The Regulation concerning connection to the power public grid
Daniel Vlăsceanu December 2020
Relevant amendments applicable as of 1 January 2021
Every year is special, but one cannot contest that 2020 was somehow “more special” than others. All economic sectors were influenced, and the energy industry could not have escaped, but here the impact was reflected differently: while certain sectors were so severely impacted that they may never recover (e.g. it was said that “peak oil” was reached in 2019; Denmark, the largest European oil producer, cancelled its latest licensing round and announced intend to stop fossil fuel production by 2050), other sectors may have found unexpected traction in the current times, such as the renewables that have taken a huge boost all around the world (especially in Europe where there seems to be consent to reach carbon neutrality by 2050).
The Romanian renewable market has slowly revived since 2019 and 2020 showed unforeseen expansion. The legislator supported its development by introducing favorable measures (such as re-introduction of long term PPAs for new facilities). Following the amendment of the Energy Law no 123/2020 at the middle of the year (through Emergency Ordinance no 74/2020 and Law no 155/2020), the secondary legislation had to be put in place in order to enable application of the new primary legislation. As such, the ANRE legal framework undergone probably the most complex review process in the last years and the outcome can be seen in the numerous normative acts issued in the second half of 2020.
In this material, we have chosen to analyze the amendments to the most relevant ANRE Regulation for the development of renewable projects, namely the connection to the public grid Regulation approved under Order no 59/2013 (the “Regulation 59/2013”). Note is to be made that the amendments to Regulation 59/2013 were approved under ANRE Order no 160/2020 published in the Official Gazette of Romania on 10 September 2020, but they shall enter into force as of 1 January 2021.
I. General considerations
The development of a wind/ solar project until reaching the ready to build (RTB) phase entails two main simultaneous streams: on one side, the urbanistic conditions must be observed; this stream starts with the urbanism certificate (“UC”), continues with the permits laid out in the UC (most important usually it is the PUZ approval) and completes with the issuance of the building permit; on the other side, the ANRE/ energy specific regulations must be complied with. On this second stream, the most important permitting document laying down the conditions for the future energy producing facility is the technical connection endorsement (“ATR”) which must be followed by the conclusion of a connection to the grid contract; this stream completes with the issuance of the setting up authorization which (once obtained) signals reaching the RTB phase.
II. Relevant amendments
The amendments to the Regulation no 59/2013 address the more recent (operational) needs observed in practice, namely the connection of the prosumers, the battery energy storage systems (BESS) and the possibility of new producers to directly conclude a design & construction agreement (after conclusion of the connection agreement). Let us detail each of these aspects below.
2.1 Prosumer’s connection certificate
The definition of prosumer was for the first time included in Law no 220/2018 under the amendment dated 18 July 2018. The same definition is now replicated under Regulation 59/2013 in order to give substance in interpretation to the newly inserted para 3 of Article 55 referring to the connection certificate (Romanian: certificatul de racordare). The connection certificate ascertains completion of both the connection installation and of the production installation (including testing phase) and sets forth the future grid usage conditions; in case the conncetion certificate is to be issued for a prosumer[1], it must specify it expressly (since the connection certificate ascertains a prosumer’s qualification as such, in accordance with the ANRE Order no 69/2020 approving the Procedure applicable to prosumers having installed capacity of up to 100 kW/ a single consumption place); in the case of a prosumer, the connection certificate is required, among others, for the replacement of the one-way meter with a two-way (i.e. bi-directional) metering equipment and it is the very document enabling him to sell his energy.
[1] The Regulation continues to refer to prosumers with an installed capacity of up to 27 kW, but ANRE Order no 69/2020 was subsequently amended in November 2020 and now refers to prosumers having installed capacity of up to 100 kW.
2.2 Battery energy storage systems
Should energy storage systems spread on a wide basis, the arguments behind the volatility of renewable energy would diminish till irrelevance (simply because such storage systems ensure technical conditions for feeding power into the grid on a constant basis).
Although the cost of technology (both for wind and even more substantially for solar panels) has drastically gone down in the last years, grid parity without a support scheme is expected to be reached in Romania for RES around 2025. In this context, also the economics of a BESS case are still far from straightforward (at least, in Romania). There are only a couple of such systems installed in Romania, but rather on an experimental basis. Permitting-wise, the road to authorization a BESS is still not clear and very incipient. While many aspects are still to be clarified regarding an energy storage system in Romania, we consider the introduction of the storage concept in the Regulation no 59/2013 as a positive first encouraging step.
As such, Regulation no 59/2013 will impose as of 1 January 2021 that an ATR is obtained (amended) whenever a BESS is installed. Consequently, the connection certificate will have to mention the specific requirements regarding BESS (as per Art 55 letter l1 of Regulation no 59/2013).
2.3 Design & construction agreement for the connection installation
The connection agreement must be concluded within 12 months as of issuance of the ATR [otherwise, the ATR becomes invalid, as per Art 33 para 1 letter b) of Regulation no 59/2013]. Once the connection agreement is concluded, the agreement covering the design & construction of the connection installation must be concluded. Until 1 January 2021, only the grid operator could conclude the design & construction agreement. It could have either selected the design & construction company by itself (via a time-consuming tendering procedure) or conclude the contract with a company appointed by the investor. In such cases, the operator must obtain the building permit for the connection installation.
As of 1 January 2021, the investor will be able to conclude directly the design & construction agreement [as per the newly introduced Art 44 para 4 letter b)]; this solution offers potential to lower costs and make savings of time, especially for private beneficiaries (let alone the certainty brought by the direct control over the contractor). As it is absolutely justified, such direct contracting comes with related obligations on the investor, such as:
-
- notifying (in advance) the grid operator of its intention to directly conclude the design & construction agreement;
- obtaining the building permit for the connection installation [Art 40 para 2 letter b)]);
- bearing the responsibility for the design & execution works;
- making sure that the works comply with the ATR and the connection agreement.
It is now clearly stipulated that the outcome of such designing & construction works (executed under a directly concluded contract) remain under the ownership of the investor and will be used by the grid operator on the basis of a frame agreement (a template being enclosed under Annex 7 to the Regulation). Such frame agreement stipulates that the operator takes over the connection installation only if reception of works and its putting into operation were performed (we have seen a situation where lengthy discussions were carried with the transport system operator due to non-completed reception of the works; such situations should no longer appear in practice following the amendments as of 1 January 2021).
III. Closing remarks
The general mindset of promoting RES (also geothermal, tidal and biomass, not just wind and solar) is abundantly spreading throughout most continents. Europe made already clear its intention to be the pioneer leading the way towards a carbon neutral economy by 2050. Early December 2020, the Romanian President stated in Bruxelles that Romania aims to reach this status also by 2050, while assuming the intermediary deadline of 2030 for reaching a target of energy from renewable sources of 30,7%. As such, it is clear the renewables will increase their quota into the domestic energy mix (and this will be powered both by industrial projects and also by small, primarily residential, prosumers using solar panels). In order to enable such development, one must concentrate on the development of the necessary infrastructure where such production is to be evacuated.
It is expected that Romania will rank (again) high on the list of foreign investments into renewable projects due to
-
- the excellent onshore and offshore Romanian potential for clean energy;
- the generous access to European funding (some even on a non-reimbursable basis, such as the Modernization Fund) as well as
- the large number of “old” (i.e. developed prior to 2013) projects that are now considered for “re-permitting”
Within this context, putting in place the necessary legal framework is of tremendous importance as it signalizes the intend (at state’s level) to facilitate such development and supports the creation of a trust-based environment.
¹The Regulation continues to refer to prosumers with an installed capacity of up to 27 kW, but ANRE Order no 69/2020 was subsequently amended in November 2020 and now refers to prosumers having installed capacity of up to 100 kW.
The Regulation concerning connection to the power public grid
Daniel Vlăsceanu / December 2020
Relevant amendments applicable as of 1 January 2021
Every year is special, but one cannot contest that 2020 was somehow “more special” than others. All economic sectors were influenced, and the energy industry could not have escaped, but here the impact was reflected differently: while certain sectors were so severely impacted that they may never recover (e.g. it was said that “peak oil” was reached in 2019; Denmark, the largest European oil producer, cancelled its latest licensing round and announced intend to stop fossil fuel production by 2050), other sectors may have found unexpected traction in the current times, such as the renewables that have taken a huge boost all around the world (especially in Europe where there seems to be consent to reach carbon neutrality by 2050).
The Romanian renewable market has slowly revived since 2019 and 2020 showed unforeseen expansion. The legislator supported its development by introducing favorable measures (such as re-introduction of long term PPAs for new facilities). Following the amendment of the Energy Law no 123/2020 at the middle of the year (through Emergency Ordinance no 74/2020 and Law no 155/2020), the secondary legislation had to be put in place in order to enable application of the new primary legislation. As such, the ANRE legal framework undergone probably the most complex review process in the last years and the outcome can be seen in the numerous normative acts issued in the second half of 2020.
In this material, we have chosen to analyze the amendments to the most relevant ANRE Regulation for the development of renewable projects, namely the connection to the public grid Regulation approved under Order no 59/2013 (the “Regulation 59/2013”). Note is to be made that the amendments to Regulation 59/2013 were approved under ANRE Order no 160/2020 published in the Official Gazette of Romania on 10 September 2020, but they shall enter into force as of 1 January 2021.
I. General considerations
The development of a wind/ solar project until reaching the ready to build (RTB) phase entails two main simultaneous streams: on one side, the urbanistic conditions must be observed; this stream starts with the urbanism certificate (“UC”), continues with the permits laid out in the UC (most important usually it is the PUZ approval) and completes with the issuance of the building permit; on the other side, the ANRE/ energy specific regulations must be complied with. On this second stream, the most important permitting document laying down the conditions for the future energy producing facility is the technical connection endorsement (“ATR”) which must be followed by the conclusion of a connection to the grid contract; this stream completes with the issuance of the setting up authorization which (once obtained) signals reaching the RTB phase.
II. Relevant amendments
The amendments to the Regulation no 59/2013 address the more recent (operational) needs observed in practice, namely the connection of the prosumers, the battery energy storage systems (BESS) and the possibility of new producers to directly conclude a design & construction agreement (after conclusion of the connection agreement). Let us detail each of these aspects below.
2.1 Prosumer’s connection certificate
The definition of prosumer was for the first time included in Law no 220/2018 under the amendment dated 18 July 2018. The same definition is now replicated under Regulation 59/2013 in order to give substance in interpretation to the newly inserted para 3 of Article 55 referring to the connection certificate (Romanian: certificatul de racordare). The connection certificate ascertains completion of both the connection installation and of the production installation (including testing phase) and sets forth the future grid usage conditions; in case the conncetion certificate is to be issued for a prosumer[1], it must specify it expressly (since the connection certificate ascertains a prosumer’s qualification as such, in accordance with the ANRE Order no 69/2020 approving the Procedure applicable to prosumers having installed capacity of up to 100 kW/ a single consumption place); in the case of a prosumer, the connection certificate is required, among others, for the replacement of the one-way meter with a two-way (i.e. bi-directional) metering equipment and it is the very document enabling him to sell his energy.
[1] The Regulation continues to refer to prosumers with an installed capacity of up to 27 kW, but ANRE Order no 69/2020 was subsequently amended in November 2020 and now refers to prosumers having installed capacity of up to 100 kW.
2.2 Battery energy storage systems
Should energy storage systems spread on a wide basis, the arguments behind the volatility of renewable energy would diminish till irrelevance (simply because such storage systems ensure technical conditions for feeding power into the grid on a constant basis).
Although the cost of technology (both for wind and even more substantially for solar panels) has drastically gone down in the last years, grid parity without a support scheme is expected to be reached in Romania for RES around 2025. In this context, also the economics of a BESS case are still far from straightforward (at least, in Romania). There are only a couple of such systems installed in Romania, but rather on an experimental basis. Permitting-wise, the road to authorization a BESS is still not clear and very incipient. While many aspects are still to be clarified regarding an energy storage system in Romania, we consider the introduction of the storage concept in the Regulation no 59/2013 as a positive first encouraging step.
As such, Regulation no 59/2013 will impose as of 1 January 2021 that an ATR is obtained (amended) whenever a BESS is installed. Consequently, the connection certificate will have to mention the specific requirements regarding BESS (as per Art 55 letter l1 of Regulation no 59/2013).
2.3 Design & construction agreement for the connection installation
The connection agreement must be concluded within 12 months as of issuance of the ATR [otherwise, the ATR becomes invalid, as per Art 33 para 1 letter b) of Regulation no 59/2013]. Once the connection agreement is concluded, the agreement covering the design & construction of the connection installation must be concluded. Until 1 January 2021, only the grid operator could conclude the design & construction agreement. It could have either selected the design & construction company by itself (via a time-consuming tendering procedure) or conclude the contract with a company appointed by the investor. In such cases, the operator must obtain the building permit for the connection installation.
As of 1 January 2021, the investor will be able to conclude directly the design & construction agreement [as per the newly introduced Art 44 para 4 letter b)]; this solution offers potential to lower costs and make savings of time, especially for private beneficiaries (let alone the certainty brought by the direct control over the contractor). As it is absolutely justified, such direct contracting comes with related obligations on the investor, such as:
- notifying (in advance) the grid operator of its intention to directly conclude the design & construction agreement;
- obtaining the building permit for the connection installation [Art 40 para 2 letter b)]);
- bearing the responsibility for the design & execution works;
- making sure that the works comply with the ATR and the connection agreement.
It is now clearly stipulated that the outcome of such designing & construction works (executed under a directly concluded contract) remain under the ownership of the investor and will be used by the grid operator on the basis of a frame agreement (a template being enclosed under Annex 7 to the Regulation). Such frame agreement stipulates that the operator takes over the connection installation only if reception of works and its putting into operation were performed (we have seen a situation where lengthy discussions were carried with the transport system operator due to non-completed reception of the works; such situations should no longer appear in practice following the amendments as of 1 January 2021).
III. Closing remarks
The general mindset of promoting RES (also geothermal, tidal and biomass, not just wind and solar) is abundantly spreading throughout most continents. Europe made already clear its intention to be the pioneer leading the way towards a carbon neutral economy by 2050. Early December 2020, the Romanian President stated in Bruxelles that Romania aims to reach this status also by 2050, while assuming the intermediary deadline of 2030 for reaching a target of energy from renewable sources of 30,7%. As such, it is clear the renewables will increase their quota into the domestic energy mix (and this will be powered both by industrial projects and also by small, primarily residential, prosumers using solar panels). In order to enable such development, one must concentrate on the development of the necessary infrastructure where such production is to be evacuated.
It is expected that Romania will rank (again) high on the list of foreign investments into renewable projects due to
- the excellent onshore and offshore Romanian potential for clean energy;
- the generous access to European funding (some even on a non-reimbursable basis, such as the Modernization Fund) as well as
- the large number of “old” (i.e. developed prior to 2013) projects that are now considered for “re-permitting”
Within this context, putting in place the necessary legal framework is of tremendous importance as it signalizes the intend (at state’s level) to facilitate such development and supports the creation of a trust-based environment.
¹The Regulation continues to refer to prosumers with an installed capacity of up to 27 kW, but ANRE Order no 69/2020 was subsequently amended in November 2020 and now refers to prosumers having installed capacity of up to 100 kW.