Alro Urges Romanian Government to Cut Renewable Energy Incentive

Alro SA (ALR), a Romanian aluminum producer, is urging the government to cut incentives granted for investments in renewable energy after its power costs surged, pushing the company into a loss.

The Slatina-based smelter, owned by Vimetco NV (VICO), said a government program that grants green certificates for each megawatt-hour of power produced from wind, solar or biomass, will generate an additional cost for the company of about $44 million this year.

“We think the renewable energy producers should operate in a free market, with no state incentives,” Marian Nastase, Alro’s chairman, told reporters in Bucharest today.

Romania plans to scale back renewable-power subsidies to limit electricity-price increases for consumers by changing its incentive program in July or at the beginning of next year, Minister-Delegate for Energy Constantin Nita said in a Feb. 28 interview. It intends to cut the maximum value of green certificates granted for clean-energy generation and also lower the number of certificates, he said.

The plan to rein in support for renewables follows similar moves in Spain, France, Italy and the U.K., where debt-strapped governments have reduced aid to avoid overcompensating companies and to curb power-price increases for households and businesses.

Romania, which offers two green certificates for each megawatt-hour generated from wind, may cut the number to one or 1.5, and for solar to 3.5 from six, Ziarul Financiar reported, citing an unpublished draft law. Their maximum value may drop to 30 euros ($39) from 55 euros, the newspaper said.

Alro said it recorded a loss of 170 million lei ($51 million) last year after its power costs increased by 172 million lei to 831 million lei in 2012.

Nastase said Alro will “have a more prudent approach” to its plan to build a 250-megawatt gas-fired power plant because of the “unfavorable environment.” The investment plan will cost about 280 million euros, according to Chief Executive Officer Gheorghe Dobra.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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