CEZ, Enel, E.ON, EDP Renováveis (EDPR), Verbund and GDF have but a few reasons to be happy these days, as government cut in half and postponed the subsidies to wind energy industry. They are just part, though a consistent one, of the 3.5 billion euro invested so far into wind energy projects in Romania, and many other companies are affected as projects worth 1 billion euro were anulled or put on hold, cutting even further the aldready-skimmish foreign direct investment (FDI) level. Meanwhile, a powerful lobby led by large industrial companies such as the steel mill mammoth Mittal or the aluminum plant Alro said their profit was severely affected by the green subsidies and gas price liberalization which led to the energy price hike. And the government took advantage of the approaching election year to cut the burden of paying Green Certificates (GCs) also for population, a few months after their first billing.

Foreign investors in Romania have always faced severe lack of predictability, transparency and disparities in the level-playing field, and the renewable energy investments are no exception, as its subsidy regime just changed against them. Currently, the renewable market awaits for new regulation that will further discourage green energy.
Meanwhile, the economy seems to regain its strength due to exports and agriculture, however, that is hardly felt within the country. The FDI level dropped about 29% in the first  seven months of 2013, as compared to January-July 2012 to 946 million euro, about five times lower than the 2008 level, according to National Bank of Romania (BNR). Romania’s dwindling economy, frozen without the previously hefty FDI level, needs every drop of foreign money, now a scarce and expensive resource. And scaring investors away sends signals to other potential buyers of local debt or equity.

1 billion euro lost in wind projects
After the large industry lobby for reducing prices by cutting subsidies, a lot of the wind energy projects came to a halt, says Ionel David, president of the Romanian Wind Energy Association (RWEA)  - which comprises main 100 players in the industry, from developers to banks, lawyers and consultants.
As last year’s overall investment in green energy was of 1.5-1.6 billion euro (about 1% of GDP), of which 8-900 million euro just in wind turbines, this year will see projects curbed by about 800 million-1 billion euro, to a total of 4-600 million euro.
“We are demanding the legal regime to be brought back to its initial status. Now investors are captive in Romania, as their profits are severely affected and there’s a huge problem of cash flow given this new cut in subsidies”, David says.
The new Government Ordinance 57/June 2013 halves the number of GCSs received by investors from two to one, postponing its payment to 2017, while hydropower and solar energy are also affected. “The law came into effect in July, but rumors about it rose in the market in January – so the market froze early”, says David.
As investments stopped, banks also put lending to a halt, which meant a severe cut in revenues for producers of equipment and a dramatic loss of interest from potential investors.
“There aren’t any new project started this year, except for the investments started last year, when contracts were signed. There are no new large projects signed this year, with a sole exception, EDPR’s,  which wants to build a park of 160 MW by next year”.