”Biomass, Biogas & Cogeneration Romania 2014 – National Conference”

*Zoltan Nagy, ANRE: ”Romania has a huge potential with respect to biomass and hydropower energy, even greater than wind and solar energy”

Energy generated using biomass and its derivatives, such as biogas, has a great potential considering the available agricultural land and the existing landfills, source of raw materials for producing this type of renewable energy. Yet, the development of this niche in the green energy market has been left behind by wind and photovoltaic projects, but remains of high importance in terms of balancing power capacities.

The future evolution of the sector, the challenges the industry is facing, development premises, as well as the role agiculture has as a source of fuel, were the key-aspects approached during the first event dedicated to the industry in Romania – ”Biomass, Biogas & Cogeneration Romania 2014 – National Conference”, organized by GOVNET Conferences.

”Romania has a huge potential with respect to biomass and hydropower energy, even greater than wind and solar energy”, Zoltan Nagy, Member of the Board within the Romanian Energy Regulatory Authority (ANRE), said during the conference.Nagy also pointed out the discrepancy between the evolution of green energy projects: “Among all renewable sources, wind and solar energy have dominated the market and deprived the other sources – biomass, biogas and hydropower energy, from the appropriate attention”.

The main factor braking a similar development are the costs involved by a biomass or biogas project (either in cogeneration or not) which are considerably higher, as pointed out Serban Tiganas, CEO of TEB Energy Business: ”It is the largest investment, 3 – 3 million euro or so per MW (referring to a biomas plant), compared with others which amount to about 1 million euro. It is a remarkable financial effort”.

The legislative sphere and obtaining all necessary permits are also challenging developers of biomass or biogas projects. For Egger Radauti, the wood manufacturer operating in the Suceava County, which inaugurated this year a cogeneration biomass power plant, the biggest issue was the slow authorizing process. Hence, although initial proceedings began in May 2012, it took a year and eight months for the company to obtain all permits.

At the same time, there are some uncertainties about the subvention scheme: ”There are many inconsistencies. For instance, if you use biogas to generate electricity and thermal power, there are three green certificates – two for electric power, one for thermal power. If you do the same using landfill gas, there is only one green certificate. I do not know on which ground. When I went to ANRE, I was informed that we might get the second one, but we have to prepare a documentation for them to submit to the EU Commission”, explained Liviu Birau, Executive Director of IRIDEX Group.

Also, providing the necessary fuel to operators of biomass power plants is another impediment, explained the ANRE’s delegate: “Peculiarities of producing biomass energy derive, from my point of view, from that additional cost with fuel, which is hindering the investors’ business plan, as besides the fact that funders and banks require for each project contracts or agreements on energy acquisition, to ensure that the power will be bought, long-term contracts for selling green certificates, for biomass projects banks usually request long-term contracts for supplying power plants with biomass”.

“Since Romania currently has biomass power plants of 65 MW (at the end of 2013, 70 MW, respectively, at the end of April 2014) – and the power capacity doubled compared to a year ago – it is very, very little. The biomass market is almost non-existent”, Nagy concluded.

A paradox, given that apart from cultivated farmland, there are some 800.000 hectares of unexploited agricultural areas, according to Tatiana Preda, Senior Counsellor in the Ministry of Agriculture and Rural Development, as agriculture is one of the biomass sources (both considering agricultural waste and energy crops), together with forestry sector.

The National Rural Development Plan (PNDR 2014 - 2020) includes measures meant to support investments in renewable energy with funds amounting to about 760 million euro, concerning the entire period, “for investment at farm level which can produce and use renewable energy for own consumption or for economic operators, other than farmers who want to process biomass to obtain renewable energy”, Preda detailed during the conference.

Cogeneration technology has been a key-point in the debates, too, as combined with biomass and biogas as fuels it becomes a solution not only for ensuring electric and thermal power for internal consumption (as it is the case for wood product manufacturers, for instance) or for trading it, but also in terms of energy efficiency which will be mandatory to achieve in the coming period, cogeneration being decisive in that strategy.

The future development of the industry depends on a greater legislative predictability that causes uncertainties for the moment as the Government decided to annul the initial renewable energy quotas and to establish these quotas yearly, as well as on less strict financing proceedings. There is interest in this green energy niche which will see increasing investments, as Mihail Faca, State Secretary within the Ministry of Environment and Climate Change, anticipates, who said during the conference that he is positive that investors will direct more and more towards this business field.

A further important aspect with respect to the successful development of such projects relates to their insurance, depending on the stage of the project: from development, building and installation to operational stage. ”Annually, one of 500 businesses faces a major damage and almost half of those that had been affected by such an event no longer reopen”, said Georgiana Popescu, Head of Corporate Risks Insurance Department within Generali Romania.

Energy produced using biomass and its derivatives, biogas included, remained the sole unaffected by the changes in the subventions scheme which lead to reductions in the amount of green certificates corresponding to solar, wind or hydropower energy. Hence, the electricity generated by biomass power facilities receives 2 GCs/MWh for a 15-year period. Additionally, there is an extra GC, provided biomass derives from energy crops (i.e. rape, soya plants, sunflower, even corn), as well as if the electricity is produced in high-efficiency biomass CHP plants.

The partners of the Conference were: Aggreko, B-Team Energy and Environment, Casa de Traduceri, Elsaco, Eneria Caterpillar, EOS Energy, GENERALI, Maviprod, MT-Energie, New Life Energy, Noerr, Transenergo, Valeg Romania.

GOVNET is an independent media channel dedicated to provide professional business journalism about Romania’s economics, politics and business climate and, at the same time, an event organizer through GOVNET Conferences.

Post-event details, as well as all presentations made within the Conference can be found here: http://govnet.ro/Biomass-Biogas-and-Cogeneration-Romania---National-Conference

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