Zoltan Nagy-Bege
Vicepresident
ANRE

17 May 2021

 

The RES industry is enthusiastically preparing for a second wave of development. How does ANRE plan to support industry members in this process?

We would like a better control of technical connection approvals, and more transparency regarding areas where there is still available capacity. We started an inventory recently to understand just this, what are the spots where new capacities can be integrated, relatively quickly and without additional investment. We have already gone through a few rounds of reporting and every week the available capacity decreases, a sign that investors' interest is very high.

The main challenge is that a large share of investors and developers want to place their projects in areas where the wind and solar potential is at its maximum (Dobrogea), but the access is fairly limited because there are already numerous capacities installed.

We also want to change the way in which the available grid capacity is contracted, we are considering a model based on auctions. Just now we are in the process of selecting a consultant to put together a study that weighs the advantages and disadvantages of this model, and ways in which it could be implemented. The conclusions will be ready in about three months (July), including proposals for alternatives in case auctions don't prove to be the best way.

 

 

Investor confidence in the Romanian renewable energy market has returned and we want our actions to prolong this sentiment.

 

Why do you think that an auction-based mechanism is the most likely to work? And what are the associated risks?

I am concerned that if we simply publish this data (important for any investors/developer) we will only increase the value of the land around those points. So it would be useful to have a mechanism that prevents that. In the same time we want to avoid the phenomena that took place in the 2010s, when we reached a connection volume way higher than the available capacity: we ended up with about 5000 MW built, however, the connection agreements that had been granted suggested a total of over 15.000 MW. We want projects to be more realistic this time around.

Romania has had a slower path than other countries in terms of bilateral contracts, what can investors currently rely on from this point of view? And how do you expect changes in the balancing market to impact them?

The good news is that starting with January 1st 2020 the EU Regulation 943 which allows bilateral agreements (PPAs) has entered into force, and it is directly applicable to all member states including Romania. Meanwhile we also defined the concept of "long term contracts" as those longer than a month. In theory, anybody who want to conclude a PPA can do so, the only condition is that they obtain a producer license before their first delivery.

So for us the situation is clear, this type of agreement is permitted, but there are still some issues that leave market participants reluctant. Indeed, Law 123 continues to stipulate that trading on the centralized markets is mandatory. GEO 74/2020 did modify this law, in a way which allows the conclusion of PPAs, but only for capacities installed after June 1st 2020. This is an obvious discrimination against older capacities, in fact the European Commission has already signaled its disapproval. The solution to all these issues may come when Directive 944, essentially the new law of electricity, is transposed into national legislation

Regarding the balancing market, the move to a single price and a 15 minute settlement period places Romania among the first in Europe, as the actual implementation deadline was 2025. The month of February was closed under this model and, while it is early to draw solid conclusions, the signs are all positive: compared to January the balancing costs went down, and we hope this continues to be the trend.

The Government is considering Contracts for Differences (CfDs) as an option for support. Do you see it is a useful tool to encourage the development of renewables?

I don't think mature technologies still need a support scheme, it would be difficult for end consumers to take it on and the industry can nowadays support itself through other means. For instance, I hope to see as many projects as possible that are funded with European money, especially now that we have so many options available. I would also note that a balanced mix remains crucial - if we pursue one single direction this balance breaks. We need renewable energy as well as gas capacities, and there is plenty of interest for both.

 

 

 

 

 

 

 

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