Global wind power installations increased by 44,711 MW in 2012, bringing the total installed capacity up to 282,482 MW, a 18.7% increase on the 238,035 MW installed at the end of 2011. Wind power has now established itself as a mainstream electricity generation source, and plays a central role in an increasing number of countries’ immediate and longer-term energy plans. After 15 years of average cumulative growth rates, the commercial wind power installations in about 80 countries at the end of last year reached to the 240 GW level.
Twenty-two countries have more than 1,000 MW installed. Romania is one of those countries. Demand growth is very slow, nonexistent or negative so demand for new power generation of any kind is slim, and the competition is fierce. Brazil, India, Canada and Mexico are very dynamic markets, but cannot make up for the lack of growth in the traditional markets in Europe, the US and China. There are many exciting new markets in Latin America, Africa, and Asia where there is major potential for growth.
According to the Global Wind Energy Council, the wind energy sector has continued its expansion worldwide in 2012. The annual market growth has reached almost 10% while the cumulative capacity growth is now at 19%. The development in this sector was particularly visible in the US while in China the market was slower than last year. The US Production Tax Credit was anticipated to expire which led to a last minute rush, more than 8,000 MW being installed in the fourth quarter of 2012 bringing the total for 2012 to 13,124 MW. In China on the other hand, due to the market consolidation and rationalization, the annual installations reached 13.1 GW making 2012 a slower year for the wind sector.
In Europe, Germany and UK are leading the market. Romania, Italy, Poland, and Sweden are the emerging markets that brought a surprising contribution last year. Europe has set a new record of 12.4 GW for 2012 due to all the developments in these areas.
Other regions that showed a remarkable expansion in 2012 are Brazil with 1,077 MW and Australia, which accounted for 359 MW of the new capacity in the Pacific region. In the Middle East and North African region, only Tunisia completed a 50 MW project but the first sub-Saharan commercial wind farm came on line in Ethiopia, marking a promising future for the area. Africa is expected to become a competitive market in the next years because the generation of green energy has become a priority for the economic development.
This year, China’s total attainable capacity amounts to 75.6 GW, which constitutes 26.8% of global resources. In second place after China is the United States with 60 GW and a 21.2 % share in global capacity. Germany ranks third with 31.3 GW and an 11.1% share.
According to the GWEC, in 2012 China recorded a substantial growth again, but this year considerably lower than in 2011, when they reached 17,630 MW, adding a further 13,200 MW of new wind capacity and imposing itself again as the world’s leading wind market with a total of 75,564 MW of installed capacity by the end of the year.
The global annual installed wind capacity increased by 10% in 2012 compared with 2011, continuing last year’s upward trend. However, the global installation of new wind capacity has slowed over the last three years following its largest ever annual increase in 2009, from 26.5 GW to 38.6 GW, representing a rate of growth of just over 45%.
The figures in the previous tables are affected by project decommissioning of approximately 316 MW.
Wind energy in the context of economic crisis
During 2012, even with the current difficult economic period, the wind energy market was able to rebound. As a survival strategy, the turbines manufacturers updated their turbines while the developers were more inclined towards building premium higher margin projects.
The significantly negative impact of market, regulatory and political uncertainty sweeping across Europe since the beginning of 2011 were not showed in the EU wind power installations for 2012. The turbines installed during 2012 were generally permitted, financed and ordered prior to the crisis that brought the destabilization of legislative frameworks for wind energy. The stress that was felt by the wind sector in many markets across Europe should be more visible through a reduced level of installations in 2013, possibly continuing also into 2014.
The global financial crisis has contributed to the decline in economic potential, and consequently investment by international companies has been severely limited or even postponed. However, despite a drop in the gross domestic product of most countries, investment in the renewable energy sector has not decreased.
Even though the estimations for 2013 and maybe even 2014 appear to be discouraging, the GWEA still foresees a general ascending trend until 2016. The market forecast offers a positive overview of the developments worldwide, with Asia remaining the leader overall. This shows that the effects of the economic crisis are getting weaker by the day.
Romania and Europe
A very important milestone has been reached by the European market, the installed wind capacity has reached 100 GW and new and interesting signals are coming from emerging countries. We can see a large variety of new players on the renewables market, pension funds are investing in wind as an alternative to Government Bonds while investment funds are beginning to act as traders.
12,744 MW of wind power have been installed across Europe, out of which 11,896 MW in the European Union. The wind energy installed in the EU is worth between EUR 13 billion and EUR 17 billion. The wind power accounts for a total of 26.5% of the total installed power capacity. Annual installations have increased exponentially over the last 12 years. In 2000 we only had 3.2 GW, comparing that to the numbers from the last year we can see a compound annual growth rate of over 11.6%.
Germany has remained the European country with the largest installed capacity followed by Spain, UK and Italy. Among the emerging markets of Central and Eastern Europe, Romania and Poland both had record years – both installing around 7.5% of the EU’s total annual capacity. Both markets are now consistently in the top ten in the EU for annual installed capacity. It is also important to note the amount of installations in the UK, Italy and Sweden. These three markets represent respectively 16%, 11% and 7% of total EU installations in 2012. The wind power capacity installed by the end of 2012 would, in a normal wind year, produce 231 TWh of electricity, enough to cover 7% of the EU’s electricity consumption – up from 6.3% the year before.
Of the 11,896 MW installed in the EU, 10,729 MW was onshore and 1,165 MW offshore. Investment in EU wind farms was between EUR 12.8 billion and EUR 17.2 billion. Onshore wind farms attracted EUR 9.4 billion to EUR 12.5 billion, while offshore wind farms accounted for EUR 3.4 billion to EUR 4.7 billion. 293 offshore wind turbines were installed and grid connected last year. That results in more than one wind turbine per day. They represent 1,165 MW, which means an increase of 33% compared to 2011 when there were 874 MW. The total offshore wind capacity is now 4,995 MW with UK leading the market (60%). In Europe, there are currently 1,662 turbines in 55 offshore wind farms spread through 8 countries making the continent the world leader in offshore wind energy.
The wind energy sector situation in Romania
The European Union has continued to install new wind energy capacities with an ascending rhythm in 2012. It is remarkable that in Romania 923 MW were installed which cover 8% from the total of the new wind energy sources of EU in 2012. The 94% increase in the total wind capacity that was achieved by Romania in 2012 will probably never be equaled.
At the end of 2012, wind energy was covering 8% of the total energy requirements in EU while in Romania the indicator was about 5%. Even though the number is inferior to the European medium, it is still a remarkable percent given that in 2009 only 0.1% of the energy requirements were covered by wind energy sources.
Even with the major legislative unpredictability that we encounter this year that will only bring 500-600 new MW, wind power will cover 8% of Romania’s total gross energy requirements. Romania’s position on top of the European medium will be possible because the 1,905 MW installed until 2012 will generate energy throughout the entire year 2013.
By the end of 2012, the wind energy market in Romania was exceeding the estimates of ANRE and those under the National Renewable Energy Action Plan (NREAP), as depicted in the previous chart.
Romania’s potential has been recognized, among other sources, in the Ernst & Young report on “Renewable energy country attractiveness indices” (February 2013 edition). The report ranked Romania 10th in the world this year with regard to wind energy potential. In 2012 it was ranked 13th while in 2011 Romania was ranked the 12th. So, it can be seen that the market was relatively stable in the past year even with all the changes.
Romania was the leader among Europe’s emerging markets in 2012, installing 923 MW of new capacity, nearly double the 520 MW installed in 2011, for a cumulative capacity of 1,905 MW at the end of last year. The country has a significant development pipeline, and ranks 5th within the European Union wind markets in terms of 2012 capacity increase.
The produced electricity in Romania was 60.44 TWh, out of which were: conventional thermal power of 33.18 TWh; hydro power of 12.23 TWh; the nuclear power of 11.47 TWh; wind power of 2.64 TWh and other renewable energy sources of 0.92 TWh. The growing numbers for the alternative energy are promising especially since the energy consumption has increased with 0.2%.
Enel Green Power has also continued the ascension in the wind energy sector of Romania with a total of almost 500 MW, out of which 325 MW were installed in 2012 (the largest park is in Târg?or and has a capacity of 120 MW).
Iberdrola finalized a 80 MW park at Mihai Viteazu, Verbund commissioned a 100 MW park at Casimcea, GDF Suez commissioned a 47.5 MW park in Br?ila and EDP has reached the 300 MW landmark. An 123 MW park was built in Pantelimon, Constan?a county, by Monsson and Vestas.
As a whole, the market is being dominated by multinational companies: CEZ, ENEL, EDP, Iberdrola and Verbund sum up around 1,600 MW from the total of 1,905 MW installed (over 80%).
The Verbund investment plan foresees EUR 340 million by 2016 for the wind farms in Romania. So far, Monsson Group has developed 40% of Romania’s almost 2,000 MW of installed wind capacity. The whole investment is worth more than EUR 3.6 billion (USD 4.8 billion). They also have more projects planned for Romania with a total capacity of 2,400 MW. Out of these, for 1,700 MW the necessary authorizations have already been received. 818 MW were built in the country until now and projects have been sold to big companies like OMV Petrom, STEAG, CEZ, or ButanGas with a capacity of over
850 MW.
Some of the most important problems for the investors on the Romanian energy market are the unstable infrastructure of the electricity transmission and the low level of the power consumption. It is getting harder to make a forecast for the Romanian renewable energy sources market and the industrialization of the sector is bringing an extra challenge for the investors.
Romania’s operational wind farms are mainly located in Dobrogea, on the Black Sea coast, where average wind speeds can reach 7 m/s at an altitude of 100 m. The region is flat and sparsely populated, which makes it possible to install a large number of wind turbines. There are also two other regions with a high wind power potential in Romania: Moldova and Cara? Severin. At the end of 2011, 88% of Romania’s installed capacity was in the Dobrogea area, while in 2012 there has been a shift towards the North East of the country.
2013 forecast for Romania
In 2013, the following wind farms are expected to become functional:
GDF Suez »» – the development of 50 MW located in B?beni (Gala?i County) using GE turbines;
EP Global Energy »» – the development of 80 MW located in Chirnogeni (Constan?a County) using Nordex turbines;
Verbund »» – the development of 100 MW located in Casimcea (Tulcea County) using Enercon turbines;
Lukerg »» – the development of 84 MW located in Casimcea (Tulcea County);
EDP »» – the development of 162 MW located in F?c?eni (Ialomi?a county) using Vestas turbines;
PNE Wind »» – the development of 18 MW located in Mircea Voda (Constan?a county) using Vestas turbines.
The above development would bring a total of 494 MW of new energy coming from wind energy sources.
According to RWEA estimates, the forecast for installed wind capacities is ambitious given the current investment plans and needs to be backed up by a significant grid improvement plan, a clear plan for the decommissioning of old, inefficient coal power plants and a stable legal framework. Below are the RWEA estimates for 2013 compared with those of the ANRE.
All turbines installed in 2012 were made in the EU: Germany participates with 85% (GE is manufactured in Germany) and Spain with 15% (Gamesa). The equipment used in Romania are using the best and highest level of technology bringing Romania on the first place worldwide from the modernization point of view. The main turbines producers in Romania are Vestas and GE with approximately 650 MW each (GE fully equipped the CEZ wind park with a capacity of 600 MW). Siemens and Gamesa are following with 250 MW installed by each. Nordex and Fuhrlaender are also important competitors.
Programmes co-financed by the EU
The EU-funds for alternative energy projects have been part of the 2007-2013 programs for Structural Funds. Since this financing period ends by the end of 2013, it cannot be expected that in 2013 any new projects can be submitted for approval. The next financing period 2014-2020 is still under discussion and most likely, only in the beginning of 2014 a clear strategy regarding the new programs for EU-funds will be made public. Nonetheless, it is to be expected that EU-funds for investments in alternative energy facilities will be foreseen for the period 2014-2020 as well, even though extent and conditions are not known right now.
For the 2007-2013 financing period, alternative energy projects could receive EU-funds through the following two programs:
“ERDF” »»– the European Regional Development Fund – the Sectorial Operational Program “Increase of Economic Competitiveness” – Measure 4.2 – Investments in Renewable Energy
“EAFRD” »» – the European Agricultural Fund for Rural Development – Measure 121 – Modernization of agricultural holdings.
ERDF: Within the framework of Measure 4.2, around EUR 300 million have been made available for funding renewable energy projects during the period 2007-2013, of which 85% represents non-refundable EU funds granted by the European Regional Development Fund and 15% public co-financing funds from the state budget (according to GD 750/2008).
Companies could receive up to EUR 18 million in non-reimbursable EU-funds for wind energy projects under Measure 4.2. Up to 70% of the eligible project, costs could be funded, depending on the size of the company applying for the funds. Applications have been submitted in 2008 and 2010. In total, more than 450 projects had been submitted. All these projects competed with each other in terms of quality, such that only applications with the highest quality received EU-funds. At the current moment, it is not possible to apply for further projects. The only possibility to profit from these funds is to acquire a project that has been approved, and some of them – in different stages of implementations – are currently for sale. Since EU-investment funds and feed-in tariffs can be combined only within certain limits, it has to be calculated for each project which of the two funding methods is to be preferred.
The precondition of receiving funds for renewable energy under Measure 121 was that all the electricity produced be used exclusively for the farm that applied for these funds – no electricity should be fed into the national grid system. The maximum value of the eligible costs for such projects could not exceed EUR 2 million. The public co-financing component was limited to EUR 800 thousand for the period 2010-2013 with non-reimbursable support of 40%. For projects that included investment in agricultural production and the use of renewable energy, the project’s maximum eligible costs were limited to EUR 3 million. Only a few energy related projects have been financed under this scheme, as farmers used most of the available EU-funds for buying farm-equipment and machinery.
EEA and Norway Grants
Iceland, Liechtenstein, and Norway cooperate closely with the EU through the Agreement on the European Economic Area. Through the EEA and Norway Grants, the three countries contribute to reducing disparities in Europe and to strengthening bilateral relations with 15 countries in central and southern Europe.
Norway and the European Free Trade Association (EFTA) member states that are not EU members play a role in the economic and social development in Europe. Despite much progress in Europe over recent years, gaps in economic development and living standards persist. The EEA Agreement includes a goal to reduce social and economic disparities in the European Economic Area. The EEA EFTA States have contributed to European cohesion efforts ever since the EEA Agreement entered into force in 1994. EUR 1.79 billion have been set aside under the Grants for 2009 to 2014 and Norway provides 97% of the funding.
The funding is targeted on areas where there are demonstrable needs in the beneficiary countries, and that are in line with national priorities and wider European goals. Key areas of support include environmental protection and climate change, civil society, children and health, cultural heritage, research and scholarships, decent work, and justice and home affairs. Grants are available for non-governmental organizations, research and academic institutions, and the public and private sectors.
Between 2009 and 2014, Iceland, Liechtenstein and Norway will provide EUR 988.5 million in EEA Grants to the 12 newest EU member countries, plus Greece, Portugal and Spain. The EEA Grants are jointly financed by Iceland, Liechtenstein and Norway. The donor states contribute according to their size and economic wealth. The beneficiary states of the EEA Grants are Bulgaria, Czech Republic, Cyprus, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain. The funding is allocated between the countries based on their population and GDP per capita. Romania has EUR 190.75 million of EEA Grants available for 2009-2014.
In the five-year period 2004-2009, EUR 672 million in funding was made available. Grants were awarded to more than 800 projects, programs and funds, of which around 200 included joint financing by the EEA Grants and the Norway Grants.
More than one fourth of the EEA Grants was awarded to projects in the fields of environmental protection and sustainable development. The majority of this funding was provided to increase energy efficiency and the use of renewable energy in public buildings such as schools and hospitals, and to reduce emissions of greenhouse gases and other pollutants.
The Norway Grants represent EUR 800 million in funding allocated to the 12 newest EU and European Economic Area (EEA) member states between 2009 and 2014. Norway provides funding for social and economic development projects in Central and Southern Europe both through the EEA Grants and the Norway Grants. The beneficiary countries of the Norway Grants are Bulgaria, Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. The funding is allocated between the countries based on their population and GDP per capita. Romania has EUR 115.2 million of Norway Grants available for 2009-2014.
Priority sectors for EEA and Norway
Grants include the following:
• Climate change and renewable energy for EEA »»Grants. Program areas within this priority sector include “Renewable energy”. Each program set up within the “Renewable energy” program area will contribute to the overall objective of an increased share of renewable energy in energy use. Activities which may be supported include measures for the increased use of renewable energy, infrastructure development (e.g. networks) relevant for renewable energy and capacity building, e.g. in respect of developing plans and policies;
• Green industry innovation for Norway Grants. »»Program areas within this priority sector include “Green Industry Innovation”. Each program set up within the “Green Industry Innovation” program area will contribute to the overall objective of increased competitiveness of green enterprises, including the greening of existing industries, green innovation, and green entrepreneurship. Activities that may be supported within each program include improvements of technology and processes, waste and wastewater management, energy efficiency, certification and capacity building, as well as support projects to implement technologies and standards necessary to comply with EU/EEA legislation in the field of environment and energy.
Romania has received funding since entering the EU and EEA in 2007. For the period of 2009-2014 Romania has been allocated EUR 305.95 million (including EUR 98.5 million for the period covering 2007-2009) consisting of EEA Grants and Norway Grants. Norway provides 97% of the funding, with Iceland and Liechtenstein providing the rest. These funds will co-finance projects within 23 different programs. The Ministry of European Affairs is the national contact point that will co-ordinate programs and the management of the financial assistance provided to Romania. For each of the funded areas there is a public institution or non-governmental organization (generically called Program Operators) that manages directly the allocation of funds.
The open calls for project proposals are to be organized nationally by Program Operators running individual programs. Agreements (Memoranda of Understanding) on the program areas and priorities for funding were signed in March 2012 between the donor states and Romania. Following the signing of the MoUs, the Program Operators are now submitting their detailed program proposals to the Financial Mechanism Office – the secretariat for the Grants. Once these are approved, the call for proposals is to be published.
The Green Industry Innovation Program ROMANIA and the Call for Project Proposals were officially launched in Bucharest on 12 March 2013. More than 400 representatives of enterprises and NGO’s participated in the event. The Green Industry Innovation Program is a business development program. It shall contribute to increase the competitiveness of green enterprises, support “greening” of new and existing enterprises and stimulate green entrepreneurship and environmental innovation. The expected outcome of projects is “Realisation of business opportunities of greening the European economy”. Available co-financing for projects is EUR 21,623,200. Partnership projects are encouraged (Romanian applicant with Norwegian partner).
The Program Operator is Innovation Norway, a state owned entity under the Norwegian Ministry of Trade and Industry and the Norwegian County Municipalities.
The funding will be made available under the following three schemes:
• individual Projects Scheme EUR 19,408,200.a);
• Small Grants Scheme EUR 2,000,000.b) The deadline for applications under these two schemes is 15 July at 3. p.m. local Norwegian time;
• Fund for bilateral relations EUR 215,000.c).
The deadlines for applications under the Fund for bilateral relations are:
• For Travel Support applicants can apply »» continuously up to 15 June 2013;
• For Project Development Fund applicants can »» apply continuously up to 15 May 2013.
The projects must be completed by 30 April 2016, which is also the end of the eligibility period for the implementation of the program. It is expected that the implementation period of the awarded projects will start at the latest in the first quarter of 2014, which means that applicants should not plan for a project implementation period for more than 24-26 months.
National funds
As an alternative to the EU-program, investment funds could also be accessed through the Romanian Environmental Fund of the Ministry of the Environment (approved by Order No. 1342/15.10.2009). Financing was granted for up to 50% of the total eligible value of the project for companies developing wind parks in Romania, with the exception of projects in the Bucharest and Ilfov county region, where the maximum financing was 40%. The maximum amount of funds a beneficiary can receive was RON 30 million.
Also this program has been closed since 2010, when project could be submitted for the last time. It is uncertain whether it will be possible to submit projects in 2013 or 2014, the respective decisions have not yet been taken.
All funding programs – EU as well as national programs – require that the company applying for funds prepare a detailed feasibility study of the technical and economic aspects of the project. To have a realistic chance of receiving funding, the project should already have acquired a building permit on submission of the documents.
UniCredit Leasing Corporation (UCL) financed wind energy projects for the first time on the Romanian leasing market when it granted financing for two wind farms: one of EUR 22 million for Holrom and another of approximately EUR 12 million to Energy Rose. The new contracts portfolio of financing for renewable energy during 2012 was worth around EUR 42 million.
There are currently seven renewable energy projects subject to evaluation by UniCredit Leasing, and of these five are wind power related. The general financing structure is as follows:
• Client’s own financing: minimum 20%
• Period: maximum 15 years »»
• Main criteria: the cash flow generated by the project
The Romanian Commercial Bank (BCR) concluded a financing agreement amounting to EUR 23 million with Martifer, an industrial multinational group for development of a 42 MW wind park in the south-east of Romania.
The European Bank for Reconstruction and Development (EBRD) granted a loan of EUR 10 million to Raiffeisen Bank Romania in order to finance sustainable efficiency projects on energy generation developed by local companies. This loan is part of the EU/EBRD Financing Facility related to power efficiency and will be used to support investment in efficient energy implemented by local companies through long term loans each amounting to EUR 2.5 million. According to EBRD, loans provided by the bank will be complemented by EU grants for technical assistance and payment incentives for final consumers, thus promoting investment in sustainable energy.
The Fund to promote energy efficiency (EEEF) manage by The European Investment Bank (EIB) will invest in energy saving, energy efficiency and energy sources, particularly in urban areas, to achieve at least 20% saving energy and reduce CO2 emissions.
The main objectives of the program are: contribute to climate change, attract private capital and public finance projects aimed at mitigating climate change and achieve economic sustainability of the fund.
The eligible applicants are: local and regional authorities, national authorities, companies and SME’s and associations.
The European Investment Bank (EIB) granted a loan of EUR 200 million at the end of 2010 in order to finance development of a wind park located in Fântânele in the Dobrogea region. The funds from the EIB will be used to co-finance the design, construction, commissioning and operation works related to the wind park as well as the construction of power transformers and grid connections. The project is developed by the CEZ AS group, an energy producer with the Czech government as the majority shareholder that will implement the project through its Romanian subsidiaries, Tomis Team and MW Team Invest.
Commercial banks
Criteria and financing structure
Every wind energy and corporate finance project has the commercial banks as a first point of contact. The Austrian Erste Group and Raiffeisen Bank International, the Italian Unicredit and the French Societe Generale are the most important and active banks in this sector.
Romania, Turkey, and Poland are viewed as the most promising countries by
