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28/09/2016

Czech utility decries Romanian rough play on green energy subsidies

Central Europe

Czech utility decries Romanian rough play on green energy subsidies

CEZ wind farm in Romania.jpg

The Czech power utility ?EZ has complained to the European Commission about delays by Romania in paying green energy subsidies, saying they may cost it up to €66 million a year.

Foreign-owned firms have ploughed billions of euros into wind, solar, biomass and hydropower projects in the Balkan nation, lured by the prospect of earning payouts for generating a certain amount of renewable power.

In June, Romania's leftist government decided to hold off paying some of the subsidies for several years and cut the issue of so-called green certificates to avoid over-compensating investors and curb price increases for industry and homes.

?EZ, which operates Europe's largest land-based wind farm in Romania, said yesterday (21 August) that retroactively changing the rules conflicted with basic European Union principles.

Based on the current value of ?EZ's green certificates, the changes mean part of the utility's income from the scheme – up to 1.7 billion Czech crowns annually, according to a Reuters calculation – will be delayed until 2018 to 2020.

By then the value of the certificates could fall and Romania could further adjust the overall support scheme.

"At this moment, it is impossible to quantify the possible loss, because we have not lost one of the granted certificates, but it was only postponed until the 2018-2020 period," ?EZ said in a statement.

"This step is in conflict with the basic law principles of the European Union, in particular with the claim to freedom of settlement of business entities and free movement of capital."

The European Commission said it was following the situation in Romania and investigating similar complaints over the changes from other companies involved in Romania's renewable sector.

"A number of complaints by current and future beneficiaries are also being investigated," spokeswoman Marlene Holzner said in a statement.

"The Commission will be producing its guidance on renewable energy support schemes and on government interventions in the energy sector more broadly, in the autumn," she added.

Elsewhere in the European Union, Germany, Britain and Spain have also either cut, or plan to reduce, incentives for renewable energy after years of strong government support.

The Romanian Wind Energy Association has criticised the country's proposed changes that give renewable power producers green certificates for each megawatt hour generated and obliges suppliers to get more of the power they sell from renewable energy.

Green energy investors gain once by selling certificates and again when they sell their electricity. But under the law approved in June, the government will postpone paying some of the certificates until the end of 2017.

Until then, energy projects will only get one green certificate instead of two, small hydro power plants one instead of three and solar projects two instead of six. 

Background

The Czech Republic's biggest power company, ?EZ, has taken a leading role in "greening" the energy sector in Central and Eastern Europe.

>> Read: ?EZ profiles itself as ‘green pioneer’ in Eastern EU

But green energy subsidies have proven to be costly for the impoverished consumers in Romania and Bulgaria.

In Bulgaria, the government of former Prime Minister Boyko Borissov collapsed last February over unusually high electricity bills. The protests were also directed against the Czech utility ?EZ, which controls power distribution in Western Bulgaria.

>> Read: Bulgarian prime minister quits following mass protests over electricity bills