Romania is getting ready to ride a second wave of renewable energy investments

Increasing the share of renewable energy use is an essential pillar for Romania to meet its commitments under the European Green Deal. The country must scale up the deployment of renewable projects to achieve its 30.7 % target for 2030: some 6 GW of new wind power and solar PV capacities need to be installed over the next 10 years.

Renewable energy investors are ready to tap into this potential and in the past year or so interest in the market has risen. Greenfield investments and acquisitions of ready-to-build or operational projects have been announced, raising hopes about what has already been optimistically labelled as Romania's "second wave of renewable energy developments and investments".

Still, industry voices and financial institutions say the country's policy landscape must improve significantly. While it is not uncommon for the market to be one step ahead of policy and regulation, capital investments will not increase unless there is a clear, certain and predictable governmental strategy for renewables going forward.

2021, a big policymaking steppingstone for Romania

And no doubt Romania will only be able to bridge the gap between the current reality and the 2030 target if it further develops and strengthens its policies and measures aimed to boost the uptake of renewable energy sources. This year is a watershed moment from a policymaking perspective in what concerns the measures that need to be taken to foster and integrate the development of new renewable energy projects and to allow the country to achieve its energy transition targets for the next decade. The main measures refer to:

• Romania's Energy Strategy. The Romanian Government is soon to approve the country's 2019 – 2030 (with a 2050 perspective) Energy Strategy, which will then be adopted by law by the Romanian Parliament. Renewable energy sits at the core of the new Energy Strategy, amongst the six priority investments deemed critical for attaining the fundamental objectives of the Strategy.
• Over-the-counter power purchase agreements ("PPAs"). As a particularity of the Romanian energy market, PPAs were banned back in 2012. The removal of the PPA ban has been generally perceived as a key factor for unlocking Romania's renewable energy potential. After a legislative mix-up created mid-2020 in an attempt to lift the PPA ban, a recent draft amendment to the Romanian Energy Law puts a positive spin on the issue, freeing the way for PPAs.
• A new support scheme on the horizon, based on a contracts for difference ("CfD") mechanism. Announced in spring 2019 and further formalised in mid-2020, the CfD scheme is designed as the new mechanism for supporting low-carbon electricity generation. According to public statements made recently by the representatives of the Ministry of Energy during an event organised by Schoenherr Romania, the new support scheme could be expected within 24 months, with a view to reducing this timeframe to 16-18 months.
• The Offshore Wind Law. Romania's Energy Strategy indicates that offshore wind is expected to play an important role in the development of the renewable energy sector. The Romanian Parliament is working to create a framework for implementing investments in this sector.
• Transposition of the Renewable Energy Directive II ("RED II"). RED II is set to be transposed in the Member States by 30 June  To this end, the Ministry of Energy has organised an inter-institutional working group, reuniting the relevant stakeholders. It is envisaged that the draft law will be approved by the Romanian Parliament in June 2021, but chances are the deadline will not be met.
• A new electricity law in the making. The Ministry of Energy is in the process of drafting a new electricity law, having engaged consultants in 2020 with the support of the European Bank for Reconstruction and Development.
• Easing access to EU funding. One of the most appealing programmes is the EU Modernisation Fund, which has attracted a lot of interest from investors, as Romania can access some EUR 6bln from this fund alone. Still, the implementation guidelines that would allow the actual organisation of calls for proposals have not been adopted yet. In a recent webinar organised by our law firm, officials from the Ministry of Energy announced they expect the framework will be ready on time to allow access to the applications round scheduled for this December.
• The 2021 – 2030 National Energy and Climate Plan ("NECP"). After several rounds of discussions with the European Commission and revisions, the final NECP was published early this year, defining the country's energy transition strategy and measures for the next decade.

Read more in our recent publication renew romania

To make all these measures happen and to step up the deployment of renewable energy projects, it is important to keep the dialogue open between all relevant stakeholders.

With this in mind, we have launched renew romania, a publication aimed to provide investors and developers with the full picture of what it means to do business in this sector in Romania, and to facilitate the exchange of ideas between the market, policymakers and financiers.

renew romania can be downloaded from the Schoenherr website at: https://www.schoenherr.eu/content/renew-romania-2021/

author: Monica Cojocaru