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Temporary reduction of the number of green certificates (GCs)

 

•Starting with 1 July 2013, the issuance of the full number of GCs/MWh will be temporary deferred for certain technologies, as follows:

(i)new HPPs (below or of 10 MW): 1 GC deferred;

(ii)wind: 1 GC deferred;

(iii)solar: 2 GCs deferred.

 

•The deferred GCs shall be recovered starting with 31 March 2017 (for new HPPs and solar) and with 1 January 2018 (for wind).

•The recovery of the deferred GCs will be done in tranches, according to a methodology to be adopted by way of ANRE secondary legislation.

 

Limitation of installed capacity

•Accreditation of power plants by ANRE in order to benefit from the support scheme will be done up to the level of the annual total installed capacity from renewable energy sources determined for each calendar year by way of Government Decision, on the basis of updated data in the National Renewable Energy Action Plan (NREAP).

•In case this cap is reached during any calendar year, ANRE will deny the accreditation of other renewable capacities until the next year (when accreditation will also be done within the limits provided for in the Government Decision for the respective year).

•ANRE has the obligation to regulate annual quotas of E-RES which will be off-taken in the national energy system, with the benefit of the support scheme, on the basis of firm contracts with every accredited producer.

 

GCs trading limitations

•Trading of GCs will be available only to RES producers and entities under the obligation to acquire GCs (ie, suppliers to end consumers and certain producers).

•Trading of GCs should be done in a transparent, centralized and non-discriminatory manner, on the centralized markets managed by OPCOM (the commercial operator of the electricity market).

 

These limitations will have significant impact on the GCs trading, as:

 

-Traders – ie, those who are not supplying to end consumers – will no longer be allowed to trade GCs.

-Similarly to the power market, the market for directly negotiated bilateral GCs purchase agreements is banned.

 

Exclusions from the support scheme

 

•The electricity generated by photovoltaic power plants located on lands which, as at the date of entry into force of the emergency ordinance, are in the agricultural circuit, and

•The quantities of electricity delivered by dispatching units in excess of the quantities of electricity stated in the hourly physical notifications transmitted by E-RES producers to the TSO will not benefit from the support scheme (ie will not receive GCs).

 

Financial guarantees

•The network operators have the right to request financial guarantees upon issuing of grid connection permits (Romanian, avize tehnice de racordare - ATR). The amount of the financial guarantees and the use thereof will be further determined by ANRE regulations.

 

Guarantee fund

•The guarantee fund designed to guarantee the operation of the GCs market is maintained. The change refers to the fact that the guarantee fund purchases from all producers of electricity from renewable sources who request so, green certificates offered but not purchased.

 

•GCs sold to the Guarantee fund shall be annulled.

•The operation of the guarantee fund will be regulated by secondary legislation drafted by the commercial operator of the electricity market and approved by ANRE.

Penalties for not reaching the GCs acquisition quota

 

•The penalties applied to suppliers not having met their GCs acquisition quota will not be included in the electricity bill to final consumers.

 

Monitoring and applicability of overcompensation measures

•The overcompensation monitoring will be done twice a year (comparing to the current annual monitoring); the first monitoring report that could result in the measures detailed below shall cover the year 2012 (ie, the report published on ANRE’s website on 29 March 2013).

•The measures aimed at correcting the overcompensation (ie reduction of the number of green certificates allocated to the respective technology) shall be applicable to new entrants. The draft provides for more clear sequences, as follows: (i) ANRE publishes the monitoring report within 90 days upon the lapse of each semester; (ii) should the monitoring conclude that overcompensation has occurred for certain technologies, ANRE shall propose to the Government measures for reducing the number of GCs within 30 days upon the publication of the monitoring report; (iii) such measures for reducing the number of GCs shall be approved by way of Government decision within 60 days and shall be applicable to new entrants accredited by ANRE after the entry into force of the respective Government decision.

•The deferred application of a potential reduction in the number of GCs (as a result of the overcompensation mechanism) until 1 January 2015 (for renewable sources, except for solar) and respectively 1 January 2014 (for solar) was eliminated.

 

Exemption for certain quantities of consumed electricity

•A certain percentage of the electricity supplied to the final consumers will be exempted from the application of the GCs acquisition quota.

•The conditions for qualification for the exemption mechanism, as well as the exempted quantity, conditional upon the application of annual programs for the increase of energy efficiency, shall be approved by Government Decision and shall be object of a separate ANRE regulation, after their notification to and the issuing of a positive decision by the European Commission.

 

Miscellaneous

•The operational plants having benefitted from state aid before 1 January 2013 will no longer be exempted from a potential reduction of GCs number due to cumulation of the GCs with other state aid measures;

•Producers will benefit from GCs as of the date of the accreditation decision (compared to the current wording where the benefit is granted as of the month of issuing the accreditation decision);

•Renewable electricity may be traded by way of regulated contracts, according to regulations to be adopted by ANRE.

 

General

•The emergency ordinance will enter into force on 1 July 2013.

•The new measures will be notified to the European Commission.

 

It is unclear from the wording whether the Government’s intention is to delay the application of the ordinance until clearance from the EC.

 

Old Energy Law

 

On July 16, 2012 the new Energy and Gas Law no. 123/2012 (“EL 123/2012”1) was published in the Official Gazette of Romania, the final step towards its enactment. Starting with July 19, 2012, EL 123/2012 will almost entirely repeal the Energy Law no. 13/2007 which was later amended and modified. EL 123/2012 is set to prepare the Romanian electricity market for total liberalization and specifies concrete terms to gradually reach such liberalization. Moreover, EL 123/2012 introduces new principles that should apply to producers' electricity sales. Such principles are provided so that the electricity market will be transparent to all participants and the prices of the electricity traded may be established by competitive mechanisms, based on supply and demand.

Given the consolidated version of the EL 123/2012, we will point out some of the provisions regarding the trade of electricity, promotion of RES-E and intelligent measurement systems.

 

 

1. Trading of electricity under EL 123/20122

Trading of electricity will have to be done on the (i) competitive market, (ii) transparently, (iii) publicly, (iv) centralized and (v) without discrimination.

On the competitive market trading is performed according to ANRE3regulations and the prices will be computed based on supply and demand mechanisms. The electricity suppliers will have to keep evidence of the contracts they concluded on the wholesale electricity market for five (5) years and much such evidence available on request, to ANRE, European Commission or other relevant public authorities.

Participants in the electricity market (including producers) must submit information regarding the electricity traded according to the sale-purchase agreements concluded for electricity to the operator of the electricity market4and to the balancing market. Moreover, the producers are obliged to offer all the electricity they produce, on the competitive market, in a manner that is both public and without discrimination. The electricity prices according to EL 123/2012 will result from the application of the competitive mechanisms of the electricity market.

 

2. Promotion of RES-E

2.1 Guaranteed access to the grid

ANRE will establish the guaranteed access to the grid using technical and commercial rules and priority dispaching of electricity produced from renewable sources and high efficiency cogeneration.

2.2 Priority access

ANRE, using same rules specified above at paragraph 2.1, will establish priority access to the grid and priority dispaching of electricity produced from renewable sources in high efficiency cogeneration units with installed power under or equal to one (1) MW, if the security level of SEN5 is not affected.

 

3. Intelligent measurement systems

Until September 3, 2012, ANRE will evaluate the implementation of intelligent measurement systems in accordance with costs and long term advantages for the market, rent-ability and feasible implementation terms.

If ANRE concludes that such systems are beneficial to the electricity market, it will approve an implementation schedule so that by the year 2020, 80% of the clients will have such systems. The implementation of the systems will be approved during the annual investment plans of distribution operators.

 

4. Conclusions

The EL 123/2012 seems to be a step in the right direction for Romania, since the provisions of the law respect the guidelines of the European electricity market. Moreover, the competent ministry of Romania will have to notify the European Commission regarding the enactment of EL 123/2012 and other administrative bills in order to ensure the ratification of Directive 2009/72/CE.

With regard to the trading of electricity under EL 123/2012, we observe that the provisions set forth in Law 13/2007 referring, among others, to the possibility of selling electricity using bilateral agreements negotiated by electricity suppliers and electricity producers (i.e. PPA) are replaced with principles of trading electricity. Under such principles, the trading must be performed in the (i) competitive market, (ii) transparently, (iii) publicly, (iv) centralized and (v) without discrimination.

In addition to this, we observe imperative provisions regarding the obligation of the producer to offer the entire produced electricity in the competitive market in a manner that is both public and without discrimination. Also, the prices for the electricity traded must be the result of competitive mechanisms.

 

One key issue is the interpretation of the (iv) condition which is the centralized principle. The term is not defined by EL 123/2012, but it is mentioned in the definition regarding the centralized electricity market (in Romanian “piata centralizata de energie electrica6”). Therefore, if the centralized condition is viewed as a reference to the centralized electricity market, then one may argue that the only way to conclude PPA and meet the new conditions is in the centralized market for trading bilateral electricity agreements organized and administrated by OPCOM.

This opinion is also backed by Order 6/2011 regarding the organized framework for the trading of bilateral electricity agreements. Order 6/2011 approves the regulation for trading in a centralized and competitive regime through the bilateral electricity agreements. Nevertheless, it is worth mentioning that the Law 13/2007 is a reference document to Order 6/2011, which is canceled by EL 123/2012 enactment. To this end, we consider that PPAs, as possible means of selling electricity, are not canceled under the EL 123/2012, but rather in accordance with the manner in which such PPAs are concluded.

The Romanian Photovoltaic Industry Association – (“RPIA”), will take a public stand regarding, specifically, the clarification of the provisions regarding the selling of electricity by producers. Giving the novelty of the principles to be observed by producers when selling electricity, it appears that some confusion has spread into the market. In order to avoid further delays caused by insecurity, RPIA specialists will try to get together with responsible individuals from the competent authorities in order to clarify such sensitive topics.

RPIA fully understands the need for a clear and steady legal framework and will actively collaborate to reach this goal. Romania has a great potential for renewable energy and, therefore, RPIA will take action in order for the Romanian RES-E market to reach its potential.

 

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1 For the purpose of this newsletter we refer only to the electric enegy section regulated by Law 123/2012

2 For the purpose of this newsletter we refer only to the wholesale electricity market, which is not regulated.

3 ANRE – The Romanian Regulatory Body in Energy.

4 Operator of the electricity market – Legal entity which ensures the organisation and the administration of the centralized markets, except the balancing market, in the view of wholesale trading of electricity for short, medium and long term.

 

5 SEN – Electroenergetical National System