The Romanian Renewable Energy sector: 9 “wonderful lies” that are spread around
In the last 45 days I have traveled to 4 countries and exhibited in 2 of the most important Renewable Energy exhibitions in Europe, presenting the Romanian market to foreign investors, banks and financial institutions etc. As the interest for the local market is really very strong, there are tens of questions asked during hundreds of discussions. People asking are either international professionals with a vast experience, or Romanian entrepreneurs who want to enter in the field as well.
But as the market is very hot, too many amateurs have entered the segment. They also travel around, trying to promote their project or services (something fair) by saying “wonderful lies” to people, hoping that they will earn their money before they are discovered. The situation reminds me a lot of the Real Estate “golden era”, when everyone was saying everything just to make some money today (and destroy the market tomorrow).
From all these lies, allow me to share with you 9 of the most wonderful (or ridiculous) ones, transmitted to foreigners or locals:
1. “The price of green certificate will always be at the maximum level, you can be sure of that. Nowadays it is around 55 – 57 Euro and if you add inflation, in a few years’ time it will be around 65 – 70. You can look on the OPCOM site for prices”.
The prices are high now and they will probably remain high as long as not many projects (especially wind ones) are commissioned. Every serious company will tell you that its income projection does not include the scenario of maximum prices on the long term.
2. “As the price is at the maximum level, you will have something akin to a Feed in Tariff for many years to come”.
If you want a fixed price, sign a Power Purchase Agreement or a Green Certificate Purchase Agreement with a “bankable” international trader. Having been involved in this kind of deals, I will tell you that it is much more difficult than you think and the final price is satisfactory, but has nothing to do with “fixed prices at the maximum level”.
3. “The energy is easy to sell, there is a spot market and it will double in 5 years’ time”
They just forgot to say that you also have to be an expert in arbitrage, if you don’t want to lose all your money. Let a trader do this, as all experts suggest.
4. “Financing in Romania is simple. Banks may provide you loans up to 85% of the total value of investment”
Correct. They are waiting for you at the door, with a red carpet to lead you to their office. Some banks have hired famous Hollywood actresses, in order to massage you while you sign the loan contract. (Let’s be serious. There is financing in Romania, but it is not easy at all)
5. “Many international banks wait to finance projects and they can cover up to 100% of the total investment”.
I also hear that (had plenty of relevant discussions), but I am waiting to see the proofs in the following months.
6. “Foreigners buy anything, even if the papers are not yet ready”
Foreigners are VERY careful. They pay a lot of money for due diligence and they crosscheck every single detail. And they do very well.
7. “You can get European Grants, build your project with their money and then benefit from the certificates scheme as well. So prepare one now!”
No, they also pay you money, as you gave them the pleasure of collaborating with you. The budget for this sector has been invested for some time now.
8. “Once you have the ATR, you have secured the connection to the national grid”
Security comes once you pay the first installment. If not, this is just an indication.
9. “You will get your money back in 3 years’ time”
Who says that is either naïve or a liar.
My company (together with our collaborators) crosschecks projects before presenting them, gives solutions for EPC, facilitates PPA and GCPA and resolves tens of other problems until we consider a project to be “well done”. I guarantee you that the Romanian Renewable Energy sector is very interesting, but it has nothing to do with all these myths of “easy money”. It is worth investing in, but carefully and with attention to details.
What is your opinion?