Law no. 23/2014 approving the Government Emergency Ordinance no.57/2013 for the amendment and supplementation of Law no. 220/2008 on the establishment of the promotion system for the production of energy from renewable energy sources (“Law”)

(Law no. 23/2014 – published in the Official Gazette no. 184/14 March 2014)

The Government emergency ordinance no.57/2013 (“GEO 57/2013”) for the amendment and supplementation of Law no. 220/2008 (“Law 220/2008”) on the establishment of the promotion system for the production of energy from renewable energy sources has been approved by Law no. 23/2014, with the following significant amendments and supplementations:

E-RES Quotas

As of 2014, ANRE shall monitor on an annual basis the annual quotas of E-RES which benefits from the green certificates (“GC”) promotion system and, depending on the accomplishment level of the national objective and the impact on the final consumer, will estimate, publish on its website and will inform the Government, by 30th of June of the respective year, in relation to the level of the annual E-RES mandatory quotas which will benefit from the GC promotion system during the following year.

During the period 2015 – 2020, the annual E-RES mandatory quota which benefits from the GC promotion system, shall be set on an annual basis by Government decision within 60 days as of the data ANRE communicates said quota.

Deferral of GC

During the period 1 July 2013 – 31 March 2017 a certain number of GCs, out of the number of GCs provided under art. 6 para. (2) of Law 220/2008, to be received for each 1 MWh produced and delivered by those E-RES producers accredited by ANRE by 31 December 2013, shall be deferred from trading.

The recovery of the deferred GCs shall commence as of 1 April 2017 for hydro and photovoltaic projects and, respectively, as of 1 January 2018 for wind projects, in installments by 30 December 2020 the latest.

Investment Aid

For those projects for which the deferral of GCs operates and have received investment aid, the reduction of GCs will apply in such a manner that the reduced number of GCs will not be subunitary. When the reduced number of GCs, established pursuant to the computations done by ANRE, is subunitary, the provisions of art. 6 para. (21) of Law 220/2008 (deferral of GCs) shall not be applicable.

Biomass

For the electricity produced in power plants using biomass from energetic crops, the producers shall receive an additional GC for each 1 MWh produced and delivered.

Reduction of GCs – State Aid

The producers which benefited from state aid shall receive a reduced number of GCs, regardless of the source of E-RES used. The reduced number of GCs shall be established by ANRE by reducing the reference value of the investment per MW with the value of the state aid received per MW and maintaining the internal rate of return considered in the computations provided to the European Commission during the authorization process of the promotion system.

The reduction of GCs shall apply up to the level of the investment aid received by the producer of electricity by considering the average value of one GC, computed as the arithmetical mean of the maximum and minimum trading value for GCs.

Validity of GC

The validity period of GCs shall be decreased from 16 months to 12 months.

Acquisition of GCs

The suppliers of electricity and the producers of E-RES specified in Law 220/2008 must purchase on an annual basis a number of GCs equal with the product of the value of the annual GCs mandatory acquisition quota set for the respective year and the quantity of electricity provided for in art. 8 para. (1) of Law 220/2008, expressed in MWh, supplied annually to end consumers.

Within the invoice for electricity sent to the end consumers, the value of the GCs shall be invoiced separately from the fees for electricity, stating the legal grounds, only after the acquisition of said GCs by the suppliers as per the mandatory acquisition quota. This value represents the product of the value of the annual GCs mandatory quota (GCs/MWh) estimated by ANRE, the quantity of electricity invoiced (MWh) and the price of GCs purchased by the respective supplier on the centralized markets managed by the electricity market operator.

By 1st of September of each ear, the suppliers of electricity and the producers specified in Law 220/2008 shall adjust, in equal installments, (i) the value of the GCs for the previous year, depending on the annual quota set by ANRE, (ii) the electricity supplied and (iii) the weighted average price of the used by the respective supplier for the previous year.

The suppliers and producers specified in Law 220/2008 are obliged to send on an annual basis to ANRE the quantities of electricity for which they have the obligation to purchase GCs.

Access to the electricity market

The regulation for the access to the electricity market up to the safety limit of the National Electro-energetic System shall be approved by Government decision, pursuant to the proposal of the Energy Department.

Monitoring

ANRE shall be monitoring the producers which benefit from the promotion system and shall prepare annual reports which will be published on ANRE’s website within 90 days as of the closing of the monitored period.

The measures for the reduction of GCs shall be approved by Government decision, pursuant to the proposal of the Energy Department, within 60 days as of the communication of said measures by ANRE and shall be applicable only to those projects accredited by ANRE after the entering into force of the Government decision, starting with 1st of January of the following year.

Facilities

By way of exception to the rule of centralized trading (through OPCOM), as of the entering into force of the Law, E-RES producers operating projects, which benefit from the promotion system, with an installed power of up to 1 MW per producer and 2 MW per producer of high efficiency cogeneration based on biomass, may enter into bilateral sale-purchase agreements for electricity and GCs negotiated directly, but only with suppliers of end consumers.

Exceptions

For the year 2014, ANRE computes the E-RES quota which benefits from the GCs promotion system, publishes it on its website within maximum 3 days as of the entering into force of the Law, informs the Government in this respect and, said quota, will be approved by Government decision, pursuant to the proposal of the Department of Energy, until 31 March 2014.

Also, by way of exception from the Law 220/2008, ANRE computes and publishes on its website, within maximum 3 days as of the entering into force of the Law, the annual GC mandatory acquisition quota estimated to be issued based on the information related to the estimated E-RES to be produced and the final electricity consumption.

Repeals

Along with the entering into force of the Law, the following provisions of Law 220/2008 shall be repealed:

•  Article 3, paragraph (8), letter b);
•  Article 4, paragraph (10);
•  Article 8, paragraph (5);
•  Article 12, paragraphs (21) and (22).

Also, article II of GEO 57/2013 shall be repealed.

For additional information, please contact:

Dragos Radu, Partner – Head of Law Practice

Radu Ionescu – Attorney-at-law

EY Law

15-17 Ion Mihalache Blvd.

Bucharest Tower Center Building, 22nd floor

District 1, 011171 Bucharest, Romania

Tel: (40-21) 402 4000, Fax: (40-21) 310 7124

Email: office@ro.ey.com

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