While the European Commission is proposing a temporary emergency provision to accelerate investment in the development of renewable energy projects, Romania is blocking them.

At the end of July, changes were made to the Law on the Land Fund aimed at simplifying the procedure for granting permits for renewable energy projects in accordance with the goals set by the European Union. However, the Ministry of Agriculture and Rural Development misinterprets the new legislative provisions in such a way that they block the development of these projects.

***

As a general rule, the construction of any structures on agricultural lands located outside the village is prohibited. If such land is earmarked, it must be included in the urban area based on the Zonal Town Planning Plan (ZPP) with prior approval of the land quality class issued by the Ministry of Agriculture and Rural Development (MADR). There were a number of exceptions to this rule, none of which applied to stand-alone power plants.

The procedure provided by the above rule was followed for all photovoltaic projects that were developed and commissioned in Romania during the first wave of renewable energy sources.

Although the above rule has not undergone any legislative change, this procedure appears to have fallen out of favor with MADR since the beginning of this year. None of the requests submitted to MADR for a land quality class opinion received any response in the first half of this year, most likely due to the absence of a statutory provision to support a negative response.

At the end of July, the Law on the Land Fund was amended only with regard to a new exception to the above rule. According to this amendment, the development of renewable energy generation capacity, storage and other related facilities on agricultural land located outside village boundaries is permitted if the land (i) does not exceed 50 hectares and (ii) has a fertility class III, IV and V. Instead, such projects must follow a special procedure for removing land from the agricultural cycle.

Although this legislative amendment was intended to simplify the authorization process for small projects, what followed led to the blocking of all renewable energy projects.

Immediately after the adoption of the new legislation, MADR began rejecting all requests received since the beginning of the year, regardless of whether they were for projects larger or smaller than 50 hectares. The restitution notes sent by MADR do not contain any legal arguments for such a refusal, they are limited to (i) citing a new legislative provision that allows the development of renewable capacity on land located outside the city limits within 50 hectares and (ii) asking the applicants to comply of the special procedure applicable to these projects. In other words, MADR uses an exception designed to facilitate the development of small projects, generally the only legal basis for the development of renewable energy projects in Romania.

What impact does this MADR position have on the renewable energy sector?

1 Projects over 50 hectares are completely blocked

• The development of renewable energy capacity exceeding 50 hectares is completely blocked: such projects cannot comply with the newly introduced statutory procedure for projects up to 50 hectares (as they do not comply with the legal requirements applicable to them) and the statutory procedure for MADR refuses such large projects.

• The impact is significant given the following:

• projects that reach the MADR approval request stage are mature projects for which the investment process has started at least 1 year ago;

• developers have already made significant financial investments by buying land or entering into firm surface contracts for at least 30-35 years;

• projects risk losing the technical connection permit (which is the key permitting document in such projects), which expires automatically if the building permit is not obtained within 18 months of its issuance (or the building permit cannot be obtained before the land is entered into the urban area );

• projects that applied for grant funding through PNRR are at risk of losing this funding due to non-compliance with development/commissioning deadlines;

• investors have already paid the fee for the introduction of land in the central part of the city, which, for example, can reach 1 million euros for a project with a capacity of about 130 MW.

2 Photoelectric projects with a capacity of more than 42 MW will no longer be able to develop in Romania

The maximum capacity of a PV project that can be developed on a 50-hectare plot of land is approximately 42 MW. Given that agricultural land located in the periphery is the most suitable for the development of such projects, the restriction imposed by MADR will mean that there will no longer be an opportunity to develop PV projects above 42 MW in Romania.

3 It is no longer economically feasible to connect new PV projects directly to the 400 kV grid

Connecting renewable energy projects to the 400 kV grid involves high costs, which are economically impractical for projects with a capacity of less than 200 MW. At the same time, given the limited capacity of the network, the indirect exclusion from the connection of 400 kV stations/lines further limits the connection possibilities.

4 Energy security will be at risk

Since 2019, Romania has become a net importer of electricity due to the lack of investment in new energy production capacities over the past 8 years. In addition, Romania’s decarbonisation plan calls for the decommissioning of existing coal and lignite-fired capacity. Therefore, Romania urgently needs investment in the development of new renewable energy production capacities, which can be put into operation much faster than conventional ones. The lack of such investments will also lead to a new increase in prices on the Romanian energy market.

5 Romania will not be able to meet its renewable energy targets

Thanks to the green certificate support program adopted by the Romanian state between 2008 and 2010, Romania reached its 24% renewable energy target set by the European Commission for 2020 (it also helped reduce energy consumption that year). .

However, the goal to be achieved by 2030 is very ambitious. Thanks to the National Integrated Energy and Climate Plan, Romania set a target of 30.7%, which should have been increased to 34% before the adoption of the REPowerEU plan. We can expect the European Commission to ask Romania to set an even more ambitious target for 2030.

6 Romania’s food security has not been affected by the development of renewable energy projects

The projects Romania needs to meet its 2030 renewable energy targets will not affect more than 0.05% of Romania’s total arable land area. Therefore, the development of these projects does not have a real impact on Romania’s food security.

7 Legislative instability affects Romania’s ability to attract new investments

The development of renewable energy production capacities requires significant investments, and our country competes with other EU member states in attracting these investments. Legislative instability significantly affects the attractiveness of Romania for foreign investors.

Read the whole article and comment on Contributors.ro