Romania revises Energy and Natural Gas Law

Romania

On 30 June 2020, the Deputies Chamber approved a draft law amending the Electricity and Natural Gas Law 123/2012 and amending other laws that address activities in the electricity and gas sectors, such production, storage and distribution.

The draft law is currently awaiting approval by Romania's President. Its main amendments pertaining to the electricity sector include:

  • A licence granted by ANRE will be necessary for carrying out electricity storage and aggregation activities.
  • ANRE can approve electricity distribution without a licence for distribution operators of closed distribution systems and other distribution operators or directors of industrial parks and free zones as well as other economic operators, owners of distribution networks outside of industrial parks and free zones with approved cumulated power of up to 3 MW.
  • Electricity production will be allowed without a licence for installed-power capacities of less than 1 MW.
  • In order to facilitate investment financing for new electricity production capacities, ANRE regulations now allow a natural or legal person to act as a producer and contract electricity generated through a new energy capacity without holding a production licence at the time of the electricity trade, provided that a licence is obtained at least 60 days before the date of the physical delivery of the electricity generated by the new energy capacity.
  • On the wholesale competitive market, ANRE has the right to approve the introduction and use of specific trading products in order to ensure flexibility in concluding long-term electricity transactions, including flexible delivery profiles for renewable energy producers. ANRE and the electricity market operator (OPCOM) will periodically monitor and evaluate the impact of the use of these flexible products.
  • In addition to generated renewable electricity commissioned after 1 June 2020 that producers can sell outside the centralised markets through Long-term Bilateral Power Purchase Agreements (PPAs), PPAs may also be concluded by market participants, combining the electricity generated through several energy sources. Market participants can conclude these PPAs with the owners of these sources, thus combining the electric charges of more clients with suppliers.

The bill's amendments in the Natural Gas sector include:

  • The introduction of a new type of authorisation and licensing regime for hydrogen production installations.
  • ANRE can approve natural gas distribution without a licence for distribution operators of closed distribution systems, and for the directors of industrial parks and free zones.
  • The reintroduction of the storage obligation for natural gas suppliers that had been previously abrogated by Government Emergency Ordinance 106/2020 (GEO 106).
  • Suppliers are again obligated to set up a "physical point", although the 50 km limitation area around the physical point has been eliminated.
  • Between the entry into force of this law and 30 June 2021, gas suppliers will pay a windfall tax of 90% for the difference between the purchase price and RON 68/MWh. This tax is only applicable for natural gas bought below the price of RON 68/MWh.

Provisions for prosumers , "prosumers" with a maximum of 27 kW installed power are exempted from payment of income tax and social-contribution taxes for income obtained from the sale of their generated electricity to suppliers.

  • Prosumers with a maximum of 100 kW installed power (this 100 kW limit was extended from 27 kW) can now sell their generated electricity to electricity suppliers based on electricity-supply contracts.
  • Prosumers and natural and legal persons are exempted from the obligation to buy green certificates for electricity generated and used for their own consumption. This does not apply to technological consumption in a factory or plant they may own.

Lastly, the draft law clarifies that electricity producers and public authorities owning power plants with installed power of up to 3 MW can only conclude directly negotiated contracts with end-user suppliers for the sale of electricity or green certificates, irrespective if benefiting or not of the green certificate support scheme.

For more information on this draft law and Romania's energy sector, contact your regular CMS advisor or local CMS experts: Varinia Radu, Ramona Dulamea, Raluca Diaconeasa.