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Sprijinirea investitiilor in noi capacitati de producere a energiei electrice din surse regenerabile (1)

Supporting investment in new renewable electricity generation capacity (1)

In the Official Gazette (Part I) no.408 of 12 May 2023 was published MADR Order no. 70 for the approval of the State aid scheme to support investments in new capacities for the production of electricity from renewable sources for self-consumption of enterprises in the agricultural sector and food industry.

According to the normative act, the state aid scheme, based on a competitive bidding procedure, aims to support investments in the production of electricity from renewable wind and solar sources for self-consumption by enterprises in the agricultural sector and the food industry, in order to increase the share of renewable energy sources in the total energy mix and reduce greenhouse gas emissions.

We specify that the competitive bidding procedure refers to a non-discriminatory bidding process that provides for the participation of a sufficient number of enterprises and in which aid is granted either on the basis of the initial bid submitted by the bidder or on the basis of a balancing price.

 According to the recently approved document, the aid scheme contributes to the implementation of Key Programme 1: SRE and energy storage – Support for the construction of new power plants and heating-cooling systems based on renewable energy sources and for the construction of electricity storage capacities, in accordance with the provisions of OUG no. 60/2022 on the establishment of the institutional and financial framework for the implementation and management of funds allocated to Romania through the Modernization Fund, as well as for the modification and completion of some normative acts, with subsequent amendments, as well as the specific provisions of European Union and national regulations, national and European public policy strategies and documents.

We underline that the state aid scheme is aimed at supporting investments in the production and/or storage of electricity from renewable sources, namely solar and wind energy, for the agricultural sector and the food industry.

The amount of state aid requested may not exceed 20.000.000 euro per enterprise and per investment project.

 

Objective of the scheme:

Financial support under this scheme is granted for investments in electricity production from renewable energy sources mentioned above, with or without storage facilities, contributing to the achievement of the objectives assumed by Romania in the National Integrated Energy and Climate Change Plan 2021-2030 (PNIESC), those of the European Green Pact, as well as the commitments of the Union to implement the Paris Agreement and the sustainable development objectives of the United Nations (ONU).

 Thus, the implementation of this scheme will contribute to the following objectives:

 

  • reducing carbon emissions into the atmosphere from the energy sector by replacing part of the amount of fossil fuels consumed each year – coal, natural gas;

  • a more resource-efficient, greener and more competitive economy, leading to sustainable development, based, among other things, on a high level of protection and improved environmental quality;

  • achieving the European Union’s targets for renewable energy production set out in Directive (EU) 2018/2.001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources;

  • implementation of the key programmes set out in Government Emergency Ordinance No 60/2022 on the establishment of the institutional and financial framework for the implementation and management of the funds allocated to Romania through the Modernisation Fund, as well as for the amendment and completion of certain normative acts, with subsequent amendments;

  • achieving the objectives of the National Integrated Energy and Climate Change Plan 2021-2030, approved by Government Decision no. 1.076/2021 on the overall share of energy from renewable sources in gross final energy consumption;

  • increasing the production of electricity from renewable sources contributing to the objectives of the European Green Pact as a strategy for sustainable growth in Europe and combating climate change in line with the Union’s commitments to implement the Paris Agreement and the UN Sustainable Development Goals;

  • increasing the share of renewable energy in total primary energy consumption, as a result of investments to increase the installed capacity of electricity generation from renewable energy sources referred to in Article 2(2);

  • achieving the climate neutrality objective set out in Regulation (EU) 2021/1.119 of the European Parliament and of the Council of 30 June 2021 establishing a framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1.999 (“European Climate Act”), relating to ensuring, by 2050 at the latest, a Union-wide balance between emissions and removals of greenhouse gases that are regulated under Union law, so as to achieve zero net emissions by that date;

  • decongesting the national energy system through the use of new electricity production capacity, by increasing the energy independence of enterprises in the agricultural sector and the food industry;

  • implementation of the flagship initiative Power-up of the Annual Strategy for Sustainable Growth 2021, which aims at the development and use of renewable energy sources EUR-Lex – 52020DC0575 – EN – EUR-Lex (europa.eu).

 

The State aid scheme based on a competitive bidding procedure is addressed to enterprises in the agricultural and food industry sector that have submitted to the administrator of this State aid scheme (Ministry of Agriculture and Rural Development/Agency for Financing Rural Investments) a bid for granting State aid for carrying out, on the territory of Romania, an investment in energy production and/or storage from one of the sources referred to in Article 2(2), prior to the start of the works, in accordance with the requirements of the Applicant’s Guide.

It is important to specify that at the time of contracting, enterprises in the agricultural and food industry sector must have registered and authorised, in the company’s articles of association/foundation deed, as their main or secondary activity, the activity of producing electricity related to division 35: “Production and supply of electricity, gas, heat, hot water and air conditioning”, CAEN class 3511 – Production of electricity.

This aid scheme applies only to new renewable energy power plants, with financing of energy storage capacity for plants with an energy production capacity of more than 1 MW. The amount of aid is independent of production.

Investment aid for storage projects is granted under this scheme to combined renewable energy and storage (behind the meter) projects where both elements are components of a single investment or where the storage device is connected to an existing renewable energy installation. The storage component absorbs at least 75% of its energy annually from the directly connected renewable energy production installation. All investment components (generation and storage) are considered to constitute a single integrated project for the purpose of verifying compliance with the threshold set out in Article 17paragraph (1).

More specifically, this scheme based on a competitive bidding procedure applies to projects which aim to:

 

a) the realisation of new solar electricity generation capacities (below 1 MW inclusive and above 1 MW);

b) the realisation of new electricity generation capacities from wind energy sources (below 1 MW inclusive and above 1 MW).

 

Beneficiaries:

Projects for the construction on the territory of Romania of new capacities for the production of energy from renewable energy sources mentioned in Article 2 paragraph (2), selected as winners on the basis of a competitive bidding procedure, may have as beneficiaries:

 

a) enterprises in the agricultural sector (micro, small, medium and large enterprises), legally established and registered with the National Trade Registry Office (ONRC);

b) enterprises in the food industry sector (micro, small, medium and large enterprises);

c) organisations/federations of organisations in the field of land improvement (OUAI/FOUAI), constituted according to the Law on land improvement no.138/2004, republished, with subsequent amendments and additions.

  1.  
  2. Therefore, the potential beneficiaries of the present State aid scheme provided for in points a) and b) in the agriculture and food industry sectors must have registered and authorized in the company’s articles of association as main activities or secondary activities activities carried out in the mentioned sectors defined by the following CAEN codes:
  3. a) CAEN code 01 – Agriculture, hunting and related service activities;
  4. b) CAEN code 10 – Food industry;
  5. c) CAEN code 11 – Manufacture of beverages.
  6.  
  7. Self-consumption refers to the energy produced, delivered and used locally by the beneficiary and which represents at least 70% of the one-year production of the financed renewable power plant.
  8. Potential beneficiaries can only submit projects individually.
  9. The offer under the competitive tendering procedure contains at least the following information:
  10. a) name of the bidder and size of the enterprise;
  11. b) the description of the project, including its start and end date;
  12. c) project objectives and expected results;
  13. d) location of the project;
  14. e) project budget;
  15. f) list of project costs (eligible and ineligible);
  16. g) the amount of State aid requested for the project, including grant euro/MW, which will be a selection criterion in the competitive bidding procedure;
  17. h) cost-benefit analysis.
  18.  
  19. General eligibility conditions for beneficiaries:
  20. At the time of submission of the offer, the beneficiaries of the scheme must cumulatively fulfil the following conditions:
  21.  
  22. a) fall within the category of eligible beneficiaries, depending on the eligible actions provided for in Article 8;
  23. b) they are legally constituted and registered with the Romanian ONRC or, where applicable, they are constituted in accordance with the provisions of Law no. 138/2004, republished, with subsequent amendments and additions;
  24. c) they are not in default of payment / state of insolvency according to the provisions of Law no. 85/2014 on insolvency prevention and insolvency proceedings, as amended and supplemented, as appropriate;
  25. d) they are not in a state of bankruptcy, liquidation, have their affairs managed by a receiver or their business activities are not suspended or are not subject to an arrangement with creditors or are in a similar situation to the previous ones, regulated by law, or are not subject to a legal procedure for declaring them in a state of bankruptcy, liquidation, management of affairs by a receiver;
  26. e) they have fulfilled their obligations to pay taxes, duties and social security contributions to the component budgets of the general consolidated budget;
  27. f) they are not declared to be in serious breach of the provisions of the legislation on public procurement and/or of the obligations assumed in a contract/agreement for financing from public funds;
  28. g) the applicant/legal representative of the applicant does not have any economic-financial record in his/her criminal record;
  29. h) they are not subject to an outstanding recovery order following a previous decision of the Competition Council, the European Commission, a State aid provider/administrator or the court, by which a State aid/de minimis aid was declared illegal and incompatible with the internal market;
  30. i) demonstrates technical and financial capacity to support the project activities;
  31. j) it does not fall into the category of enterprises in difficulty, as defined in Article 2, point 18 of the Regulation, with the exception of the situation referred to in Article 1, paragraph (4), point (4), point (4) of the Regulation. c) final sentence of the Regulation.
  32.  
  33. The beneficiary also fulfils other conditions specified in the Guidelines for Applicants, which are without prejudice to the provisions on state aid.
  34. At the time of submission, projects must meet the following eligibility requirements:
  35. a) the project is implemented on the territory of Romania;
  36. b) the project must be aimed at the creation of new capacities for the production and/or storage of electricity from wind or solar sources;
  37. c) for the first tender intended to be held in 2023, the amount of state aid granted under the scheme per MW installed is maximum, but not more than 100% of the eligible costs:
  38.  
  39. (i) for wind energy:
  40. – 1,400,000 euro/MW – for installed capacities less than 1 MW inclusive;
  41. – 700.000 euro/MW – for installed capacities above 1 MW.
  42. (ii)for solar energy:
  43. – 1.000.000 euro/MW – for installed capacities of less than 1 MW inclusive;
  44. The project fulfils, in addition to the eligibility conditions mentioned above, the conditions specified in the Guidelines for Applicants, which are without prejudice to State aid provisions.
  45. Projects that are proposed to replace older electricity production capacities from renewable sources mentioned in the normative act are not eligible, nor are projects that do not foresee a self-consumption of at least 70% of the electricity produced by the newly installed capacity.
  46. It is important to note that mixed projects proposing investments in wind and solar energy production capacities are not eligible.
  47. The implementation period of the projects falls within the period of eligibility of expenditure, i.e. between the date on which the applicant submits a bid for funding to the administrator of this scheme and the date of completion of the investment provided for in the competitive bidding procedure, in compliance with the “start of works” principle.
  48. The project has never received public funding, with the exception of preliminary studies – pre-feasibility study, geotopographical analysis, feasibility study, technical design, execution details and provided that they are not requested for funding under this scheme.
  49.  
  50. Legal basis:
  51. – MADR Regulation 70/2023 approving the State aid scheme to support investments in new capacity for the production of electricity from renewable energy sources for own consumption by enterprises in the agricultural sector and the food industry.
  52. – https://www.madr.ro/