Renewable energy projects in Romania

The 29 countries in which the EBRD operates possess vast renewable energy resources, thanks to their favourable geographic locations and climates. But early attempts to develop a cleaner energy sector slowed down considerably in the late 1990s.

In the past three years the EBRD has actively supported the region’s efforts to sustain greener power policies. A number of major investments have significantly expanded the capacity of these countries to tap into renewable energy resources.

Some of the most important investments have been in Romania.  

Restoring a key power station

Once the pride of communist-era Romanian engineering, the vast 50-year old Stejarul Bicaz hydroelectric plant on the Bistriţa river in north-eastern Romania has seen much better days. Decades of under-investment meant much of the plant – conceived as far back as 1908 – has fallen into disrepair

But when Hidroelectrica, the state-owned hydropower company and Romania’s biggest electricity producer was developing its business model for the future, it looked to Stejarul Bicaz as an obvious candidate for rehabilitation.

With a capacity to generate 210 megawatts – and 18 per cent of Hidroelectrica's total output – the plant plays a key role in the national power generation chain. Once renovated, Stejarul Bicaz would once again contribute to the livelihood of neighbouring towns and villages and Hidroelectrica would have a reliable supply of clean energy.

The project made very good sense to the EBRD – and the Bank has contributed €70 million towards the modernisation of the plant.

The Bank’s investment in Romania’s renewable energy sector did not stop there: with the International Finance Corporation (IFC) and three commercial banks, Groupe Société Générale, Unicredit Bank and La Caixa, the EBRD is co-financing the development of the Pestera and Cernavoda wind farms with loans of €36.7 million and €57.4 million, respectively.

Together Pestera and Cernavoda are among the biggest producers of wind power energy in the country, with a total capacity of 228 megawatts. This represents roughly 40 per cent of the total wind generation capacity in Romania and a considerable step towards meeting the country’s intention of increasing the use of renewable energy sources to around 16 per cent by 2020.

The bigger picture

And Romania is not alone in concentrating on “green” energy. According to the UN Environment Programme, global investments in renewable energy sources, from wind and solar power to geothermal and waste-into-energy, rose last year by nearly a third – to a record US$ 211 billion, from US$ 160 billion invested in 2009.

This large-scale investment in renewable energy projects in developing economies is good news for the EBRD region which remains one of the most energy intensive – and energy wasteful – in the world.

The continuing growth of this core segment of the green economy is not happening by chance, according to Riccardo Puliti, EBRD Managing Director for Energy and Natural Resources:

“The rise of oil and gas prices, coupled with geopolitical instability, has made renewable energy projects more competitive and, as a result, this contributes to the rise of global investments in this sector. Additionally, governments come up with more stringent target-setting programmes about CO2 emissions reduction. In parallel to this, they also engage in a more vigorous policy support, while international institutions increase their funding,” Mr Puliti explains.

The EBRD is stepping up its own renewable energy financing, in order to support this global drive to implement ambitious renewable energy generation programmes – and to break free from dependence on fossil fuels.

Out of the 161 projects the Bank concluded in the first six months of 2011, 44 came under the EBRD’s the Sustainable Energy Initiative (SEI), a programme that includes development of renewables as well as energy efficiency improvements to reduce waste and harmful greehouse gas emissions. These 44 projects stretched over 19 countries ranging from Poland to Tajikistan.

In volume terms, the EBRD’s energy efficiency and climate change-related investments reached €1.2 billion, a rise of almost 50 per cent from the same period in 2010.

Since its launch in 2006, SEI financing reached €7.3 billion through nearly 400 projects across 29 countries. The impact of these investments so far is estimated at 43 million tonnes of CO2 emissions reductions per year - more than the annual greenhouse gas emissions of Azerbaijan.

Financing of renewable energy projects totalled €832 million in this period.

Investing in renewable energy

Developing modern technologies based on the use of renewable sources of energy is becoming crucial for both developed and emerging economies as they seek to remain or become more competitive in the global economy, Mr Puliti says.

Renewables also play a profoundly important role in moving towards the EBRD’s goal of increasing energy security by further diversifying the energy mix in the countries of its operations.

Mr Puliti also believes that renewable energy investments make good business sense but only as long as the legal environment is right. “If countries want to be more attractive to renewable energy investors, they should develop legal and regulatory frameworks that make these investments commercially appealing and sustainable,” he says.

Investing in energy efficiency has become more attractive worldwide. Wind turbine prices have fallen 18 per cent per megawatt in the last two years, reflecting fierce competition in the supply chain. Competition is also stepping up in the solar industry.

As renewable sources become more competitive with thermally generated power, Mr Puliti says, they have a real potential to reduce the dominance of fossil fuel sources in the future.

The EBRD remains committed to working across the renewable energy sector. Securing sustainable energy and reducing carbon emissions has never been a better investment.

By Sergiy Grytsenko