Romania: green certificates for biogas and biomass — how the electricity support scheme works

Romania does not support electricity from biogas and biomass with a fixed tariff but with green certificates: a generator receives a certificate (or several) for each MWh produced and delivered, and energy suppliers must buy a set quota of such certificates. The basis is Law 220/2008. The scheme was closed to new participants after 31 December 2016, and certificates issued from 2017 are valid until the end of 2031.

How the scheme works

A generator of energy from biomass, bioliquids or biogas can use the scheme only if it holds documents confirming the origin of the feedstock. Certificates are issued monthly by the transmission system operator Transelectrica; according to Kinstellar, certificates issued after 1 January 2017 are valid until 31 December 2031 (earlier rules limited validity to 12 months). Trading is allowed only for producers and suppliers, without intermediaries, and only on centralised markets run by the energy market operator (OPCOM).

Energy suppliers have an annual obligation to buy certificates (the quota). The original law set it year by year, and the 2017 amendments replaced the variable quota with a fixed one: the total number of certificates estimated up to 2031 (including those suspended in 2013–2014) is divided by the number of remaining years, and the quota is verified every two years.

How many certificates per MWh

Originally the law granted three certificates per MWh to biomass from biological waste and two to biogas from waste and sludge. Emergency Ordinance OUG 88/2011 changed the number of certificates. According to the summary of these changes:

During the trial operation period of an installation, each MWh produced and delivered earned one certificate regardless of the source.

What a certificate is worth

The European Commission decision of 16 December 2016 approved amendments to the scheme. According to the law firm Kinstellar, the trading value of a certificate lies within a corridor of EUR 29.4 to 35. The penalty for a supplier that fails to meet the quota was reduced from EUR 110 to EUR 70 per certificate, and the scheme's impact on the customer's bill was capped at EUR 11.1/MWh.

At these prices a generator receiving two certificates per MWh earns EUR 58.8–70/MWh from certificates on top of revenue from selling the electricity alone; with one certificate it is EUR 29.4–35/MWh. The calculation is theoretical: it depends on the installation category and on whether the certificates can be sold at a price within the corridor.

Freeze on new participants and deferred certificates

Until 31 December 2016 the scheme was open to new beneficiaries. For some technologies a deferral of certificates was introduced: for wind and hydro, deferred certificates are to be returned over eight years, from 1 January 2018 to 31 December 2025, in equal monthly instalments; for photovoltaics the suspension of trading was extended to 31 December 2024, and the return is due in 2025–2030. These rules do not apply directly to biomass and biogas, but they show that the Romanian scheme is costly and full of adjustments.

Impact on customers' bills

The cost of certificates is ultimately borne by energy customers, because suppliers include the purchase of certificates in the electricity price. The changes approved in 2016 capped this impact at EUR 11.1/MWh, which is in effect a ceiling on the burden for consumers.

Who it is for

• Existing biogas plants and biomass power plants that entered the scheme by 2016 — they receive certificates according to the installation category.
• New projects — after 2016 they cannot use green certificates and must rely on other sources of revenue, including selling electricity on the market.

Comparison with other countries

Unlike Germany, where the generator knows the level of support from the tender bid (EEG 2021), in Romania certificate revenue depends on the certificate market, albeit limited by the price corridor. This reduces investor risk compared with a pure market, but does not eliminate it.

The logic of the price corridor

The lower limit (EUR 29.4) protects the generator against a collapse in the certificate price when supply exceeds the demand arising from the quota. The upper limit (EUR 35) protects customers, because they ultimately pay for certificates in their bills, and the impact on the bill was capped at EUR 11.1/MWh. The penalty of EUR 70 per certificate not purchased is twice the upper limit of the corridor, so it pays suppliers more to buy certificates than to pay the penalty. Certificates have a limited validity period, so in practice a generator plans their sale in advance.

For biogas plants

The revenue of a biogas plant running on waste or sludge has two components: sales of electricity and of certificates (one per MWh). For biomass from energy crops, the number of certificates is three times higher than for biogas from waste.