Solar Boom in Romania

Solar booms inspired by large solar subsidies are a regular feature in the solar industry. The story line is the same where clueless bureaucrats set high feed in tariff rates for solar energy which leads to a massive influx of solar developers and solar panel producer from China. This leads to exponential growth in solar power installations (up to 1000% growth in a year). The country sees high electricity tariffs and clamps down heavily solar developers (through retro tariffs like that, being seen in Bulgaria).

Romania is set to see almost 100 MW of solar power being installed in 2012 and 1500 MW by 2015 according to the energy regulator ANRE. The solar subsides in Romania are given through green certificates which are between 27 to 55 euros in value which means 15-33c/kwh tariff for solar power. While the mid point of USD 35c/Kwh is not very high compared to the Japanese solar subsidy of 52c/Kwh , it is still enough to draw in big developer like EDF and Chinese low cost solar panel producers like ET Solar. Unless Romania reduces the subsidies sharply (they are thinking of cutting it by 16% in 2013) , they will see the same mess as being seen in Bulgaria now and Czech, Spain earlier.

Solar Booms always end up in Spectacular Busts

Note Solar Booms are generally followed by a Bust after a couple of years as the massive subsidies forces the Government to stop the incentives abruptly and even apply retroactive taxes . This story has been completed in a number of countries like Spain,Italy Czech and Bulgaria already and Japan is in the first phase. Sumitomo one of the largest industrial  groups has decided not take part in this bubble and is investing instead in wind energy which has lower FITs and lower returns as well.

Bulgaria the most recent Solar Bust

The Bulgarian Government is set to face numerous lawsuits from investors in solar power plants as it imposes electricity grid fees on existing solar power plants to reduce their returns. This will reduce the returns for solar investors by 20-40% and bring down the electricity rates for Europe’s poorest citizens who saw rates go up by 12%. Note Bulgaria had given a very generous solar feed in tariff which has attracted solar developers and companies in droves setting up large solar power plants. The returns were enormous for these investors as solar panel prices have crashed leading to IRR of 30-40%. This has imposed a heavy monetary burden on the Bulgarian government and electricity companies as they are forced to pay for this boom. This story is similar to what was scripted in Czech and Spain a couple of years ago. The story goes like this:

a) Government starts a solar subsidy program by giving above market rates for solar electricity

b) Solar systems prices go down making the FIT very lucrative

c) Massive solar boom ensures with solar developers setting up huge capacities in short period of time (Czech saw 1 GW of solar installed making it the 4^th largest solar market)

d) Burden becomes huge in the government leading to increasing rates for customers

e) Government clamps down and imposes taxes and fees on existing solar power plants

f) Investors cry wolf and sue the government.

Businessweek

Romania’s energy regulator will decide early next year whether to recommend a cut in solar incentives as project costs fall. The regulator, known as ANRE, has so far proposed a reduction in the number of green certificates granted for solar- power production to five from six per megawatt, said Nicolae Havrilet, who heads the organization. Romania may have as much as 100 megawatts of power produced from solar plants at the end of this year, said Zoltan Nagy- Bege, a director at ANRE. The country’s solar capacity may increase to 1,500 megawatts in 2016, he said.

ET Solar gets 50 MW contract

Solar PV solution provider ET Solar was awarded a 50MW contract from Tinmar-Ind, a Romanian power supplier and energy trading company, to build several PV plants in Romania.The PV projects will be developed in three counties, including Gorj, Girugiu and Dolj. More than 20MW are already under construction and expected to be completed before the end of this year while grid connection and electricity feed-in is anticipated to be finished in the first quarter of 2013. The remaining 30MW are being planned, although the company notes that construction is slated to start before the end of 2012.