RES Investment Made Easy: Development Step by Step

17 May 2021

The green energy segment had its share of challenges in Romania as in most other jurisdictions. However, new projects have been announced as of 2021, foretelling a new wave of developments. The overarching market fundamentals point not only to a repeat, but a surpassing of the 2010-2013 investment boom. 

RWEA (The Romanian Wind Energy Association) is supporting this new wave of investment through the publication of a  Code of Good Practice for Renewable Energy which will help stakeholders navigate the full process, from permitting and development to repowering & decomissioning. A summary is presented below and the full process will be available upon the launch of the Code of Good Practice, on May 26th 2021.

 

STEP 1: Understand the Legislation

Legislation can make or break a successful energy project (and it has!) so one of the first things to pay close attention to in this business is the regulatory and legal framework that defines the industry. Romania’s laws have undergone certain amendments in the past 13 years since renewables first set up shop in the country, aligned with the European acquis, but also adapted to market conditions. The civil law system treats local and foreign investors equally and is welcoming of overseas investments.  

STEP 2: Choose & Secure Your Location

Depending on the project’s nature, you should first conduct preliminary studies to understand exactly how much energy could be obtained in your location of choice, assess whether the land is appropriate for such developments and the energy source sufficiently plentiful. 

This process includes an array of wind tests, solar irradiation tests, geotechnical, topographical studies and noise studies, among others. These tests should be performed within a specific period of time, depending on the renewable energy technology used. For wind, the recommended period is approximately 12 months. 

As a next step you need to secure the relevant rights to the land. According to Romanian regulations, constructions may be erected only by the land owner or the holder of another building right (the so-called rights in rem, Ro: drepturi reale). A simple lease agreement does not entitle the lessee to obtain a building permit. In addition, depending on the location of the project, you might need to secure additional easements (e.g. rights of way, blades’ servitudes), on neighboring properties or on local roads in order to ensure access to the project. Ownership and rights in rem must be registered with the Land Registry in order to ensure their effectiveness against third parties. 

BEST PRACTICE: In Romania RES developers benefit from a statutory right of use and easement over neighboring properties to the extent needed for their projects. However, in reality, landowners often do not allow access without the payment of certain compensation. They are your neighbors so it is important to negotiate openly and ethically (i.e. propose a fair price, use your legal knowledge to draw up terms that are favorable to both of you). This is also the right me to start legal procedures to remove the land from the agricultural circuit, a procedure that is known to be time (and money) consuming. 

STEP 3: Engage the Community

A very important, albeit often neglected dimension of planning for the development of wind and solar farms is building trust and gaining the cooperation of local communities. 

This is an aspect that goes above and beyond the developer’s legal obligation for public consultation, as it involves an actual in-depth understanding of local public perceptions, beliefs, fears, expectations, and risk assessments with regard to the planned investment. A diligent developer will anticipate the economic, environmental, and public health impact and plan accordingly. Once you get a proper understanding, a set of accessible and common sense explanations must be tailored to the public. Talk clearly and honestly about the benefits of building and operating a RES project in the community 

BEST PRACTICE: You can and should work hand in hand with the authorities, who after all share the same goal of bettering the community. It is important to say that the business is here to stay and not be stingy about sharing the benefits. 

In particular, your communication specialist – there should be one as it is far more expensive to miscommunicate – needs to be familiar with the main narratives in the central and local media. Stories that sift through social media also have ripple effects and shape public perception, for the better or worse. When handled poorly, the collective emotions triggered by such narratives translate into fears and concerns about the presumed negative effects of the project’s operation upon the local environment, agriculture, biodiversity, public health etc. If the case, these must be addressed in their own terms, through direct engagement and accessible, though well-documented communica on. 

STEP 4: Obtain the Necessary Permits

The permiting process in Romania is actually simpler and faster than in most other EU jurisdictions. But it is still important to make sure your documentation folder is complete upon submission, with all steps taken in the right order and a timely fashion. What makes a difference when dealing with the authorities is coming from a place of understanding and patience. Obtaining a permit can seem simple and straightforward but sometimes rules vary from one county to another in Romania and some exibility is needed. 

You will need to obtain civil, grid connection and post-construction permits - this takes about 540 days and you will interact with four public institutions in the process. 

STEP 5: Register to Sell Electricity

Once the RES facility becomes operational you can start selling energy. Wholesale trading takes place on centralized markets, organized and managed by OPCOM. To operate on OPCOM, the RES producer must register with the market administrator signing a participation contract, a lease contract for the USB token key and a REMIT contract to empower OPCOM to report on all transactions where the RES producer is a contracting party. 

Furthermore, you need to register with the TSO to buy and sell electricity as a Balancing Responsible Party (BRP).  The TSO manages the balancing market (established in 2005) by buying and selling active electricity from and to market participants, holding dispatch units in order to compensate any deficit or excess of production. This market is binding for all license holders. You will therefore need to register as a BRP and receive an EIC code from the TSO, or transfer responsibility to another BRP. Transferring comes with the advantage of aggregating imbalances and reducing costs. Bringing together several participants in the same BRP means mutual compensation of individual imbalances and the efficient distribution of costs and benefits. Your role as a BRP is to balance the differences between the contracted electricity and the electricity measured at full contour level by offering competitive prices and high-quality services to license holders who delegate their responsibility to you. 

 

This article was originally published in The Code of Good Practice for Renewable Energy in Romaniawhich will be launched on May 26th 2021. You can attend the launch event by registering here.

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