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New law on the production of energy from renewable resources

On 18 July 2018, the Romanian Parliament adopted Law No. 184/2018 approving Government Emergency Ordinance No. 24/2017 regarding the amendment and completion of Law no. 220/2008 for establishing a system to promote energy production from renewable energy sources and for the amendment of other legal enactments.

The changes aim to help achieve the national target of producing 24% of the gross national energy consumption from renewable energy sources by the year 2020. This target is in accordance with the allotment made to EU member states, under Annex no. 1 of Directive 2009/28/EC on the promotion of the use of energy from renewable sources.

The changes also aim to avoid the annulment of green certificates that may lead to the closure of renewable energy producing facilities.

Some of the most relevant points under the new law are:

1. The notion of a “prosumer” is introduced, being the final client who owns electricity generating installations, including co-generation.

2. The focus is not on the actual production of electricity, but rather on the personal consumption, storage and sale of electricity from renewable sources produced on their premises.  Such premises may be a block of flats, a residential area, shared service facilities, commercial or industrial establishments that are within the same closed distribution system (in the case of non-residential households).

3. Autonomous energy consumers from renewable sources can store and sell electricity as long as such activities do not constitute their primary commercial or professional activity.

4. New rules for obtaining and selling green certificates that are as follows:

(i) the Romanian Energy Regulatory Agency (“ANRE”) must set, every December, the mandatory annual green certificate quota for the following year, which is based on the final estimated consumption of electricity for the following year. The estimated annual average cost on the final consumer bill shall be Euro 12.5 /MWh in 2019, Euro 13 /MWh in 2020 and 2021 and Euro 14.5 /MWh in 2022;

(ii) the ANRE must establish, by the 1 March each year, the mandatory annual green certificate quota for the previous year. This is based on the previous years final electricity consumption, so that the average cost on the final consumer bill is no more than Euro 11.7 /MWh in 2018, Euro 12.5 /MWh in 2019, Euro 13 /MWh in 2020 and 2021 and Euro 14.5/MWh in 2022;

(iii) in order to correlate the supply and demand of green certificates on the market, the ANRE may reduce the cost of the estimated average annual green certificate on the final consumer’s bill starting in 2023. This shall be based on the ANRE’s methodology, to be published on its website;

(iv) the new rules guarantee the takeover of all green certificates issued between 1 April  2017 and 31 December  2031, including green certificates postponed from trading, as long as the final consumption of electricity does not fall below the average value set for the period 2017 - 2022;

(v) From 1 April 2017 until 31 December 2020 producers owning solar power stations accredited by the ANRE until 31 December 2013 will be temporarily barred from trading two green certificates for every 1 MWh produced and delivered. The postponed green certificates can be recovered between 1 January 2021 and 31 December 2030, in equal monthly instalments;

5. Authorities producing electricity from renewable sources, which are partially or fully financed from structural funds, from suppliers they have an agreement with will benefit from the regulated service between energy delivered and energy consumed in the network.

6. The sale of green certificates is exclusively allowed for producers of renewable energy and only one certificate may be sold within a single transaction between a producer and a supplier.

The following benefits are being established for prosumers:

(i) prosumers can sell energy, from production capacities of up to 27 kW, to electricity suppliers with whom they have concluded agreements;

(ii) electricity suppliers are required, at the prosumers request, to purchase the electricity at a price equal to the weighted average price recorded in the Next Day Market of the previous year;

(iii) natural person prosumers may carry out the trading of electricity produced in units of their electric power production, without registration and authorisation of their operation;

(iv) prosumers who have units for renewable electricity production with an output of no more than 27 kW, at the point of consumption, will benefit through the electricity suppliers with whom they have concluded agreements from the regulated service between the value of the electricity delivered and the value of the electricity consumed by the network;

(v) natural person prosumers are exempt from acquiring the annual and quarterly green certificates for electricity produced and used for their own final consumption, however regarding the technological power consumption of their power station, such certificates must be acquired; and

(vi) the Romanian Tax Code and Tax Procedure Code, exempts natural person prosumers from the payment of all tax liabilities related to the amount of electricity produced for self-consumption and the surplus sold to suppliers.

Law No. 184/2018 was published in the Romanian Official Gazette no. 635 dated 20 July 2018, and entered into force on 23 July 2018.

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