Czech utility company reports Romania to European Commission for cutting renewables subsidies

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Romania’s decision to stop paying renewable energy subsidies for seven years has been reported to the European Commission by Czech utility company ČEZ.  

In a policy change announced in early June, effective from 1 July 2013, the Romanian government has deferred payments to renewable energy producers, as well as suspending the issue of green energy certificates which renewable energy facilities must have.

The move could impact on potentially billions of euros of foreign investment in solar, wind and other renewable energy projects in Romania.

According to a statement reported by Reuters, ČEZ claims that the retroactive rule changes being applied go against the principles of the European Union. ČEZ argued that the measures could mean the utility company’s income from the production of wind energy at its facilities in Romania will be reduced by as much as CKR1.7 billion (US$89 million) a year. ČEZ owns 600MW of wind power capacity at its Fantanele-Cogealac park, the largest onshore wind farm in Romania.

Under Romanian renewable energy law in effect since 2011, the green certificates represent a mandatory acquisition quota, guaranteeing the sale of the electricity on the certificate to end distributors. In addition to guaranteeing sale and price of electricity, the certificates themselves can be traded on the national energy market or sold to power distribution companies. This has led to accusations of artificially inflated consumer energy prices. Certificates must be obtained for each megawatt produced with renewable energy producers required to apply for new certificates every two years.

The government decided to postpone the issue of green energy certificates until at least March 2017, far beyond the suggestion of ANRE, the Romanian energy regulator. ANRE had recommended strictly capping the issue of certificates once a certain amount of electricity production had been committed to in any given year. ČEZ claims that the postponement of certificates until 2018-2020 makes it difficult to assess how much money the company would stand to lose.

Previously, a goal of producing 24% of Romania’s energy from renewable sources was set through Romania’s role as a member of the European Union and a National Renewable Energy Action Plan (NREAP) put into place. ČEZ are among a number of foreign firms that invested in the Romania renewable energy market based on the attractiveness of subsidies. Over 2GW of renewable energy, mostly wind power, had been installed in Romania by the middle of 2013, with more in the pipeline. A number of megawatt-scale solar projects have also been connected this year, with more planned.

The European Commission is reported to be investigating complaints from renewable energy producers in Romania. The commission is next scheduled to produce guidelines on renewable energy support schemes and government intervention in the autumn.

The problems facing renewable energy suppliers in Romania are echoed in the Czech Republic, where industry figures have blamed the government for taking populist measures aimed at cutting inflated consumer energy costs to an extreme where they claim the renewable energy industry is being unfairly taxed. Bulgaria is also facing a similar situation.

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