News August 30th, 2011

Eng. Paul Keisch Page 1

UPDATE: Government postpones approval of

higher grants for renewable energy producers

Government would have to

approve in this afternoon

meeting the emergency

ordinance amending the Law

220/2008, which increases the

green certificates number given

to renewable energy producers,

but postponed the decision, said

sources from energy sector.

In July, EC approved new grants support-scheme for renewable energy producers in the form of

green certificates and the decision was published in the Official Journal of the EU Tuesday, August

23.

According to the Directorate General for Competition of the EC's, total budget of the support-

scheme is €19.5 billion, which means the value of green certificates for the duration of the scheme's

support.

This means a maximum of 15 years for new wind turbines, new MHP, solar electricity and for all

types of biomass.

Used wind technologies receive a certificate for 7 years. Re-technologized MHP will be supported

for 10 years, and non upgraded - 3 years.

Investors wishing to benefit from the support scheme should begin production no later than

December 31, 2016.

In the first 10 years of the scheme, producers will receive certificates worth about €10 billion.

How does the support-scheme function?

Energy producers receive subsidies in the form of green certificates that can be sold on a special

market for a gain in excess of the actual price of electricity.

Certificates are worth between €27 and €55 each and will be valid for 16 months.

In parallel, energy suppliers are obliged to purchase a number of green certificates, depending on

the amount of delivered energy. But they will transfer these costs into final prices, so consumers

will be those who will actually subsidize the green energy production.

News August 30th, 2011

Eng. Paul Keisch Page 2

What do producers receive?

So far, all renewable energy producers receive a green certificate per MWh of energy delivered to

the system, but the EC decision gives the green light of new legislation, which increased the number

of certificates.

Thus, wind energy producers will receive 2 certificates until 2017, after 1.

Those who generate electricity from solar sources will have 6 certificates. Producers will receive 2

certificates for biomass, biogas and bio-liquids and 1 certificate for waste fermentation and waste

sludge from wastewater technologies. Those who use the energy crop will receive 3 certificates,

while producers using geothermal sources will receive 2 certificates.

How much do consumers pay?

According to the National Regulatory Authority for Energy (ANRE), which estimates that the new

scheme will be implemented in September, this will lead to a rise in electricity price with a value

between 2% and 4.5% for the population.

The price will increase as more green energy will be in the system, which will cost 30% more in

2017, as the calculations of the authorities show.

Finally, according to EC decision, consumers in Romania could pay €19.5 billion to producers of

renewable energy throughout the scheme period.

Why do we do this?

EU Strategy provides for increasing the share of renewable energy to 20% by 2020 and carbon

dioxide emissions reduction also by 20% by that year. Romania has pledged that 24% of total

energy consumption in 2020 to be renewable.

On the electricity, Romania has a target of 38% for 2020. Last year, Romania has 35% of electricity

produced from renewable sources, exceeding its target of 33%.

The renewable energy sector, especially wind energy, the last 2 years has attracted huge projects in

Romania. Investors are interested in the large wind potential of Romania, given that several

prestige studies have indicated Dobrogea as the best region in southeastern Europe (SEE) and the

2nd on the continent for such investment.

Karoly Borbely, State Secretary in the Ministry of Economy, told "Adevărul" few months ago that ¾

of investors who are interested in business opportunities in Romania aimed at energy, especially

wind power production.

Romanian Wind Energy Association (REWA) estimates that this sector will attract investment of €5

billion in the coming years.

Subsidies are needed because renewable energy technologies are very expensive. For example, the

investment required to install 1 MW wind is between €1.5 and €1.8 million.