, but exempting projects with non-refundable funds or in an advanced development phase.
Monsson also participated in the development of the 600MW Fantanele-Cogealac wind farm – the largest onshore wind farm in Europe. The giant wind park is owned by Czech group CEZ.
Other major foreign companies that have invested in Romanian renewable energy include the Czech energy group CEZ, Italian group ENEL and Portugal’s EDP.
A controversial government decision postponed the allocation of a portion of the green certificates until the 2017-2018 compliance period. Further changes to the support scheme implemented soon afterwards increased investor concern over regulatory instability. firstname.lastname@example.org