April 5 (Bloomberg) -- CEZ AS, central Europe’s biggest power utility, will concentrate on expanding in Poland after Romania said it will cut subsidies for clean energy.
“Further expansion in Romania was still at the hypothetical stage, and now we’ve decided to focus on the Polish market instead,” Ladislav Kriz, a spokesman for the Prague-based company, said in an e-mail.
The Romanian government said yesterday it will reduce subsidies for new wind and solar projects from 2014, adding to plans announced this week to freeze some support for plants already operating. The measures, designed to stem an increase in electricity prices for consumers as they shoulder the cost of the support, threatens to drive foreign investors elsewhere.
“Romania’s credibility has been reduced to zero,” said Markus Vrieling, chief executive officer of RESbroker International, a wind and solar project broker. Several clients have already withdrawn or put on hold investments of hundreds of millions of euros, he said, without identifying any.
CEZ shares closed down 0.4 percent at 566 koruna in Prague, rebounding from an earlier drop of as much as 2.1 percent. The stock has lost 17 percent of its value since the beginning of the year, extending last year’s drop of 13 percent.
CEZ said in October it was in talks to acquire projects in Romania, adding to the 600-megawatt wind park it operates in Dobrudja province. It intended to build 1,000 megawatts of wind in the nation by 2016, a plan it cut back to 300 megawatts in February, citing uncertainty over the future of state support and funding needs at home. CEZ will now focus on Poland, where it plans 760 megawatts of wind farms, February data show.
Poland, which like Romania has a green-certificates system, offers greater potential to build new projects because wind-energy density is among the lowest in Europe, according to the Polish Wind Energy Association. The country, which generates 90 percent of its power from coal, is debating a draft Renewable Energy Act as it seeks to meet demand without adding emissions.
Romania said yesterday it will grant 1.5 green certificates per megawatt-hour of wind power generated, down from two now, and three for photovoltaic plants, down from six. Power distributors are obliged to buy the tradable certificates, which each pay out 27 euros ($35) to 55 euros, plus inflation, over 15 years.
Investors are being “overcompensated” under the current system, which must be scaled back given the rapid growth of renewable-energy capacity, Maria Manicuta, a director at the regulator, said in Bucharest. Wind capacity grew to 2,117 megawatts and solar to 85 megawatts by mid-March from 1 megawatt in 2005, according to data from the Economy Ministry and the regulator.
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 has also curtailed support for existing projects. The government said April 2 it would temporarily cut subsidies in half by holding back one in every two certificates awarded to wind-power producers until 2018, and two out of every six for solar generators until 2017, starting July. Power distributors must buy the certificates before passing on the cost to users.
The move will “certainly have an impact on the market, and probably will filter the boys from the men, and the serious investors from the speculators,” said Nicolai Canetti, executive manager of the Romanian unit of Gigawatt Global, a renewable-energy developer. “But even the most seasoned sailors can get seasick from a rough ride.”
Gigawatt Global has developed an 8-megawatt solar plant in Ialomita County and is working on a larger project in same area, he said. CEZ’s 600-megawatt wind park, which started operating at the end of last year, is Europe’s biggest land-based wind farm, generating enough power for as many as 1 million homes.
Romania has a target to get 24 percent of its energy from renewable sources by 2020 as part of a European Union program to lower carbon emissions. It still intends to reach that goal, according to the regulator, which cited an expected increase in solar capacity this year.