Edited by Bernd Rajal/PGReg
Contents
- Romania
SAFETY NET FOR THE EXCESS OF GREEN CERTIFICATES – WILL IT WORK? - Slovakia
CHANGES IN THE PROMOTION OF RENEWABLE ENERGY - Moldova
THE MOLDOVAN AGENCY FOR ENERGY EFFICIENCY: A NEW MOVE TOWARDS GREEN ENERGY
Country Reports
ROMANIA: SAFETY NET FOR THE EXCESS OF GREEN CERTIFICATES
– WILL IT WORK?
By Monica Cojocaru
The Romanian Government recently submitted to public debate a draft of secondary legislation for the application of the law on the promotion of renewable energy (Act No. 220/2008). The new feature of this draft secondary legislation is its provision of a "safety net" for the excess of green certificates.
Romania has opted for a green certificates support scheme for renewable energy (as opposed to the feed-in-tariff system common among the EU-27).
Under the green certificates system each renewable energy producer is granted a number of green certificates for power fed into the electricity grid. These green certificates are tradable on competitive markets (the bilateral contracts market or centralised green certificates market). The offer side consists of renewable energy producers and the demand side of energy suppliers obliged to purchase a certain number of green certificates (known as the mandatory quota).
A criticism of this scheme raised by investors and financiers is that there is no purchaser of last resort for a possible excess of green certificates on the market. In the near future it is expected that green energy producers may not be able to sell their green certificates, given the lack of demand. Studies on the future development of the market anticipate that the offer of green certificates will exceed demand as early as 2016. This raises the issue of the lack of predictability of the cash flow and seriously affects bankability.
The draft secondary legislation contemplates a mechanism aiming to ensure a certain degree of compensation for the excess of green certificates. This mechanism is closely linked to the cooperation mechanisms provided by the Renewable Energy Directive (Directive 2009/28). It stipulates that the annual excess of green certificates shall be compensated from funds received by Romania from Member States on the basis of a statistical transfer (the statistical transfer consists in a transfer for statistical purposes, on paper, of a certain quota of green energy from one Member State – which has exceeded its projected target of green energy – to a Member State which cannot meet its respective target). The level of compensation is set at the medium trading value of the green certificates for the respective year. If no statistical transfer to a Member State is identified, the excess of green certificates shall be reported the following year.
Under the Romanian Renewable National Action Plan it is unlikely that any statistical transfer with other Member States will be carried out, as it will be a challenge simply to reach the national targets. It is debatable whether the safety net mechanism described in the draft secondary legislation will ever prove to be effective in real life.
SLOVAKIA: CHANGES IN THE PROMOTION OF RENEWABLE
ENERGY
By Gudrun Stangl Lutz and Lucia Tadlánková
As a reaction to the situation in the Czech Republic, in December 2010 the Slovak Parliament adopted tighter rules for the solar energy sector.
Powered by extremely generous feed-in tariffs, the loose rules for the issuance of permits for these energy facilities in Czech Republic has resulted in the mushrooming of solar energy projects, particularly taking into account the limited size of Czech market. As a result, electricity prices for Czech consumers have increased significantly. By means of legislative changes, the state is trying to regulate the construction of photovoltaic and wind energy facilities, which are considered by Slovak Transmission System Operator (SEPS) to be unpredictable renewable energy sources that may influence the stability of the transmission system.
Pursuant to the Amendment to the RES Promotion Act (the Amendment), from 1 February 2011 (apart from some provisions effective as of 1 April 2011), only solar rooftop facilities or solar facilities on the exterior wall of buildings with capacity not exceeding 100kW are promoted in the form of additional payment. Promotion in the form of the transfer of liability for deviations is also reduced to 1MW of installed capacity (previously 4 MW) with respect to non-photovoltaic facilities. The regulation of the transfer of liability for deviations is even stricter regarding solar facilities: this is reduced to 100kW of installed capacity (previously 4MW). Further, according to the Amendment, the Regulatory Office shall be entitled to reduce feed-in tariffs for solar and wind energy facilities without limitation, i.e. by more than 10% in respect of the next regulation period (previous regulation). The Amendment also specifies conditions for the reconstruction and modernisation of existing devices. The total costs for reconstruction and modernisation must exceed 50% of the total investment costs of the producer. The changes in the promotion scheme will not affect projects under development with a building permit effective prior to 1 February 2011 and with a use permit issued prior to 1 July 2011.
The solar energy boom in the Slovak Republic was caused by legislation unable to react to the decreasing prices of photovoltaic components due to regulation that stated that the tariff could not be decreased by more than 10% per year, while investment costs decreased much faster. To lift this restriction, amendments to the regulation were necessary. However, the new regulation, in combination with previously introduced administrative restrictions of grid operators, sharply cuts the benefit and heavily favours small residential installations under 100 kW compared to larger commercial solar projects. This follows the trend in other European countries like Spain and Germany, which have changed their promotion schemes to favour small distribution solar owners. As a result, new solar and wind energy projects in Slovakia are on hold due to the practical impossibility of obtaining the necessary permits – and, as of 1 February 2011 and 1 April 2011 respectively, also due to the restricted promotion.
Nevertheless, with an annual solar irradiation per square meter comparable to that of southern Germany, Slovakia is still an interesting market for investors. The country's National Action Plan for renewable energy sources, adopted in October 2010, assumed that the Slovak Republic would meet its commitment primarily by way of supporting the generation of heat by biomass and high efficiency cogeneration production. Biomass is also considered to be a prospective alternative source for electricity generation.
MOLDOVA: THE MOLDOVAN AGENCY FOR ENERGY EFFICIENCY: A
NEW MOVE TOWARDS GREEN ENERGY
By Vladimir Iurkovski and Andrian Guzun
On 21 December 2010 the Moldovan Government adopted the Decision "on Agency for Energy Efficiency" and approved the Regulation "on organization and functioning of the Agency for Energy Efficiency" (GD 1173/2010). The chief mandate of the Agency for Energy Efficiency (the Agency) is to ensure the accomplishment of the objectives from the National Programme "on improvement of the energy efficiency". Further, it will supervise the evolution of energy efficiency and renewable energy in the country.
The Agency replaces the former Moldovan National Agency on Energy Conservation, established in 2002 and now deemed inefficient.
The Agency shall be subordinated to the Moldovan Ministry of Economy. Its funding shall come entirely from the Moldovan national public budget. The Agency shall be coordinated and represented by a general director and a deputy general director, both appointed and dismissed by order of the Minister of Economy. Pursuant to GD 1173/2010 a number of services shall exist to support the Agency's management (e.g. responsible for renewable energy, energy efficiency, accounting, etc.).
Given the goals on renewable energy and energy efficiency established in Act No. 160/2007 "on renewable energy" and Act No. 142/2010 "on energy efficiency", the Agency's establishment seems to be a step towards the fulfillment of the objectives on renewables, i.e. to reach a relative share of renewable energy of 20% from overall production by 2020. To eet these goals, in the period 2010 – 2012 the Agency shall prepare the secondary legislation on renewables and energy efficiency.
In parallel, the Agency shall contribute to the education of specialists in the field of energy efficiency and renewable energy. In this respect, the Agency, together with the Ministry of Education, shall approve the education programmes for experts, auditors and managers in energy. Further, the Agency shall keep the registers of energy auditors and carried energy audits. It shall also authorize natural persons and companies to perform energy audits.
Moreover, it shall fall under the competence of the Agency to coordinate the programmes and plans of action prepared by the Moldovan local authorities, as well as energy efficiency programmes financed by international organizations based on governmental agreements. It shall also approve projects on energy efficiency and on exploitation of renewable resources partially or totally financed by the national public budget, local budgets or from the Energy Efficiency Fund.
The establishment of the Agency raises a number of questions on whether the structure shall be successful in carrying out an efficient policy to reach its goals, on the one hand, and to be investor-friendly, on the other hand. Whether the expectations in relation with the Agency's activities are realistic shall soon be seen. It is expected that the management of the Agency shall soon be appointed.
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.