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60-Second Interview

Keith Kirkham
Commercial Counsellor
Embassy of the United States

Romania must earn a reputation as a place where projects get done

GPC: How do you see the Romanian market developing in the next 5 years? And beyond?
KK: Romania has several factors in its favour for the development of alternative energy:  the physical attributes of the country are good for wind and solar technologies, there is political will to derive more of the country’s energy needs from renewable sources, and EU membership brings the obligation to comply with EU Directives on alternative energy.  In addition, Romania’s desire to increase its energy security has led the Romanian Government to introduce incentives for alternative energy development.

In 2008, we witnessed a wind energy boom when the Czech energy company CEZ announced its acquisition of the largest European onshore wind project with a total capacity of 600MW located in Dobrogea.  Since then, the market has attracted internationally known names like Enel (Italy), Energias de Portugal or Iberdrola (Spain).

Romania’s advantageous wind profile suggests that the wind energy industry will continue to develop and probably lead alternative energy resources over the next five years. A recent report released by Ernst & Young (August 2011) indicates Romania has climbed quickly in its rankings of countries by attractiveness for renewable energy [in the Renewable Energy Countries Attractiveness Indices]. The jump was driven by the European Commission’s approval of Romania’s Green Certificate scheme for alternative energy technologies.

GPC: What are the key factors in maintaining ongoing investor confidence?
KK: Predictability and credibility are key factors.  Incentives can help attract the interest of investors, but Romania also must earn a reputation as a place where projects get done.   This means a clear and predictable legal framework -- consistently applied -- and a serious effort to reduce bureaucratic delays and ambiguity both at the local and national level.  Investors will avoid markets where project implementation is costly and unpredictable, or where the legal framework is unstable.  There are concerns by some potential investors that Romania’s incentives for renewable energy are too generous to be sustained by the Romanian Government.    Sudden or retroactive changes to this scheme would damage Romania’s credibility among investors.

GPC: How can Romania maintain its momentum as a leading developing wind market?
KK: In order to keep momentum Romania must address its power grid.  The Romanian Wind Energy Association forecasts that Romania may produce as much as 14,000 MW of wind energy. However, Transelectrica has indicated on numerous occasions that they cannot integrate more than 5,000 MW from wind farms into their grid.  Connecting wind farms alone to the national power grid requires an investment of more than €500 million.   Finding the right solutions – technical and financial – to upgrade Transelectrica’s grid capacity should be a top priority.