Renewable Sources Energy in Romania - 3. part

3. SALE OF THE PRODUCED ERS

According to the Romanian legislation currently in force, producers of ERS obtain their revenues from 2 (two) main sources:

1. the sale of the energy produced on the electric energy market; and

2. the sale of green certificates on the green certificates market.

The ERS is traded freely on the electric energy market operated by OPCOMS.A., in market competition conditions. According to their commercial interests, ERS producers may choose between the following trading platforms:

1. Day-Ahead Market;

2. Intra-Day Market;

3. Centralised Market for Bilateral Contracts (Public Auction Mechanism);

4. Centralised Market for Bilateral Contracts (Continuous Negotiation Mechanism).

The average price for 2011 on the electric energy market operated by the Operator of the Electric Energy Market in Romania OPCOM S.A. was of RON 221.20/MWh i.e. EUR 52.13/MWh on the Day-Ahead Market (in Romanian: Piata pentru Ziua Urmatoare – PZU) and of RON 210.13/MWh i.e. EUR 49.11/MWh on the Centralised Market for Bilateral Contracts (in Romanian: Piata Centralizata pentru Contracte Bilaterale – PCCB).

The green certificates are obtained and traded separately from the energy, as detailed under Section 4.2 of the next Article.

4. THE PROMOTION SYSTEM (INCENTIVES) FOR PRODUCTION OF ELECTRIC ENERGY FROM RENEWABLE SOURCES

Further to a time consuming state aid authorisation procedure carried out in front of the European Commission, the Romanian authorities have enacted an amendment to Law 220 which entered into force in October 2011, allowing Law 220 to become fully applicable and establishing the promotion system for ERS production as detailed in this Section 4 of the Article.

4.1 SUBJECT MATTER OF THE PROMOTION SYSTEM

In Accordance with the Energy Law, Law 220 and Order 42, the following energy sources were approved by the European Commission as subject to the ERS promotion system:

Hydraulic energy used in power plants having a total installed power of over 10 MW;

Wind energy used in new wind power plants and in wind power plants which have been previously used outsideRomania, if such used power plants are part of an isolated energy system or if they were functioning inRomaniabefore the entry into force of Law 220;

1. Solar energy;

2. Biomass obtained from biologic waste used in power plants producing exclusively electric energy or in co-generation power plants;

3. Biomass obtained from energetic cultures used in power plants producing exclusively electric energy;

4. Waste gas used in power plants producing exclusively electric energy; and

5. Waste waters used in power plants producing exclusively electric energy.

As already mentioned under point 2.4.1 of this Article, the ERS power plants using other renewable energy sources cannot, at this stage, benefit from the green certificates promotion system. In order for other renewable sources to benefit from such promotion system another state aid approval procedure shall be carried out in front of the European Commission.

The promotion system in place for the ERS production is applicable for limited periods of time, as follows:

1. 15 years, for the electric energy produced in new power plants;

2. 10 years, for the electric energy produced in re-equipped hydroelectric power plants with an installed power of maximum 10 MW;

3. 7 years, for the electric energy produced in power plants which were already used in the past for the electric energy production on the territory of other states, if used in isolated energetic systems or if they were installed and functioning before the entry into force of Law 220 as republished (i.e. August 16, 2010), provided that the mentioned power plants are not older than 10 years and they fully comply with the legal provisions for environment protection; and

4. 3 years, for the electric energy produced in hydroelectric power plants with an installed power of maximum 10 MW which have not been re-equipped.

The above-mentioned periods shall be applicable to the power plant operators certified as such by ANRE and they start running from the date when the respective power plants start producing ERS and receiving green certificates corresponding to the produced energy, provided that the relevant power plant is installed/re-equipped by the end of 2016.

The last Article will deal with Green certificates, especially quotas of ERS and obtaining green certificates.