Romania: Barriers In Developing Renewable Energy Projects

For the last few months, all attention in the Romanian renewable energy sector has been centered on the outcome of the authorisation of the support scheme regulated by Law 220/2008 on the promotion system for the energy generation from renewable energy sources by the EU Commission. The uncertainty surrounding the support scheme has led to a slowdown of investments in renewable energy projects. The lack of predictability of the cash flow questions the bankability of the projects and thus financing institutions are reluctant to finance renewable energy as long as the support scheme is not confirmed. Uncertainty is now growing as it appears that full cumulating of green certificates and subsidies will not be allowed, no requirements being clearly set yet in this area.

Support schemes seem to be going through a "crisis" in the region. As an example, the Bulgarian Parliament has recently adopted a new renewable energy act, which sets forth a less appealing support scheme. The main change consists in the fact that the applicable feed-in tariff will be determined only upon completion of the construction of the project. In effect, investors in green energy in the Bulgarian market may not estimate the applicable feed-in tariff (and thus, the project cash flow) until completion of the capital investments. Moreover, the guaranteed term of the off-take agreements has been shortened.

However, while the support scheme applicable to renewable energy is essential, there are additional barriers that lower the appetite for investments in this sector, such as the complexity and timeframe of the administrative procedures. Developers experience lengthy permitting periods that prove to be excessively complicated, triggering higher risks during the development phase.

The effects of these administrative barriers on the development of the renewable energy represent and European-wide concern and have been addressed at European level by the Directive 28/2009 on the promotion of the use of energy from renewable sources.

Administrative procedures aim to ensure that certain public objectives are met, such as environmental protection, zoning and change of land designation. Directive 28/2009 sets forth several requirements aimed to reduce the burden of the administrative procedures.

The authorisation, certification and licensing procedures should be proportional and necessary. Hence, permitting procedures applicable to renewable energy should correspond in complexity and timeframe to the size of the specific project and its potential construction and operation risk. Moreover, simplified procedures (including simple notification, where applicable) should be put in place for small scale projects.

Other requirements are set forth by Directive 28/2009, such as, for example: clear coordination among the various administrative authorities involved in the permitting process; access to comprehensive information on the processing of applications and on available assistance to applicants; streamlined and expedited permitting procedures; transparent and cost-related administrative charges etc.

A number of important measures should be taken with a view to transpose these requirements into the national legislation. For example, one possible solution would be to set up a one-stop shop responsible for processing permit applications. Such single administrative body responsible for ensuring the coordination with the various other authorities would reduce the number of necessary steps and contacts for the applicant.

Moreover, guidance should be made available to all applicants at local level, so that developers are aware in advance of the nature and complexity of the permitting procedure. During the public debate on Romania's National Renewable Action Plan, it has been requested that information points be set up at the level of each county, ensuring access to information regarding the permitting procedures applicable to renewable energy. This may also ensure a more uniform permitting procedure applicable throughout the country, as at the moment developers are facing different approaches and requirements depending on the region of the country where the project is effectively developed.

Simplified procedures should be put in place for small scale projects, in addition to the existing exception from obtaining the setting-up authorisation from ANRE, the regulator of the Romanian energy market, applicable to projects with a capacity less than 1 MW. As best practice example, in Germany no building permit is required to install photovoltaic panels on private houses, with the exception of historic buildings.

Once the requirements of the Directive 28/2009 will be transposed into national legislation and the administrative barriers will be removed, it may be expected that the development of the renewable projects will be streamlined, expedited and less burdensome.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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