Significant amendments to the renewable energy sources market

On March 30, 2017 the Romanian Government adopted Government Emergency Ordinance No. 24/2017 (the “Ordinance”), amending Law No. 220/2008 for establishing a system for promoting energy production from renewable energy sources and amending other normative acts. The Ordinance seeks to bring more stability and transparency to the green certificate (“GC”) support scheme. The change was prompted by the unexpected adverse effects of previous amendments to the scheme during 2013 and 2014.

Relevant amendments to the GC support scheme are as follows:

  • Increased validity period of GCs – the initial validity period of GCs under the support scheme was 16 months and was later reduced to only 12 months. Under these latest amendments, GCs issued after the effective date of the Ordinance and those GCs suspended from trading beginning 1 July 2013 will be valid and available for trading until 31 March 2032;
  • Extension of the suspension period and recovery of suspended GCs – The Ordinance extends the suspension of GCs for solar technology until 31 December 2024, after which these GCs will be reinstated for six years beginning 1 January 2025 until 31 December 2030, to be paid in equal monthly instalments. The suspension period for wind and hydro producers is not changed, but the reinstatement period is extended to eight years starting 1 January 2018 until 31 December 2025;
  • Modifications of the GC acquisition quota – The Ordinance introduced the “static annual quota of GCs” which is defined as the total number of GCs expected to be issued until the end of the support scheme in 2031 divided by the number of years left until the end of the scheme. Starting with 2018, the static annual quota will be calculated by the Energy Regulatory Authority every two years. Moreover, during the month of December of each year, ANRE will set the estimated GC compulsory acquisition quota for the following year by taking into account the static annual quota and the estimated total consumption of electricity without exceeding a medium impact on end-consumer invoices of € 11.1/MWh;
  • Updated cut-off values for trading GCs – The Ordinance introduces new GC trading limits, ranging from a value of a minimum of € 29.4 to a maximum of € 35 per certificate. Moreover, starting in 2018 the penalty for market players not acquiring the compulsory number of GCs yearly will be lowered to € 70/GC. This amendment is of little practical relevance because GCs are rarely traded above the minimum value set by the law, so the maximum trading threshold has only a theoretical value;
  • Centralized market – The Ordinance introduces a new centralized market for trading GCs, permitting both spot and forward transactions while ensuring the anonymity of the parties involved. It also establishes a market for electricity from Renewable Energy Sources (RES) that benefit from the GC support scheme, both under the administration of the Romanian Power Exchange. Also, producers and suppliers may not conclude additional amendments to currently applicable bilateral contracts for the sale of GCs to circumvent the new trading rules. Breaches of this rule may be punished by a fine between 1% and 5% of the turnover achieved during the year before the sanction decision. In the case of newly established companies, the fine may range between RON 10,000 and RON 1,000,000.

The Ordinance was published in the Romanian Official Gazette, Part I, No. 224 dated March 31, 2017, and became effective on April 3, 2017.

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