Legal & Tax Alerts

Methodology for allocating grid capacity to power generation capacities

On the 1st of February 2024, the Romanian Energy Regulatory Authority (“ANRE”) submitted for public consultation a draft order (the “Draft Order”) regarding the Methodology on the allocation of grid capacity to power generation capacities (the “Methodology”) and for amending other ANRE regulation on grid connection.

The main points of interest:

Allocating grid capacity to power generation capacities (“PGC”) above 1 MW, based on a competitive procedure

Starting 1st of January 2025, the allocation of grid capacity to PGCs will be done in accordance with the tender process provided in the Methodology, as detailed below:

The grid areas subject to the tender process are determined by the system operator (“OTS”) based on a procedure to be approved by ANRE.

The requests shall be submitted, based on the installed power of the PGCs, as follows:

To OTS for projects with an installed power exceeding 50 MW,

To the distribution operator (“OD”) for projects with an installed power of up to 50 MW.

OTS will be responsible for developing and managing the tender platform, as well as for organising the tender process.

Each year, the tender process will observe the following timeframe:

15 January – OTS publishes the available capacity for each network area for which no grid reinforcement works are needed;

16 January – 28/29 February – users shall submit their requests, which shall include, among others, a specific year from the allocation period (i.e. a 10-year period starting with the second year after the tender) and an area for grid connection. The year mentioned in the request will match the year for commissioning the PGC;

By 15 June – OTS shall publish for each network area and allocation year relevant information regarding the tender process, such as (i) the findings of the global solution study that will determine the necessary reinforcement works; (ii) available grid capacity, with or without reinforcement works; (iii) estimated value of the reinforcement works needed; (iv) tender starting price and dates of the tender sessions;

Starting 1 July – OTS organises daily tender sessions for allocating the available capacity in each year of the allocation period.

Upon receiving registration confirmation from OTS, users shall provide a tender participation guarantee in an amount determined by multiplying the capacity requested by 1% of the starting price of the tender, calculated based on the capacity auctioned by each user.

The user with the highest rejected bid may opt (i) to secure the needed capacity for the next year to the one initially requested by concluding the allocation agreement and paying the corresponding price or (ii) not to secure the needed capacity and to attend the next tender for allocating available capacity for the next year to the one initially requested or (iii) to withdraw the request.

The Methodology also includes a template allocation agreement as an annexe. Here are some key findings from the agreement:

The full price shall be paid no later than 4 months from the signing date, with a first instalment representing 20% of the price to be paid within 30 days from the signing date (i.e. the date on which the agreement is signed by all parties).

The amounts collected shall be used for the reinforcement works necessary for grid connection.

If OD exceeds the PGCs commissioning deadlines, the former can be subject to a penalty of 0.01% for each day of delay, applied to the price paid for the allocated capacity until the needed capacity is provided. A similar penalty can be applied to the user if it exceeds the commissioning deadline provided in the allocation request until the PGC is commissioned.

 Fixed financial guarantee for a grid connection permit (“ATR”)

The Draft Order is intended to amend existing ANRE regulation by introducing a fixed financial guarantee of 5% of the value of the connection fee to be set-up before ATR is issued, regardless of any reinforcement works needed for the development of new PGCs. The guarantee will be released after commissioning the PGC.

OD can enforce the guarantee if the user fails to (i) submit the request for concluding the grid connection agreement, (ii) pay the connection fee under the grid connection agreement, and (iii) continue the project.

The new provisions will impact grid connection requests for which an ATR was not issued upon adoption of the Draft Order.

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