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European approaches on renewable energy industry under debate at the Pachiu & Associates conference

“Renewable Energy Investments in Romania: Opportunities and Challenges”

2012-11-08 09:25:15

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Pachiu and Associates Law Firm, the exclusive Romanian business law firm member of Associated European Energy Consultants (AEEC), organized Thursday, November 1st, at Capital Plaza Hotel, the conference “Renewable Energy Investments in Romania: Opportunities and Challenges”. Pachiu & Associates brought together expert energy lawyers with relevant experience from the U.S.A and several European countries (Germany, Austria, Belgium, Germany, Great Britain, Ukraine, Albania, Slovenia), specialized consultants, investors and players of the industry, authorities (ANRE) and bank representatives (BCR, Volksbank, EBRD).  The conference was focused on the renewable energy industry and the challenges that both investors and developers face in the field, providing an overview of the market at European and national level.

The chairman of AEEC, Mr. Christian Held and Ms. Delia Vasiliu, partner of Pachiu & Associates law firm, opened the conference with a welcoming speech introducing the main issues to be discussed.

The first session focused on the support schemes and challenges to grid connection of renewable energy projects, with a valuable insight from the General Director of the Energy Efficiency Regulation Department at the National Authority for Energy Regulation (ANRE), Mr. Zoltan Nagy-Bege, on the legislative framework for E-RES production in Romania. Commenting upon the national grid’s reinforcement and the participation criteria for the investors, Mr. Nagy-Bege stated that the public authorities might find themselves in great difficulty to finance the developmentand the technical improvement of the grid. Therefore, investors are advised to be prepared to advance the necessary money out of their own pockets, not relying on the immediate support of the grid operator.

The session continued with the presentation of Ms. Liana Cozigou (associate at Janson Baugniet law firm in Brussels) related to the Belgian experience with the Green Certificates (GC) support scheme. The Romanian support scheme bears numerous similarities with the Belgian one, Belgium being of the first countries in the EU to have implemented such a system, over ten years ago.

One of the senior partners at Sattler and Schanda law firm in Austria, Mr. Reinhard Schanda, made an outline of the impact of Directive 2009/72/EC and shared his experience in the field of improving the connection to the grid of new E-RES producers. With a total installed capacity of 1,387 MW in windfarms, Austria was confronted with the same problem as Romania - the difficult access to the grid. According to the Directive, system operators (TSOs and DSOs) are obliged to reinforce their grids to meet the demands of power producers. Mr. Schanda explained that a system operator is not obliged to provide immediate grid connection if the existing grid does not have the necessary capacity. Also, it does not constitute negligence if a system operator cannot immediately provide grid connection. However, if after a reasonable period of time, the system operator fails to provide grid access, such act will constitute negligence under the 2009/72/EC Directive. “It remains a question (to be answered by technical experts) what a reasonably time is in any given grid situation”, said Mr. Schanda in his presentation.

Mr. Florin Dobre, Senior Associate at Pachiu & Associates, focused in his presentation on the Romanian GC support scheme. His presentation addressed issues of greatest concern for investors in the Romanian renewable energy market, namely the excess of GCs, overcompensation and grid connection. Under the hypothetical scenario Mr. Dobre proposed, the electricity consumption remains constant in 2012 - 2013, whereas the production of renewable energy sustained by the support scheme raises exponentially, reaching 6 million MWat the end of 2013, no GCs excess will occur. The excess of GCs may only appear if the output of renewable energy will exceed the legal levels that the support scheme may sustain, which is unlikely to happen within the next 2 years. “If we are confronted with a high production and a stagnant consumption, we should go ahead and improve the interconnection lines for exporting the electricity surplus, however, we will need the support of Transelectrica for this matter”, Mr. Dobre added.

The second session of the conference was focused on project financing in the renewable energy sector. Expert lawyer for Becker Büttner Held (BBH) law firm, the largest energy law firm in Germany, Mr. Henning Thomas, presented the challenges that are common among project developers in Germany. Access to bank loans is one of investors’ greatest concernsdue to high requirements imposed by the banks. In Germany, where feed-in tariffs are applied, investors are starting to look for other ways of financing, among which cooperation with the local authorities and communities is the most popular by now.

Continuing on the project financing issues, the Head of Structured Finance Department at Volksbank Romania, Mr. Romulus Andrei, brought to the attention of the public that, ideally, the market risks related to the project should rest in the hands of the trader, not with the project developer. For the bank, it is important to see that the green certificates can be sold (ideally, a minimum price should be stated in the contract), so a GC agreement represents a milestone in the financing process.Regarding the photovoltaic projects in particular, recently the bank was confronted with high differences in total investment costs estimated for similar projects. This made various projects seem untrustworthy. “In order to gain a better control and to protect the bank of a false equity, we started to implement a benchmark”, Mr. Andrei said. For investors, another way to make the process of obtaining financing  smoother and avoid delays, is to pay a great deal of attention to the legal and technical audits and, preferably, to run them in parallel with the bank loan approval process, Mr. Andrei recommended.

The matter of thoroughly made audits and due diligence processes was further highlighted by the Executive Director Project Finance Division at BCR Erste Bank Romania, Ms. Ioana Anca Gheorghiade. In BCR’s case, the lack of a good technical and legal due diligence leads to theterminationof the financing process. “What banks are also interested in, is that the sponsor has a long term interest in the project and can show commitment”, said Ms. Gheorghiade.

The discussions were moderated by Ms. Delia Vasiliu, head of the Energy Practice Group within Pachiu & Associates law firm. The conference offered good networking opportunities creating a suitable environment for sharing experience and knowledge in the field.

Pachiu & Associates is the only Romanian business law firm member of AEEC. The firm was founded by one of the first business lawyers in Romania, Mr. Laurentiu Pachiu. The firm’s Energy Practice Group (EPG), coordinated by Ms. Delia Vasiliu, provides legal support in relation to the planning, implementation and operation of projects in the field of renewable and conventional energy as well as natural resources, oil and gas. The firm’s lawyers give much consideration in their regulatory advise to opportunities offered by Romania in energy industry, triggering high interest of investors in the carrying out of oil and gas E&P activities and also to Romania’s great potential in the renewable energy sector. More details on: www.pachiu.com

AEEC is a high-profile preferred-member international network for leading law and consultancy firms across the European continent. Founded in the year 2000, the Associated European Energy Consultants brings together renowned energy law specialists with hands-on experience and valuable insights into the energy market of their home country. More details on: www.aeec-online.com

For additional information, please contact:
Public Relations Office, Pachiu & Associates:
Mihaela Georgescu
Mobil: +4 0735.011.750
Tel.: + 40 (21) 312 10 08
Address: 75 - 77, Buzesti St., 5th floor, Bucharest, 011013, Romania
E-mail: pr@pachiu.com

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