4 important factors that may define your success while investing in Romanian renewable energy
* the article was first published on the 26th of March 2012
Despite the growing interest for investments in the Romanian renewable energy sector, we have to admit that the market is still on its first steps, especially in the photovoltaic, hydro and biomass sectors. The wind segment is a bit more developed, due to some major projects that will be delivered this year, but still it is far from being considered a mature market. Right now we are just on the first chapter of the book titled “Romanian renewable energy investments”. This is why we notice many people talking, but very few projects constructed and connected to the grid.
During this first period most people focus on the project itself and its documentation. This is the correct approach, but it’s not enough. The cumulative experience from other advanced markets proved to us that this is just the beginning. There are also many other factors that may define the success of your investment. Let’s explore 4 of them:
1. The connection and evacuation cost
In Greece people calculate the value of a project for sale by also including the cost of connection to the grid and the evacuation of electricity produced. This is not by coincidence. Many times this cost can increase the total budget or may exceed the price of buying the fully permitted project.
There are excellent projects which are unsold due to this problem, but also very good ones which were sold at a higher price, as the connection costs were really low. You really should calculate the total sum, it prevents surprises in your budget and cash flow.
2. The EPC company
“Anyone who constructs” is not necessary someone suitable to construct your project. Many people will tell you that “it’s a simple job, you don’t need to worry”. Correct. You will not worry now. You will worry during the next 10 – 15 years, when you will realize that a wrong angle can lower your production, or other minor details that may cause 10 – 20% less income for your investment.
There are many serious companies in Romania, but there are also several “not appropriate” ones. The choice is yours.
3. The quality of materials
You don’t need to be a top expert in technical issues in order to guess that this is important. People usually say that the choice is between “Europe or China”. Others, with more years of experience rephrase the dilemma as “Materials with track record and guarantees or no name ones”. Also let’s not forget that most Europeans produce in China as well nowadays.
Prices decrease month by month. But as green energy is a long term investment by default, it is not certain that the cheapest solution is always the safest.
4. Insurance, insurance, insurance
It takes some time to find the right people with experience and products for insuring renewable energy investments. First of all, make sure that you have calculated the cost in your annual expenses, many investors forget this aspect. If you check more carefully, you will see that the quality of the contract you sign is defined through many details.
Right now we are waiting for new insurance products to appear on the Romanian market. This is a field that is worth your time and attention.
The English say: “You pay peanuts, you get monkeys”. And green energy is not “monkey business”. It needs time, expertise and careful moves.
What is your opinion?