Wednesday, February 18, 2009

Romania praised for renewable energy scheme

EurActiv.com
Published: Wednesday 18 February 2009

A Romanian scheme that grants double incentives for wind farms and other renewable energy projects has been acclaimed by large investors in the region. But Rod Christie, GE Energy's president for Eastern Europe and Russia, warns that financing difficulties had risked bringing some projects to a standstill. He spoke to EurActiv in an interview.

Background:

At a landmark summit in December 2008, EU leaders reached agreement to slash greenhouse-gas emissions by 20% by 2020 and boost renewable energies by 20% by the same date.

As part of the package, EU lawmakers agreed a set of national targets for each EU member country (EurActiv 9/12/08).

To achieve the targets, every nation in the 27-member bloc is required to increase its share of renewables by 5.5% from 2005 levels. The remaining increase is calculated on the basis of per capita gross domestic product (GDP).

Renewable energy projects are picking up steam in Central and Eastern Europe following an agreement in December over the EU's energy and climate change "package" of legislation.

To move to a low-carbon economy, the package mandates each EU country to raise its share of renewable energies, paving the way for massive investments in renewables across Europe.

For investors such as GE, this represents a formidable opportunity. "We are still seeing an increasing interest in renewables, certainly in Eastern Europe where they are looking to meet their EU obligations," said Rod Christie, president for Central and Eastern Europe, Russia and the CIS at General Electric Energy.

"So in Romania, Poland or Bulgaria, for example, there is a lot of activity," he told EurActiv.

Christie is particularly enthusiastic about a scheme to encourage renewable energy investments in Romania. "In my opinion today, Romania has the best renewables legislation potential in Europe," Christie says. "From now until 2015, there is double green certificate. So if you build now, you can basically operate with a double incentive until 2015."

"They have learnt from everybody else. They know that they have to catch up."

Financing drying up

However, Christie warned that due to the economic crisis, some investors are now finding it difficult to secure financing, even for sound projects. Speaking about Romania, he said: "When we look at their projects - a windfarm project for example - they have some of the best returns that I've seen. But they are struggling to finance them. And that is just delaying, it's really pushing things back."

Given the financial crisis, Christie says it is important that solutions are found that continue to encourage private companies to invest in energy projects.

"There should be some kind of open door to EBRD or EIB certainly," Christie said, warning that "if you miss the time, you cannot get it back". "There is also a balance obviously as to how much a country can afford at a given moment in time."

And Romania is not the only country of interest to GE. Poland, for example, has a huge wind resource, Christie says, but government regulations are not always forthcoming. "Part of the challenge is defining the legislation and implementing the policy. There is obviously a lot of administration change: Poland has a change of government every twelve to eighteen months, so getting consistency is key."

Eastern Europe 'a huge opportunity'

According to Christie, there are also some specific challenges for Central and Eastern European countries when it comes to big renewable energy projects.

"The one thing that I would say is that it is still a very small market in comparison to Western Europe. Western Europe is a bit different, it is more sustainable, there is less volatility in it."

"There are also significant challenges in Central and Eastern Europe, because it is not as flexible as it is in some of the Western European countries." First, he says, grid operators must understand how to manage power received from a wider variety of sources.

"One of the things that we have spent a lot of time developing is wind control technology, which allows more control of grid dynamics through our wind farms."

But the positive aspect of the region, Christie adds, is that things can sometimes move much more quickly than in the West. "What is interesting for us is that there is actually a huge amount of opportunity for cutting-edge technologies in Eastern European countries. When I moved into the region, for example, I could get a better Internet connection than I could in the UK, because the old infrastructure had been written off. The benefit is to be able to move straight into what is the best in class today."

Smart grids

One of the examples he mentions are so-called "smart grids" that can take in electricity flows from many different directions, enabling the integration of small-scale renewable energies.

"Smart grids are going to be extremely important from the point of view of being able to accommodate renewable energies," says Christie. "And also for being able to manage distributed generation from a wide variety of small power plants."

Smart grids are not only interesting from the point of view of renewables, Christie says. They also offer a way for households to better control their electricity bill thanks to individual metering devices.

And on this issue, he believes America is showing the way forward. "Part of the Obama stimulus package includes a loan programme for people to get low-cost financing to put in meters to overcome the initial high investment of the new equipment. But ultimately, it will enable them to make more savings because they can use the electricity more wisely. That could be something where the policy side can come with a similar loan programme to accelerate the development of that technology in Europe."

What's more, he says the technologies are already there. "This is not necessarily about changing all the wires. It is more about the instrumentation that is on the grid and the automation of the grid than it is about the actual physical wires."

The issue now really is rolling out the technology. "If you have to do a substantial grid investment today, one of the things that would obviously be beneficial for Central and Eastern Europe is to go to metering."

To read the interview in full, please click here.

No comments: