Romanian developer to dismantle now-unprofitable project 

Cutting losses

Construction was completed at end-2013 but the final, minor permit needed to operate was only received in mid-2014 as project approval slowed amid increasing regulatory uncertainty. To comply with Romania’s grid code, Monsson reached a point where it had to turn on the turbines or take them down. “The important thing now is that we’re not commissioning the project,” said Enache. “It’s one thing to lose money you’ve already lost but another to know you’re about to start losing money for the next 25 years.”

Monsson operates approximately 100MW of additional wind capacity in Romania, which it will continue to run. It is also turning to places like Turkey and South Africa for wind business, entering both countries through its operations & maintenance business.

Romania’s wind energy capacity jumped from 14MW in 2009 to 2,954MW at end-2014, although growth began slowing in 2013. Only about 50MW is expected to come online this year. Monsson developed some 2,500MW in Romanian wind projects and sold about half of these, including the 600MW Fantanele-Cogealac wind farm operated by Czech utility CEZ. The other half, at the ready-to-build stage, is now on hold.

Other companies have also frozen growth plans. “Banks will not finance,” explains one international developer. A major problem is that wind producers are not guaranteed to find a buyer for their green certificates, he says. A green energy sourcing requirement for energy suppliers, which can be satisfied with the purchase of the certificates, has been set too low and has resulted in a chronic oversupply. There is no buyer of last resort.

Indeed, the Romanian government in 2013 decided to do away with one of the features that had attracted investors: the requirement for suppliers to source a progressively higher proportion of energy to renewable sources. The quota is now decided on a year-by-year basis. It also cut green certificate compensation for wind farms commissioned from 2014 and deferred the payment of half of the green certificate compensation for other producers until 2018.

“It’s a bit dangerous to develop projects in Romania now,” says Ciprian Glodeanu, a partner with the Bucharest office of law firm Wolf Theiss, adding that the green certificate system also only applies to wind farms commissioned by the end of 2016.

Hopes for an improvement in the market framework are unlikely to be satisfied soon. Romania is holding parliamentary elections in November 2016 and no politician is expected to dramatically alter the current system before then.

Regulatory instability has scared investors away but Glodeanu notes that Romania continues to enjoy strong wind resources while the opportunity to export power to adjacent energy-hungry countries represents another strong point.

Developers who remain in the market are waiting in the wings, many with fully permitted projects, should the regulatory framework improve in the medium term. Back in Targusor, Monsson is keeping the substation and roads in place and has not ruled out one day restarting that project.