RWEA, PATRES and RPIA: The amendments made to OUG 153 endanger investments of billions of RON and will lead to missing the decarbonisation targets assumed at the European level

RWEA – Romanian Wind Energy Association

PATRES – Employers’ Organization of Renewable Energy Producers from Romania

RPIA – Romanian Photovoltaic Industry Association

The three associations, representing producers, developers and providers of services and equipment in the renewable energy sector, with a total installed power of about 5 GW and investments of over 8 billion euros, make, once again, a force majeure appeal to the President of Romania, Parliament and Government to ensure a legislative framework to support investments in energy from renewable sources.

We note with great concern that, in the joint report dated June 20 of the Economic Commission, Industries and Services and the Energy, Energy Infrastructure and Mineral Resources Commission on the Law approving GEO 153/2022 as a result of the request for re-examination made by the President, a series of amendments were adopted that contradict the fundamentals of the energy market and the recommendations of the recently adopted European regulations.

RWEA, PATRES and RPIA draw attention to the decision to return to the original form of the law. Failure to do so will put existing and future investments in renewable energy at major risk. Last year, the three associations signalled that there is a risk of reaching an unprecedented situation in Romania in which the energy production capacities from renewable sources in operation will be irreparably affected.

In the case of renewable energy producers, if revenues are overtaxed without taking account of expenses, the producers will automatically be at a loss. We have previously pointed out that any surtax formula must take into account the volatility of renewable generation, which by definition cannot produce the same amount consistently. The surtax formulas must be applied to the net income achieved after deducting the expenses necessary for the purchase of energy for profiling and the expenses for registered imbalances. Otherwise, we are talking about overtaxing the loss.

For a correct and complete understanding of the entire context, we presented to the authorities the particularities of the renewable energy industry that have an impact on the Contributions to the Energy Transition Fund owed by the electricity producers that generate additional income, as well as due for the income obtained from financial insurance contracts of risks.

The negative impact on companies in our industry is caused by the formula for calculating the Manufacturer’s Contribution. In accordance with the provisions of the expense chapter, the costs of the purchase of energy required to honour sales-purchase contracts with physical delivery when the energy source is not available (when there is no wind / when the degree of sunshine is reduced) are not recognized. The negative impact is also caused by imbalance expenses, which are recognized only in proportion to 5% of the value of electricity sold, while the industry standard shows imbalances recorded by wind power plants of approx. 40%, respectively 25% in the case of solar plants.

That is why it is imperative to consider, when calculating the contribution owed by electricity producers, the expenses for the purchase of electricity to ensure deliveries according to contractual obligations, as well as the expenses with imbalances in percentage according to industry standards.

Regarding the mechanism for owing and paying the Contribution for the revenues from the Hedging Contracts, we propose to change the withholding mechanism by introducing the obligation of self-declaration/self-imposition by the hedgers, considering that the withholding mechanism proposed by the Draft Law creates a major impact for producers of energy from renewable sources, in fact reaching an overcharge for them.

If the renewable energy producer sells in advance because he does not know with reasonable precision the actual production, then he will be forced to buy back part of the energy to cover a firm contract. If he does not buy back the energy, he will remain with volumes in the balancing market, an extremely penalizing market that generates additional pressure on the system.

RWEA, PATRES and RPIA draw attention to the fact that, if the legislative changes are adopted in the form presented in the report of the two committees in the Senate, Romania will end up – in the end – being bypassed by investors, at a time when we really need them production capabilities.

Certainly, the future of the European Union will be a green one. Renewable energy is a priority for European countries, and Romania must keep up, urgently assume commitments and act to stimulate the production of energy from renewable sources, as the European Commission does and recommends to EU member countries.