On May 12, 2023, MADR order no. 70/2023 on the creation of a new state aid scheme financed from the Modernization Fund with a total budget of 500 million euros, which will be implemented in the period 2023-2028.

Under this scheme, several projects with an average annual budget of €150 million will be announced to finance new solar and wind power generation capacity, as well as capacity to store the energy produced by these installations.

Eligible beneficiaries are companies operating on the basis of CAEN classes 01 – Agriculture, hunting and related services, 10 – Food industry and 11 – Beverage production. They must consume at least 70% of the energy produced by new installations.

Up to €1 million/MW for solar projects

The maximum grant amount varies by technology and installed capacity, with a ceiling of €1,000,000/MW for PV plants up to 1 MW and €500,000/MW for PV installations above 1 MW. For wind power, the limits are 40% higher in each of the two capacity segments.

The main criterion for evaluating the projects will be the value of the requested grant, with the projects requesting the smallest grant/MW receiving the highest score. This criterion will weigh 70% of the total score. Other criteria will be defined in the Applicant’s Guide to be published by the Ministry of Agriculture.

So far, no schedule has been announced for the launch of the first tender, but the approved order states that the development and implementation of the scheme will begin after the approval of its financing by the European Investment Bank.

Renewable energy in industry

Investing in renewable energy sources for own consumption is important for all companies in the industry, especially those in the agricultural and food sectors, as the costs of electricity are passed on to the prices of final products, and the two sectors covered by this scheme are responsible for production. basic products. As a result, these companies’ efficiencies and cost reductions can help reduce pricing pressure. An element that contributes to this efficiency is the installation of storage capacities that will enable the beneficiaries to use as much of the energy they produce without transiting through the distribution network, thus avoiding additional costs.

Currently, the price of electricity is limited for economic entities in the food industry, as well as for those engaged in agriculture and fishing, at the level of 1 to 1.3 lei/kWh in accordance with Law 357/2022, which ensures stability in industry. However, the restriction will end in March 2025. By then, if the scheme is implemented in the next period, there will be time for new renewable energy installations to be installed and commissioned, which will help reduce electricity costs once the cap is lifted. , which will avoid a new wave of inflation.

Another advantage of the implementation of the financing scheme proposed by the Ministry of Agriculture is the reduction of greenhouse gas emissions by increasing the percentage of renewable energy in the national energy balance, thus contributing to Romania’s and the European Union’s decarbonization goals. In addition, the decentralization of electricity production by bringing the place of production closer to the place of consumption has a positive effect on the degree of congestion of electricity transmission and distribution networks, providing capacities for new producers and consumers at the level of existing ones. infrastructure.

Preparation of applications

In the case of such competitions, applicants had only 2-3 months to prepare and submit their applications from the moment the competition was announced, which can be difficult or even impossible if the preparation of the necessary documentation is not started in advance. .

The published scheme does not detail the content of the files to be provided, however, based on experience with other funding schemes, we suggest that interested companies check the building rights documents where the new renewable energy power plants will be located. to be in place to begin carrying out feasibility studies and cost-benefit analysis, as well as an internal project approval process, so that they are ready to complete the documentation in a fairly short time when the project is tendered.

In summary, the renewable energy financing scheme approved by MADR represents an important opportunity for the industry. If implemented in time, the scheme could have a positive impact on inflation and contribute to a cleaner environment by reducing greenhouse gas emissions from energy produced from conventional sources.

EY offers a full range of services for obtaining grant funding. The assistance offered by EY covers, in particular, project definition, identification of funding sources, preparation of funding applications, support during the evaluation period, contracting and implementation, so that projects are completed successfully and with minimal effort on the part of the beneficiaries. Interested companies can contact us at any time via our website or the EY Energy Fit app.

The article was signed by Mihai Dragici, Consulting Director, EY Romania, Alexandra Balan, Senior Consulting Manager, EY Romania and Larisa Bucur, Consulting Manager, EY Romania

Article supported by EY Romania