Romanian Renewable Energy market: What should we expect in 2013?

As September is about to end, we are preparing for the last quarter of the year and it’s possible to extract the first conclusions for 2012, but also prepare for 2013. Let’s check what the situation in the Romanian Renewable Energy market is like, one sector at a time.

Wind

Currently the balance is the opposite than in previous years as several good projects can be found, with less available investors. The market is not as hot, but transactions are still sealed. 80% of the investors I have discussed with focus on small projects, while 20% eye large scale ones. The big players continue their domination and by next year the 2.000 MW commissioned capacity will be surpassed.

Photovoltaic

This is definitely the “hottest” sector of the year in terms of transactions of projects (but not yet of constructions). Transactions have been and will be sealed this year on projects with capacity of hundreds of MW, most in the 5 – 10 MW range. Smaller (good) projects are very attractive but the supply is limited. Only a small part of big size projects are really good and they will probably be sold in the following months, if they haven’t yet. Investors are preparing to construct and commission during 2013, multiplying the actual operational projects.

During next year, roof top projects will also probably become very attractive, but there are many challenges for someone who wants to get involved in the sector.

Micro Hydro

There aren’t as many investors in this sector as in others, but the majority of them are serious and determined. Any good project whose owner will not ask for a fortune will be sold. At the same time, this is the sector with the biggest % of “ghost projects”: Someone with “an idea and some connections” who tries to sell a “project” that does not exist and requires time, expertise, devotion and perseverance.

Biomass – Biogas

Having received a mandate for 20 MW of Biogas and Biomass projects, I had the chance to study this segment, which is still at the beginning. Very few projects are advanced, even less are “Ready to Build”. Many owners have obtained approvals for European Grants but they don’t really know how to proceed. But if there is one sector which may explode in 2013 – 2014, it will be energy production through cogeneration. Romania is almost ideal for it and the national grid needs it.

PPA – Financing

We are hoping that the PPA contract legislative problems will be resolved during the following months. This does not mean that we have not been active in this sector, but there is much more to be done than what has been done thus far.

Without PPA, very few projects are constructed, using private equity. In order for a project to be financed, usually a PPA is needed, which is why everything has been delayed and the majority of investments were pushed for 2013.

Challenges

The Romanian Renewable Energy segment still faces many challenges and issues that need to be settled. Some problems were resolved in July, others remain. But the potential is here and careful investors with good consultants will be able to conclude profitable investments.

There are many similarities to the problems faced by investors in the Real Estate sector of the past. But Renewable Energy has several differences and advantages, allowing us to resolve the problems and eliminate most risks.

2012 is expected to be active until the end and 2013 will also be a very good year.

What is your opinion?