4 lies and 4 truths for the Romanian solar energy sector

If the Romanian renewable energy market has one sector where people bend the truth, this is by far the solar one. Let us go over 5 common lies and 5 truths that we hear in our daily business activity:

1. “Romania has 1.400 – 1.750 hours of annual irradiation”

Lie. All serious players prepare their business plans estimating a production of maximum 1.400 hours per annum, at the most. Usually they calculate a 5 – 10% lower production. The solar maps that present Romania as a state located… south of… Greece have nothing to do with reality. Ask for the maps that banks are using to calculate.

2. “The potential of Romanian solar energy sector is excellent”

True. If we listen to the experts, who have verified several advantages that an investor has when producing solar energy in Romania. But this is not going to last forever. It is a viable market for the next 2 or maximum 3 years.

3. “Don’t spread the word, but you can buy solar projects that have approved European grants and they benefit from 6 green certificates per MWh as well”.

Lie. If you get grants, you get less green certificates. So with 50% grants, you will get 50% of the green certificates. Plus these grants were given for different technologies and costs. Personally, I would look for something else before checking these projects.

4. “In Romania you can develop a solar energy greenfield project in 6 months’ time”

True. More or less. But only if you have very good consultants and experts who know how to do this. It took me 2 years to find them. Don’t believe in easy promises.

5. “It is cheaper to connect 10 MW of solar energy to the grid than 10 MW of wind one”

Lie. If you produce 10 MW in one hour and you need to evacuate it to the grid, you will not avoid the cost, whether or not you produce solar or wind energy. Most likely you will buy the same transformator. (By the way, there are “optimum capacities” for Solar energy projects, in order to reduce the cost per MW installed).

6. “Solar energy is easier to fit into the grid”

True. For several different reasons. For example the capacity of the solar projects is smaller, thus making them easier to fit almost anywhere and build them close to large energy consumers. But there are also many other technical aspects that confirm this statement.

7. “By investing in Romanian solar energy production, you benefit from a very high price and profitability”

Lie. The production of solar energy in Romania is “rewarded” with 6 green certificates per MWh. This means that almost 85% of the total income is related to the volatility of the green certificates’ price. The estimated income / MWh that an investor can reach is very good indeed. But don’t expect miracles, unless you are willing to risk. If you choose to stay on the safe side (for example, by using PPA contracts in your calculations) the result will be “attractive” but not “incredible”.

8. “Prices for new solar energy projects in Romania can be higher than in the majority of European countries nowadays”

True. Most of the European countries have either stopped giving subventions to new solar energy projects or offer an axed feeding tariff, which is reduced every 6 months. The Romanian scheme offers a good IRR at the minimum price scenario, which may increase a lot if the prices of green certificates remain high.

Solar energy in Romania is a promising field for investments, but I would suggest you calculate “without hopes and dreams”. Like this you will be happy with the total outcome.

PS. Upon request, I can provide you with a short memo for the subvention scheme applicable to all renewable projects in Romania, solar included.