Solar Investment in Romania

A Hot Tip about Foreign Direct Investment in Romania

Last updated: 26 Jan 2011

Within the field of renewable energies, PV is an absolute newcomer only enjoying full political support since a few months ago, thus opening the full potential of an emerging market to those who find their position first.

Solar Investment Romania USA Pre-Planning / Overview 848 N. Rainbow Blvd. # 1573 Las Vegas, NV 89107 Germany Oranienburger Str. 27 10177 Berlin Jan, 2011 Hubertusstr. 241 47798 Krefeld Romania Calea Dorobantilor 36 - 40 010553 Bucuresti The Sun While the long term assurance of oil and gas supply slowly fades away from the hidden agenda of those who used to start wars on this behalf, while the concern about climate change rapidly translates into a global consensus on CO2- reduction, and while more and more political and economical leaders understand that a safer, a more peaceful and a long-lasting planet needs to live on unlimited, renewable and clean energies instead of exploiting and polluting itself, new industries have emerged at a breath- taking pace. Huge public and private investments have been made in the past few years to encourage research and technology development in renewable energies. The most commonly and most steadily available source of energy is and will stay our sun - with current photovoltaic technologies still showing an enormous potential of increasing efficiency and affordability. Our sun is able to over-cover our current energy needs by a factor of 2.000, every day, for millions of years to come. Macro-Trends While the global long-term growth perspectives continue to promise the best, market paradigms are shifting. For the first time ever, we are running into overcapacities in module production, while technologies are having a challenging time to catch up with the fast-growing need for more efficiency and affordability. While grid-parity appears on the horizon, consumers have started to complain about their fees, which are driven by the overall amount of grid- tied solar production. Market power is going to move downstream from the technology suppliers and distributors (who until now deserved that name) to the broadening, increasingly segmentable customers such as installers, roofers, architects, house builders, real estate managers, and more, many of them waiting for more points of sales and brand clarity, many others getting used to sourcing from online market places. While technologies and applications diversify for the sake of more added value, system integrators and some of the manufacturers verticalize to close the loop from cell and module production down to the end consumer. Geographies 2011 and 2012, globally and as far as roof installations are concerned, are expected to become years of reduced speed of growth, market consolidation and new marketing and sales concepts, while investors are expected to focus on large scale projects. Locally, and encouraged by governmental incentives, the German market exploded over the past two years to be by far the number one growth market for photovoltaic projects worldwide. Along with the German market, other primary ?gold rush? markets such as Japan, and in Europe, above all, Spain and Italy evolved, with France, Bulgaria and the Czech Republic lately expected to become major growth markets short-term. At the same time, beyond Europe, the USA and, to an extent, China are ready to become major growth markets for the next five years or more. Local Barriers In many major markets, larger scale open land projects have become the ones that enjoy only the low end of feed-in tariff systems. The Spanish market virtually died ? with the broad roof business still suffering from less-than- sensitive governmental cuts. The German market is exposed to a continuous regression of feed-in tariffs which already dropped down to the 20ies cents. Italy is going for similar levels for larger installations. France capped their new installations to 500 MW p.a. (cf. Germany 2010: > 6.000 MW), and grant high end tariffs only to BIPV with additional barriers imposed by certification and insurance issues. The large electricity suppliers (and their daughters) dominate the remaining game. The Czech Republic will raise taxes on PV production. The USA and China have mighty home players with some of the Chinese OEM contractors striving for their own brand identities. New alternatives, such as Greece, partially suffer from their own instability. Romania Romania has developed significant wind energy projects over the past years. PV is still in its early childhood. The country, even though part of the EU, lived in the shadow of the more exciting markets. Still, insolation, in certain regions, equals Bulgarian conditions supporting annual production factors of 1.000 to 1.700 (Kwh per sqm) . Feed-in tariffs have been decided to be elevated from a very low 0,029 Cents to 0,148 Cents per KWh soon, while the government only lately has improved installation incentives by raising the number of Green Certificates granted per PV MW from 3 to finally 6 with each certificate selling off at a guaranteed price of EUR 52,- . Accordingly, not only some of the local players shift their focus from wind to sun, but also the first international players announced to build module factories in Romania. Dobrogea The region of Dobrogea is situated next to the Black Sea coast and the Bulgarian border in the Southeast of Romania. It comprises of the districts of Tulcea (Danube delta) and Constanta, the center of Romania?s major seaside resorts. Only a few kilometers off the coast line, a multitude of ?deserted? open lands stretch out from the North to the South, not being expected to attract any residential investment in the future. The proximity to the coast line with fair and reliable wind conditions has attracted a number of wind energy investments, backed-up by a solid prognosis of a regional potential of more than 1.400 MWp. While the Romanian administration in general is not yet very much used to managing renewable energy investment projects, Dobrogea authorities in particular, due to the wind boom, already look back to a regional ?tradition? in working down all necessary administrative steps, including grid- access. Basic Revenue and Investment Model A 10 MW plant with an output factor of Revenue Stream 1.200 will produce 12.000 MW annually, generat Installed MWp (2 x MWp) 10ing 72.000 Green Certificates selling off for EUR 3.744.000 p.a. and an Medium output factor (conservative) 1.200 add-on of EUR 1.776.000 from feed-in MW production p.a. 12.000 tariffs leading to a total revenue stream of EUR 5 No. of Certificates p.a. 72.000.520.000 p.a. Market Value of Certificates in EUR (52,- p.c.) 3.744.000 Feed-in revenues (0,148 cent p. Kwh) 1.776.000 Total Annual Revenues (EUR) 5.520.000 15 ha of appropriate open land, leaving enough space around the plant, are currently available for appr. EUR 150.000 in the relevant area. Investment / CAPEX EUR The total cost of installment of EUR 3.5 15 ha / 150.000 sqm of land 150.000 Mio per MWp are the current typical Installing 10 MWp high efficiency modules 35.000.000 European average for advanced Expenses, permissions, provisions 500.000 technology modules, inverters and plant management systems. Total Investment 35.650.000 ROI Assuming a standard share of 1% of the Annual cost EUR investment needed for annual maintenance and operation plus a share o Maintenance and operation (1% of investment) 350.000 0,5% for insurance, the total annual Insurance (0,5% of investment) 175.000 operation costs sum up to EUR 525.000,- Total operation cost 525.000 Annual Return This leads to an estimated EBIT of EUR EBIT 4.995.000 4.995.000,- p.a., which stands for 14% of the investment. ROI 14,0% NOTE: European Structural Funds, also in 2011, principally take over a typical share of 40% (Bucharest) to 70% (rest of the country) of the eligible investment costs of green energy projects. This is non-refundable. Projects with a volume of up to EUR 50.000.000,- and with up to 10 MW are in scope. This can significantly improve the ROI. (The typical set-up times for an application file are 6 to 9 months, though.) Strategic Investment An investment into the Romanian PV market is a strategic one. The marketplace has just been born and still is heavily struggling with the effects of the financial crisis. Leadership and initiative are missing all over. Within the field of renewable energies, PV is an absolute newcomer only enjoying full political support since a few months ago, thus opening the full potential of an emerging market to those who find their position first. Agricultural electrification and renewable energy concepts for rural communities do not only find up to 98% non-refundable EU support, but also imply a broad need for off-grid solutions. Millions of roofs standing by for renovation, open business opportunities for BIPV-solutions if common vertical business models are established. Politics wait for inspiration from investors when it comes to their EU- related catching-up commitments in energy concepts. Horizontal expansion into other renewable energies such as biodiesel is on the edge of offering more exciting opportunities. About us Excerpt from customer list: 3COM, Alcatel, Alfa Romeo, Arag, Bang & Olufsen, Black & Decker, BMW, Bose, British Petroleum, Cisco Systems, Citicorp, Compaq, Condor, Continental, Dell, Deutsche Bank, Deutsche Post, Deutsche Telekom, Die Welt, Dräger Safety, Dräger Medical, Encad, Epcos, Fujitsu, Fujitsu-Siemens, General Electric, General Motors, Hewlett Packard, Hoechst, Intel, Ipass, Lufthansa, Mannesmann, MAN Roland, Mehler Texnologies, Michelin, Micorsoft, Osram, Polow, Postbank, Qualcom, Quantum, Raab Karcher, Rexroth, Rohde & Schwarz, RWE, Saab, SAP, SAS, Schindler, Siemens, Sun Microsystems, Swissair, Telecom, TÜV-Rheinland, The Wyatt Company, USA Today, Volkswagen Advantages of collaboration ? Long-term experience in market assessment and feasibility studies ? Proven track record in business and project development ? Well connected both to the advanced German solar market, to the Romanian and local Dobrogea authorities, and to the Romanian banking sector ? Experience in renewable energy projects in Romania ? Excellent technical teams for all project steps standing by Contact: Phone Romania: +40. 7354 22 931 Phone Germany: + 49 2151 3255 356 Email: office@adversus.ro www.adversus.ro www.patarheigroup.com
Posted: 24 January 2011, last updated 26 January 2011

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