Eastern promise

After spending many decades on the outside looking in, Romania is now – at least where its PV market is concerned – singing from the same hymn sheet as much of the rest of Europe. At the beginning of the year the country joined the 1 GW club but, in line with a handful of other EU nations, has since seen its solar development slow on the back of knee-jerk subsidy cuts that have systematically stripped the industry of confidence, investment and growth.
Belgium, Denmark, Ukraine, Italy, Germany and Spain will each, for various reasons, experience annual declines this year. Romania will be none-too-happy to be part of this exclusive club, but at least its own domestic industry is stalling from a position of relative strength.
Much of that strength is the result of bold developers and international investors transforming the country’s solar industry throughout 2012 and 2013. Figures from the Romanian Photovoltaic Industry Association (RPIA) reveal that 834 MW of solar PV capacity was installed last year, with 2014 also beginning in a similar vein, adding 192.6 MW of capacity in the first two months. However, a controversial decision by the Romanian government in January to reduce support for its renewable energy industries has left many would-be PV projects on ice.
Three solar projects that did make it over the line in 2013 came courtesy of Austria’s Green Source, a sustainable power developer operating in many countries in Central and Eastern Europe, and LSG Group, an Austrian-based building infrastructure and EPC company for renewables with subsidiaries in Croatia, Serbia, Macedonia, Bulgaria and Romania. The companies have a combined total of 115 MW of solar PV capacity installed and connected in Romania, with the last of their three projects – a 50 MW solar park called Gamma – completed in December 2013, mere days before the subsidy cut passed into law.
“We were faced with the situation where we anticipated and expected the law change in January, which is the key reason why we made sure that we closed off the final plant before the end of 2013, otherwise it would have been very problematic for us,” said Roland Bamberger, Green Source’s Technical Director who worked on all three projects.
Before support was stripped back, Romania’s clean power incentive scheme awarded six green certificates per MWh of renewable energy supplied to the grid. All electricity consumers have to purchase these green certificates through the energy supplier, according to law. The number of required certificates is fixed by the National Energy Regulatory Authority (ANRE) on an annual basis, and these certificates constitute a significant part of a PV plant’s income. At six certificates per MWh, the scheme was an attractive proposition for renewable energy investors. This fact did not go unnoticed by ANRE, who duly announced last July that it would be suspending two out of six green certificates until April 2017 at the earliest (the “4-2” certificate system).
“Everything we had planned and developed up to that point was initially calculated on the six certificate scale,” revealed Bamberger. “Due to this reduction, the situation is currently difficult for us.” Solar projects completed after January 1^st , 2014 are only eligible for three green certificates per MWh – a rate Bamberger suggests would have made Green Source’s own projects untenable.

Location, location, location

Green Source’s and LSG’s success in completing and connecting all three of its projects ahead of the subsidy cut was not down to mere luck. The companies spent many months analyzing the Romanian PV market, its landscape, and its power sector before deciding on the location, size, financing model and procurement process of the projects.
All three solar parks are located in the Giurgui region of Romania – a low-lying corner of the country’s southeast where solar irradiation levels are high, there are very few issues with shadowing and grid connection concerns were solvable. The EPC contractor was a local subsidiary of LSG Group. This partnership, created as a joint venture between LSG and Green Source, eased the engineering, procurement and construction (EPC) process because LSG Group already had a strong footprint in Romania’s construction industry. “LSG Group’s experience in development and construction in the country was invaluable, as was the use of reliable, local subcontractors for each of the projects,” said Bamberger.
Connecting the plants to the grid was a challenge, Bamberger confirmed, but made easier by the groundwork the company put in. “Only with Alpha (the inaugural project completed in July – see Box, p. 67) did we have to build out an additional connection line – a 2.2 km high voltage line to the nearest 110 kV grid line. But with Beta and Gamma, our second and third PV plants, we were able to have direct connection from our substation to a 110 kV line passing the plot leading to the 220 kV station.” Connection was the result of a period of intense research, grid study and reams of paperwork. Transelectrica, Romania’s transmission operation company and electricity system operator, has introduced a stringent set of rules for solar PV plants wishing to connect to the grid. “There are a lot of tests that you have to run through in order to receive the final certificate of conformity,” said Bamberger. “Once you have the final certificate, then you have fulfilled all techni
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cal conditions and are thus permitted to receive further green certificates.” Transelectrica requires all solar PV plants in Romania above 5 MW to be dispatchable (plants above 10 MW are subject to more stringent rules), which means that they are completely controllable via Transelectrica and the local grid dispatcher. “This is the reason all three of our PV plants use Skytron’s monitoring system,” revealed Bamberger. “For example, whenever it may be necessary to reduce active power or inject reactive power into the grid, Transelectrica can do it automatically without any input or feedback from us. They have full control of our PV plant. They do, however, have to notify us when they take control. It does not need to happen very often, but it is a requisite that all PV plants allow this, which is one of the key facts that developers in the region need to know.” Romanian grid code requirement norm 30 stipulates that PV plants running at full active power generation must be capable of reaching a power factor of 0.90. Most European countries typically insist on the easier-to-achieve 0.95 power factor. As a result, grid connection is difficult in Romania, meaning some plants require an additional reactive power source to be installed. In the case of the 50 MW Gamma plant, Green Source installed a medium-voltage capacitor bank of 9 million volt-amperes reactive (var) to reach the required power level.

Romania’s future

Bamberger does not expect the renewable landscape in Romania to improve any time soon. The suspended green certificates will not be recovered until at least April 2017, and it could be that even then they cannot be sold. “The market is saturated already, and it is currently not possible to sell all green certificates. The certificates lose their validity after 12 months, so developers really only have a small window in which to recoup part of their investment.” Having fielded consistent interest from German and Austrian investors about the development potential of Romania, Bamberger largely advised companies to press pause on their plans. “Romania represents a risky market at the moment,” he said. “We were able to finish our projects before the new regulations, and the 4-2 certificate system makes them just about possible. But with three certificates this year, it makes the market very unattractive.” While praising the PV support system in Romania, Bamberger was critical of the government, accusing the short-termism that pervades local politics as anathema to the considered approach required for solar. “The Romanian solar market could be very good. The entire country is maturing, developing international trade agreements and stabilizing. I expect a change for the better after 2018 or 2019, but we still have some way to go until then, and nobody knows what the energy regulators have up their sleeve. We have hope, but we also have too much uncertainty, and – at the moment – too much risk.”