Financing the photovoltaic sector in Romania
Bucharest, July 12th, 2012
The conference ‘Financing PV in Romania’ organized by the Romanian Photovoltaic Industry Association – RPIA (www.rpia.ro) took place at the InterContinental Hotel in Bucharest, on July 12th, 2012. The event was meant as the first opportunity of an upcoming series which will allow authorities, financial institutions and investors to hold discussions in view of harmonizing the divergent aspects connected to the factors which have delayed, up to the present date, the financing of the solar/ photovoltaic field. The increased interest generated by this event, with more than 175 participants, confirms that Romania proves to be in the investors’ spotlight, and that the conditions established in the renewable energy market, especially solar energy, are attractive enough to support medium and long term investments.
Indeed, the increased potential of Romania in the field of renewable energy and, especially, in the photovoltaic sector is also supported by Mr. Ciprian Glodeanu, President of RPIA. He mentioned that, among others, ‘Romania displays an enormous potential for the photovoltaic energy, and the investors were the first to understand this’. As a confirmation of this fact, ‘we noticed that an increasing number of investors with projects already launched preferred to finance their investments from their own financial sources’. This fact was determined to a certain extend by the limited access to financing corroborated with the recent legal provisions which left open the possibility to reduce the support scheme for the photovoltaic industry starting with January 2013. However, considering the new provisions of the law approving the Emergency Ordinance no. 88/2011, it is expected that the situation will change. We are convinced that the “support scheme’s reduction suspension until January 2014 at the earliest, in the photovoltaic industry, shall create the environment for a new beginning, especially due to the predictability it brings onto the market”, Glodeanu added.
The investors who attended the event were able to feel the pulse of the financing in the photovoltaic field directly from the top representatives of the most active banking and leasing institutions in Romania. They explained, from the financer’s point of view, the steps to be followed by the investors in order to secure the financing of the projects in the photovoltaic field. It was noticed that banking institutions give special attention to the photovoltaic field and that they are interested in opening financing partnerships, but they required the projects to be bankable.
As Mr. Gabriel Mihai – Head of Corporate for Unicredit Leasing stated, the financing institutions examine the bankability of a project starting from the three important stages of any photovoltaic project, namely the development, the construction and the operation stage. These are all important for the financial institution and the result of the examination must point out the project’s ability to generate cash flow. Mr. Mihai underlined that during the development stage, “the situation of the approvals, of the manner in which these have been obtained, of the ready –to – build stage of the project, as well as of the realistic value of the investment value” are important, which, as Mr. Romulus Andrei – Head of Structured Finance Department, Volksbank Romania also mentioned, ‘must be similar for the projects which resemble from the point of view of the execution conditions’. The confirmation of the project status, at this stage, is achieved by the financer on the basis of the legal and technical assessment reports made by reputed consultancy companies.
Although the construction stage of the project is not financed by most of the financial institutions, it is important for the financer to acknowledge the investor’s firm commitment through its own possibility to self-financing at this important stage of the project. Also, an important role in the bankability examination is given by the operation stage of the project. According to Mr. Mihai, special attention is given ‘to the investor’s relevant experience with similar projects’. Such experience comforts the financer in the sense that the investor shall know how to turn into cash flow the energy produced and the green certificates obtained. A project with an efficient operational solution shall be a project which a financer shall take into consideration for financing.
Speaking of the financial conditions which an investor must be able to provide, both Mr. Andrei and Mrs. Ioana Gheorghiade – Executive Director Project Finance, BCR, mentioned that these cannot be inferior to 30% equity for Volksbank Romania, respectively 40% for BCR. Moreover, the two have agreed on the importance for the financing institution of the project’s ability to generate predictable, credible and constant cash flow.
As for the investors, we noticed that it is very important for them to have quick access to information in a language they can understand. Moreover, Mr. Frank Burton Managing Director for ADNOVUM Poland Limited, a German investment fund which invested significant amounts of money in the renewable energy field in Poland, re-stated the necessity to have legal and technical consultancy from reputed companies, in order to be assured that the financial institutions shall be able to draw the necessary conclusions in the determination of the projects’ bankability. An interesting solution which also rose from the debates is that of contracting a consultancy company to prepare the projects for financing.
Although the photovoltaic field is at the beginning in Romania and, as any beginning, it has its difficulties, RPIA noticed the willingness of the players involved in having an active attitude towards finding viable and applicable solutions adapted to the special conditions in Romania. The unanimous impression was that the photovoltaic market has a future in Romania, and the good projects, developed by experienced investors shall have an easier path towards financing. The RPIA representatives were satisfied by the conclusions of the conference and shall actively continue to bring to attention in the future also other interesting topics for the photovoltaic field.
Romanian Photovoltaic Industry Association – RPIA has been recently established by a group of experts with extensive experience in providing consultancy in the field of developing facilities for producing energy from renewable sources. RPIA wishes to become, together with its members, a fair and trustworthy partner for the Romanian authorities, in order to develop an open and constructive dialogue. The purpose of the association is to create an adequate environment for a constructive dialogue between the responsible parties – Romanian and international authorities and all the other Romanian and foreign companies involved in the entire chain of suppliers within the solar energy field. What the RPIA Association offers is a networking, lobby and business platform, a one-stop-shop where all the interested companies can find the necessary information and where they can meet the decision factors. Among the association members there are important players in the energy sector: Cappello Group, Egnatia Rom, Enfinity, Hanwha Solar, Helios Strategia, IBCOenerg, ICME Ecab, ISPE, Martifer Solar, Monsson Group, Schoenherr, Siemens, Sky Solar, Solveo Energies, The Diplomat Bucharest, TIAB – Vinci Energies, Tractebel Engineering, Upsolar Group, Vitalis Consulting, Wolf Theiss etc.
Attended or missed the event? Want to catch up with what was presented there? Simply download the slideshows you want by clicking on the links.
- “The new aspects in the recently voted Law for RES-E“ – Mugurel Surupaceanu, Deputy, Member of the Romanian Parliament, Presentation
- “The Environment Fund Administration – Grant Provider for the Renewable Energy Sector” - Paul Serbanescu, Chief Economic Analyses and Program Strategy Service, Environment Fund Administration (AFM), Presentation
- “The importance of PPA and GCPA contracts for the financing company and the investor; EPC involvement in the project development; bridge financing possibilities” Ioana Gheorghiade – Executive Director Project Finance BCR, Presentation
- The importance of BEING BANKABLE – the role of a Global Arranger – Diego Teani – CEO FIDIMPRESE, Presentation
- “Financing photovoltaic capacities in Romania. A glimpse into the issues of legal concern” – Andreea Poenaru, Coordinator of the Banking and Finance Department of Wolf Theiss, Presentation