(P) Green certificates in Romania: An excess should not be a matter of concern

We are approaching at a fast pace towards the end of 2012, the first time when the renewables support scheme has been applied for an entire year in the updated form approved by the European Commission. The support scheme is regulated by Law No. 220/2008 and, starting with November 2011, it has been subject to an important amendment, providing that producers of electricity from renewable energy sources (RES) should be entitled to receive for each MWh generated and fed into the grid a different number of green certificates (GC), depending on the type of RES harvested. By Florin Dobre, Senior Associate, Pachiu & Associates | www.pachiu.com The new support scheme has triggered an immense interest from the investors willing to take advantage of this opportunity. Whereas wind power has been confirmed as their favourite choice, with more than 1600 MW commissioned1, the newcomer - solar power - seems to be the current “big thing” on the Romanian renewable energy market. Leaving aside the general issues in the sectors, such as those related to the limited capacity of the grid, the negative perspective regarding the establishment of new electricity consumption units that can sustain the RES electricity boom in the long term or the overcompensation issue, we will focus on a specific possible problem frequently brought up by investors: the perspective of an excess of GC. The GC excess may be presented as the situation in which more GC would be available on the market than the number of certificates the electricity suppliers are obliged to purchase. The reasons which can determine an excess of GC are the exponential development of renewable energy projects, the issuance of an increased number of GC and the fact that these certificates are only valid for a period of 16 months. In order to determine whether the GC excess is an imminent risk that may jeopardize the Romanian renewable market, we have to take a closer look at the two factors that influence the applicable mechanism: the GC quota and the maximum amount of renewable energy that may be sustained by the support scheme. The GC quota is determined by the division of the total number of certificates issued and the total consumption of electricity registered yearly. Considering the data published by the Romanian Power Market Operator (OPCOM), during the first 10 months of 2012, there were 4.2 million GC issued, and based on the estimations of the National Authority for Energy Regulation (ANRE), by the end of 2012, the number will increase to about 6 million of GC. In order to understand the evolution of these numbers, we may take into consideration that in 2011 only 1.7 million GC were issued. As a result of this high number, in 2011, the electricity suppliers were obliged to purchase one GC for every 27 MWh supplied to end consumers, whereas in 2012, the electricity suppliers had to purchase one GC for every 8 MWh supplied to final consumers. Therefore, irrespective of the number of GC to be issued in the following years, the GC quota will be automatically adjusted and, consequently, no GC excess would occur in this respect.