It is both remarkable and welcome that energy has become a top priority for the authorities, to the point that the Government has published the list of companies holding technical grid connection approvals: more than 1,400 names, with projects totaling around 80 GW. Almost at the same time, the National Energy Regulatory Authority (ANRE) launched a public consultation on a new draft amending the grid connection rules. The aim, as ANRE President George Niculescu put it, is “to make sure we have real MW connected to the grid, not MW on paper.” And, he added, to “also make sure we put a stop to get-rich-quick schemes.”
Romania appears, at the highest level, to have acknowledged both the strategic importance of the sector and the fact that market distortions have made the issue impossible to ignore.
Precisely because the subject is so important, it should be approached without oversimplification. Technical Grid Connection Approvals (ATRs) are neither mere speculative paperwork nor guarantees that a project will be built. Rather, they are a critical point in a much larger equation involving the grid, financing, permitting, reinforcement works, and the ability of state institutions to move at a coherent pace.
Below are nine useful clarifications.
- The problem is real; an ATR does not mean a power plant has been built
A technical grid connection approval reserves capacity in the grid, but it does not amount to a completed investment. Regulatory intervention is necessary because a significant share of the projects that have received ATRs never reach the actual implementation stage. This blocks access for other investors and distorts the planning of grid investments.
The public debate showed that, out of 1,407 projects with a valid ATR, only a small number had gone through all the relevant authorization stages. ANRE also notes in its explanatory report that, among the projects subject to the 5% guarantee regime, only 12% had reached the stage of signing grid connection contracts, 3% had obtained construction permits, and only around 1% had obtained establishment permits. This clearly shows the gap between announced projects and those that actually reach advanced stages.
- An SPV with zero turnover is not, by definition, a ghost company
The Government rightly notes that many of the companies holding ATRs are newly established, have zero turnover, and no employees. But that finding needs to be interpreted with caution, because it often describes the perfectly normal situation of SPVs — special purpose vehicles — set up specifically to develop a particular project.
In energy, and especially in renewables, it is standard practice for each project to be placed in a separate entity, distinct from the group or investor developing it. During the development phase, such a vehicle may show zero turnover and have very few, if any, employees for years without that meaning the project is fictitious. The real work is there; it is simply carried out through consultants, specialist developers, contractors, or the broader group behind the SPV: studies, permits, design, legal work, landowner relations, and discussions with financiers.
All of this often shows up as negative net income in the financial statements, sometimes for years, before the project is completed and begins generating electricity, revenue, and, ultimately, profit for shareholders.
- Project development should not be confused with abuse
Any project development activity involves a degree of anticipation and risk. A serious developer does not begin with every uncertainty already resolved. Those certainties are built over time, at the developer’s own expense, in parallel with grid studies, resource assessments, environmental procedures, urban planning, land negotiations, and discussions with financiers. That is how the market normally works, and it can involve costs running into the hundreds of thousands, sometimes millions, of euros.
The problem is not the inherently speculative nature of project development, but the deliberate postponement of real progress and the long-term holding of reserved capacity with no realistic prospect of delivery.
- Not every project that still exists only on paper is a ghost project
Contrary to the simplified view that dominates much of the public conversation, the most recent debate organized by ANRE showed that many projects are delayed not because they are purely speculative, but because they are caught in a long chain of permits, environmental procedures, authorizations, and administrative bottlenecks over which the developer has no direct control.
In the case of wind projects, for example, it was pointed out that environmental procedures and monitoring requirements can take years, and that the deadlines imposed by regulation do not always match that reality.
- There are at least three categories of projects
Not all projects should be treated in the same way, because they are at different stages of development and will fall under different regulatory instruments. There are, in fact, at least three distinct categories.
The first is the legacy backlog: ATRs already issued and contracts already signed. The second is the pipeline of projects currently being assessed by Transelectrica and the distribution operators, including projects for which grid studies have already been submitted and which may or may not receive ATRs. The third is the future generation of projects, which will enter the new auction system for capacity allocation.
The main and most urgent issue is not future projects, but the pipeline that has already built up. PATRES representatives made it very clear that the fundamental problem is not only what is coming next, but the approximately 81 GW already sitting in the pipeline, which is already affecting the grid and driving up costs for real projects.
More than that, they showed that there are already completed investments that cannot be connected on economically reasonable terms precisely because, ahead of them in the queue, there are projects that exist only on paper. The example given during the debate was that of a battery already built, whose grid connection ended up requiring reinforcement works worth around 39 million lei because of congestion created by hundreds of MW that never materialized.
- The new logic of guarantees
Against that backdrop, ANRE is already proposing different measures for different stages in a project’s life cycle. For future projects entering capacity allocation auctions, ANRE is proposing a guarantee of 20 euro/kW installed in order to participate in the auction. For projects that then move into the actual grid connection phase, the tariff-based guarantee remains in place, but rises from 5% to 20%. And for the authorization stage, ANRE says it will also introduce a guarantee of 30 euro/kW installed when applying for an establishment permit or requesting its extension.
This is no longer just a simple entry barrier. It is a system of successive filters: at the auction stage, at the grid connection stage, and at the authorization stage.
- New deadlines
ANRE is proposing three key changes. First, it applies to the establishment permit the same time limits that already exist for the construction permit. Specifically, for generation projects – or combined consumption-and-generation projects – above 1 MW, the establishment permit must be obtained no later than 12 months after the grid connection contract is signed and no later than 18 months after the ATR is issued. ANRE states explicitly that it wants to align grid connection with permitting and to filter out projects that do not reach a sufficiently mature stage.
Second, if those deadlines are not met, the consequences would be severe. The ATR would cease to be valid, the grid connection contract would terminate automatically by operation of law, and the financial guarantee could be called. Under the same logic, the withdrawal of the establishment permit would also trigger termination of both the contract and the ATR.
Finally, ANRE’s documents suggest that these new deadlines and sanctions would apply to grid connection contracts signed after the order enters into force, precisely in order to avoid extending them to projects already under way.
- The wind segment needs to be treated separately
A number of market participants argued that, if there is one segment at risk of being disproportionately affected, it is wind power. Not because it is less mature, but because it has the longest and most complicated permitting pathways, especially in relation to environmental procedures and to the Romanian Civil Aeronautical Authority (AACR).
Just getting scheduled for the aeronautical approval process can take 10 to 12 months, and environmental procedures can stretch well beyond 18 months, not counting the additional monitoring periods that may be required. Treating wind projects the same way as other projects risks mistaking the inherent complexity of development for a lack of credibility.
- Projects financed through public support schemes deserve special attention
One of the most sensitive issues raised during the debate was this: what happens to projects that have obtained public support — including through the Contracts for Difference (CfD) scheme or other support mechanisms — if the investor is ready to build, but the grid operator is delayed in carrying out the necessary infrastructure works?
The answer appears to lie, at least in part, at the level of primary legislation and in stronger coordination by the central authorities.
These projects show that not all implementation and grid-connection bottlenecks can be resolved through ANRE rules alone. Some of them stem from the coherence – or lack of coherence – of the institutional architecture as a whole and therefore require Government involvement. Because it is not only investors who need to be disciplined, but the entire institutional and contractual chain that makes effective grid connection possible.
Conclusion
“For every complex problem there is an answer that is clear, simple, and wrong,” they say. The issue of technical grid connection approvals is a complex one, and simplistic approaches pave the way for the wrong answers.
It is welcome that the Government has set out to clean the system of ghost projects. It is welcome that the Prime Minister has become involved. And it is welcome that ANRE has organized the debate and put concrete proposals on the table.
It is just as important, however, not to demonize an entire sector on the basis of pathologies that are real, but only partial. There are, without a doubt, speculative projects. There are also many ATRs that unnecessarily block capacity. Some of them are probably tied to the familiar category of politically or commercially connected “smart guys.” But there are also serious projects – well financed or in the process of being financed – that are being held back by administrative delays, environmental deadlines, permitting hurdles, and delays in grid reinforcement works across the transmission and distribution networks.
Regulatory change is clearly needed and, perhaps, changes to primary legislation as well – but they should be designed in such a way that serious developers are kept in the national energy system, not pushed out together with the bad actors.
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