- Introduction
The last three years put Romania back on the map of the RES investments with an unprecedented appetite from global investors ( IPPs, PE funds, infra funds, institutional investors, utilities and developers) accounting to more than 30 GW of projects under development, some being among the largest in Europe in terms of panned size. This wave came on the back of an ambitious national strategy to increase the share of RES, the natural advantages and regional interconnections, the availability of EU grants and a legal framework aligned with the EU common market. Also, the announcement of the implementation of a support scheme in the form of Contracts for Difference for onshore solar and wind, of potentially up to 10 GW by 2030 provided a positive signal to the generators. Also, the newly adopted hydrogen strategy as well as the announced offshore wind legislation provided additional signals that the RES market development in Romania is strongly supported by the authorities. By the same token, important grid modernization and extension work have been announced by the national TSO, including the construction of an interconnector – high voltage direct current cable to be constructed alongside the existing gas interconnector will connect the country to Hungary and is estimated to be finalized in 2029. The power line is necessary to satisfy the needs to connect all the intended new RES capacities and increase the export potential.
This article aims to outline some of the most important steps in the overall permitting process for a greenfield generation capacity in Romania, alongside considerations regarding the available grant funding and support schemes, aimed to accelerate the investments in the renewables sector, to help reach the decarbonization targets at 2030.
- Land, permitting and authorisation process for obtaining the building permit and energy related grid approvals and authorisations, including environmental aspects
Under the Romanian law, the following permits, approval, certificates, authorisations are required for the development and operation of a solar farm having more than 1 MW installed capacity.
The first step in developing a solar plant project in Romania is to secure a title over the land. The most common title, besides the ownership title, which gives right to build and own the respective infrastructure for a solar plant project, is the superficies right. In a nutshell, a superficies right consists of: (i) the right to have or to construct a building on, under or above the land/ building owned by another natural or legal person; (ii) the ownership right to the new construction; and (iii) the right to use the land pertaining to the building (drept de folosinta in Romanian). The Romanian Civil Law limits the duration of a superficies right to a maximum of 99 years, with a prolongation option.
In general, all construction works can only be performed based on a building permit (in Romanian: “Autorizatie de construire”) obtained by the beneficiary following the securing of a real right over the land where the construction will be erected. That can be an ownership right, a superficies right, an easement right or a concession right over public owned land.
The first procedural step for obtaining the building permit is for the beneficiary to obtain the urbanism certificate (in Romanian: “Certificat de urbanism”). The urbanism certificate includes a list of all endorsements and approvals that must be in place before submitting the application for the building permit. Usually, among others, these endorsements are issued by the environmental protection agency, the water management and the land planning authorities.
If the Project has not yet been approved through the existing local urban plan for the respective location (i.e. administrative unit, commune, town etc), the urbanism certificate will also make note of the requirement to secure a local urban plan (“PUZ”) (in Romanian: “plan urbanistic zonal”), but only if the land has a higher surface area than 50 hectares.
As a novelty on this topic, there have been recent enactments in respect to PUZ and renewable projects. The general rule regarding developments on extra muros land is, as per the Land Law, that constructions on such land are prohibited, so renewable energy projects could be built only on intra muros land. However, Law 254/2022 amending the Land Law in July 2022, introduced the exemption according to which renewable projects could be developed on plots under 50 ha, located on agricultural extra muros land without the need to obtain a PUZ for the transfer of such lands into intra muros regime. The condition imposed by law refers only to the class/ category III, IV or V of agricultural land (where the fertility class is defined through a pedological study endorsed by a special authority, Soil and Agrochemical Survey Offices OSPA).
One of the mandatory permits listed in the urbanism certificate is the environmental permit (in Romanian, “acord de mediu”). The environmental permit is an administrative document issued by the competent authority for environmental protection, which establishes the conditions and measures for environmental protection during construction stage. The environmental authority verifies whether the proposed type of investment mandatory falls under the environmental impact assessment category (especially high polluters) or if the project falls within the non-mandatory category for which a case-to-case basis assessment is performed (typically the case of wind and solar projects).
In practice, large solar projects may typically fall under the environmental impact assessment process which would follow a legal process whereby the environmental authority and the investor set a public engagement plan which would require at least one public debate session (announced at least 20 days prior). The process is hence extended and may vary from 9 months to more than 1 year.
After obtaining the final act of the environmental protection authority, the investor may resume the administrative circuit of obtaining the building permit.
New electricity production capacities may be connected to the grid under the terms and conditions of the grid connection permit (“ATR”) (in Romanian: “aviz tehnic de racordare”). The ATR includes the connection solution and represents the offer of the Grid Operator to the request for connection submitted by the applicant. The ATR is issued by the Grid Operator in accordance with the approved solution study and contains all the technical and economic conditions for the connection to the grid.
The first step towards obtaining the ATR is to request the Grid Operator (Transmission or Distribution Operator) to provide information regarding the conditions to connect to the power grid. The Grid Operator must provide general information regarding the necessity of a location notice, general options for the grid connection, the steps and estimate duration of the grid connection process, the requested documents, the costs of the procedure etc.
The request regarding the connection to the public grid shall be submitted to the distribution operators (in Romanian, operator de distributie) if the electricity produced is less than 50 MW or to the transmission and system operator (in Romanian, operator de transport si de sistem) if the electricity produced exceeds 50 MW. Upon receipt of the ATR, applicants may require the relevant Grid Operator to execute the grid connection agreement.
After obtaining the ATR or the grid connection agreement, the beneficiary may can apply for the setting-up authorisation (in Romanian “Autorizatie de infiintare”). The setting-up authorisation allows the commissioning of a new electricity production unit according to the technical parameters previously established under the grid connection agreement, and it is required in an advanced stage of the permitting process. The setting-up authorisation is issued by ANRE and is required for new electricity production units with an installed capacity greater than 1MW.
After commissioning of the plant, the beneficiary must apply to the grid operator for the conformity certificate (only for solar and wind plants) (in Romanian “Certificat de conformitate”). The technical conformity certificate acknowledges the compliance of solar/wind plants with an installed capacity above 1 MW with the technical requirements for grid connection and represents a prerequisite for the generation licence. The commercial operation license must be obtained from ANRE after the plant is commissioned and before the commencement of commercial operations. The validity term of the licence is 25 years and may be extended only in situations where the validity period is less than the maximum duration allowed according to the law.
Another necessary permit for the commissioning of the project is the environmental authorisation (Romanian, “Autorizatie de mediu”). The environmental authorisation is issued by the Environmental Protection Agency and establishes the conditions and / or parameters of operation of an existing activity or a new activity with a possible significant impact on the environment, mandatory for commissioning the project. The environmental authorisation is valid for the entire period when the titleholder obtains an annual visa to confirm that the holder carries out its activity in compliance with the provisions of the law on environmental protection.
- Investment opportunities for solar projects
3.1 Contracts for difference scheme (to be implemented in Romania in 2024).
Acknowledging the need of new instruments in low carbon technologies, the Ministry of Energy has worked in the past years for the implementation of a Contract for Differences support mechanism (CfD), with the support of EBRD and a consortium of international consultants, where CMS has led the consortium in the design and implementation matters.
On 6th of March 2024, the European Commission has approved the €3 billion Romanian State aid scheme on Contracts for Difference (“CfD”) to support onshore wind and solar photovoltaic installations to foster the transition to a net-zero economy. As a result, the legal framework for CfD is expected to be enforced imminently.
A CfD is, typically, a private agreement between a “buyer” and a “seller” on the two-way support payment which will be the difference between the strike price and market reference price. The generator is paid by the CfD Counterparty when market reference price is below the strike price and the generator pays the CfD Counterparty when market reference price is above the strike price. Total revenue of generators per unit of electricity is given by: Actual Sale Price + (Strike Price – Market Reference Price).
The CfD scheme will involve two rounds of auctions, each with separate tenders for onshore wind and solar photovoltaic eligible generation technologies, and with a total capacity of 5,000 megawatts of new renewables across the two rounds of auctions with two separate tenders for each technology each.
The total indicative capacities targeted are:
- 1,000 megawatts installed capacity for the production of electricity from onshore wind and 1,000 megawatts installed capacity for the production of electricity from solar photovoltaic sources, both as a result of a first round of auctions to be held in 2024; and
- 1,500 megawatts installed capacity for the production of electricity from onshore wind and 1,500 megawatts installed capacity for the production of electricity from solar photovoltaic sources, both as a result of a second round of auctions to be held in 2025.
Based on this scheme, it is expected that 2500 MW of solar generation capacity shall benefit of the scheme by the end of 2025, with an expected COD date within the next three years from the award of a CFD contract.
3.2 The Modernisation Fund
In January 2024, the Romanian Ministry of Energy has put on public consultation two call for projects on support for investment in new electricity production capacity from renewable energy sources. The targeted renewable energy sources are wind, solar and hydro. However, investment aid is only granted to new installations, without financing energy storage capacities.
The eligible activities which can be financed are the construction of renewable wind, solar or hydro power generation capacity and the purchase of new plant/equipment for construction of new electricity generation capacity from renewable wind, solar or hydro energy sources.
The total estimated budget of the two calls for projects is the equivalent in RON of EUR 815,000,000 and represents grants from the Modernisation Fund. The first call for projects provides for Support for investments in new renewable electricity generation capacity related to the call for projects for private sector applicants (without self-consumption) and has a total budget of 400.000.000 EUR.
The second call for projects provides for Support for investments in new renewable electricity generation capacity for self-consumption related to the call for projects for private sector applicants and has a total budget of 415.000.000 EUR.
3.3 The National Recovery and Resilience Plan
On 31 May 2021, Romania sent its proposal to the European Commission for its NRRP, which included all seven flagship areas of EU policies to be reached. This NRRP sets out the reforms and public investment projects that Romania intends to implement with the support of the Recovery and Resilience Facility (RRF). In total, Romania has requested €14.3 billion in grants and €15 billion in loans under the RRF.
On 31 March 2022, Romania’s Ministry of European Investments and Projects launched a platform for the submission of investment projects to be financed under the NRRP, the guidelines for which are based on the six areas covering Romania’s needs and EU priorities: green transition; digital transformation; smart growth; social and territorial cohesion; health and resilience; and policies for the next generation. With the creation of this platform, the Ministry of Energy also launched a call for projects for the state aid scheme aimed at supporting investments for the installation of new electricity generation facilities, such as renewable wind and solar energy sources with or without integrated storage facilities.
The total worth of the project call was approximately 595 million euros with approximately 497 million euros allocated for new wind and solar generation capacities higher than 1MW. According to the Minister of Energy, the scheme has accommodated more than 150 projects with a capacity above 1MW.
In addition, the Ministry of Energy has announced a new state aid scheme supporting investment in the development of storage capacities for energy storage (batteries). The closing date for submission of projects is 21.03.2024 The installation must be commissioned until 30.06.2026.
Overall, it is expected that by 2030, Romania would install 10,000MW in new energy generation projects from renewable sources that will be financed through the NRRP and the Modernisation Fund, which would triple the level compared to the current capacity of 5,000 MW. At the same time, the cross-border interconnection capacity of the electric transmission network will also be increased to 5,000 MW.
Disclaimer This material is not intended to be exhaustive in presenting the permitting and authorisation process for renewables energy projects, nor intended to constitute legal, regulatory or business advice.