STRATEGIC INVESTMENT INITIATIVES IN THE ROMANIAN PRODUCTION FIELD OF

RENEWABLE ENERGY

Junior. Assist. Ionuț-Cosmin Băloi, Ph. D. Student University of Craiova Faculty of Economics and Business Administration Craiova, Romania

Abstract: We undertake in this paper a comparison from strategic point of view of the investment initiatives in the energy production sector by using the renewable resources. The expected return is determined by many factors, more or less measurable, and each energy production unit is feasible if the business’s effectiveness exceeds the investment efforts. The contribution and the dynamics of technology, the environmental requirements, the energy markets involves other interdependencies; our assessment only captures certain features of the investment requirements and the benefits measured less in terms of profitability. We finally highlight a greater suitability of some renewable sources of energy exploited in Romania and the gaps between the pillars of this strategic domain.

JEL classification: O13, Q42, G11

Key words: strategic analysis, renewable energy, investment initiatives,

opportunities

The increasing trend of the renewable energy business volume is driven by the

entrepreneurs and companies availability to try a new market, with many unpredictable

implications and the willingness of these players or their creditors to spend their

savings, in various forms, for the concerned projects.

Broadly speaking, the State companies are interested in these opportunities, but

do not have their own sources (capital from the operation of the previous business),

excepting perhaps Hidroelectrica, they cannot easily access the medium- or long term

loans, or the budget subsidies. The remaining alternative is to attract direct capital

investments of large global companies and the loans approved by the international

banking consortia.

Our personal opinion is that there is no alternative to intensive investment

strategies, given that small projects are not able to create value and competitiveness for

interested players. In a recently published article (2011), Ch. Dann et al. [2] promote

the same idea: They already began to emerge industry leaders, even if plenty of

opportunities remain for other players that could apply competitive strategies among the

global energy markets (with vision and resources).

1. THE STRATEGIC CONTEXT OF THE INVESTIGATION

All the analysis that we realise here are based on the consideration of general

trends in the global competitive field. The postulate issued by the International Energy

Agency, is perhaps the most obvious: "Technical progress can not be stopped" (IEA,

2011). In addition, we must also assume one of the great geo-strategic trends: "industry

trend to move from West to East" [11].

On the other hand, the logistic flow is accompanied by the financing flow. In

general, the external financing dependency moves from private to state, in most

industrial areas. The renewable energy production constitutes an exception because the

development financial support comes from the western institutions. Fourth, the

Romanian industry takes advantage from the availability of foreign companies and

entrepreneurs to enter into a new market. The OECD countries inundate the Romanian

renewable potential, trying to gain the opening market shares. All these general trends

have an impact that is amplified by the considerable influence of legislative levers: the

no. 220 / 2008 Law boost the producers by offering them the green certificates for each

MWh unit.

2. FUNDING OPTIONS

Manny institutions have been strengthened worldwide, whose establishment

and existence pursued to support the development of strategic industrial domains in

countries who cannot support their own development. World Bank (in fact the World

Bank Group which includes two entities, as its branches, International Finance

Corporation and International Development Association), International Bank for

Reconstruction and Development, European Bank for Reconstruction and

Development, European Investment Bank and some other institutions provides

conditional loans, in fact only credits "per project" to finance investment plans.

Another funding source (more theoretical than useful, for us) is represented by

the Structural Funds whose mechanism we judge being failed. The Operational Sector

Plan - Boosting Economic Competitiveness (known in Romania as POS-CCE) through

his key field of intervention 4.2 – The use of renewable energy to generate "green"

power, support the small and medium enterprises registered in urban areas, the big

companies and and local authorities by funding their projects whose total value with

taxes is between 400,000 lei and lei equivalent of EUR 50 million. This program aims

to finance projects that achieve energy units with production capacity exceeding 10

MW.

Table no 1. – Projects funded after 2008 through Structural Funds: 4.2 key field of intervention – The use of renewable energy to generate "green" power

Source Applicants

Installed capacity

(MW) - utility

Annual energy

produced

(MWh)

Geothermal One local authority 4,6 – thermal 51902,36 - t

Biomass 3 entrepreneurs 5,24 - electrical

5,102 - thermal

40622,09 - e

40121,82 - t Source: The Ministry of Economy, Trade and Business: National Action Plan on

Renewable Energy, p. 79, București, 2010.

The applicant enterprises, at least 40% of energy produced must be delivered in

the National System. Also, for those projects financed under the State aid rules, the

grant assistance may not represent over:

­ 70% of the eligible value in the case of micro and small enterprises;

­ 60% of the eligible value of medium enterprises;

­ 50% of eligible costs for large enterprises.

Only one call was launched for the current financial stage (2007-2013); the

funds owed for the initial intervention were relocated in addition to supply the other

operations proposal. When the call was launching, there were four projects receiving

funding acceptance (structural funds), but this projects have not been completed (see

table no 1). It is not known any intention of this funds manager’s to redress until 2013

the field by another call.

Regarding the size of submitted projects, we note that the cumulate capacity is

very small, and this funding source contribution is practically insignificant. The

remaining alternatives are the borrowing by credit at the international institutions and

the support on their own (the safer form of financing in terms of project’s property, but

also the most risky one).

3. SHORT COMPARATIVE ANALYSIS OF INVESTMENT NEEDS

Almost nonexistent possibilities to quantify the direct costs led us to use that top-

down studies made by the most authorized institution in the world. According to data

published by the International Energy Agency (IEA, OECD, 2010) the unit costs of

achieving the energy-producing units are still high (from 757 USD / kW to 19.330 USD

/ kW, both extreme values are records for hydro-facilities) although it is expected a

notably diminish of them in the next decade.

The most controversial case refers to the construction of nuclear reactors in

which case the costs estimated by the International Energy Agency fluctuate from 5.863

USD / kW, the case of reactors under construction in Switzerland, to very low values in

outh orea (a few dollars kW) where the construction expenses are small and recent

experiences of reactor’s construction are numerous. In summary, the average unit cost

of achieving nuclear power plants (according to I. . .) is 4.100 USD / kW. Also, all

bibliographic sources estimate an average operating time of 60 years.

Romania will conduct an ambitious nuclear program: the officials prepare the

building works at 3 and 4 Cernavodă reactors. The first two reactors provides up to 20%

of national electricity consumption and our State (through Nuclearelectrica) controls

51% of investment in both designed units, even if he wants to transfer a share of these

percentages in the private domain direction. Raw material price is high and is growing;

also, Romania has only one operating uranium mine, in Suceava County. One of

alternative solutions to imports of raw materials can be the (re-)activation of some

exploitations where the ore is still enough (throughout the country, we have about 25

radioactive sites, most of all in Caras-Severin1). The second nuclear plant in Romania

would have 1,000 MW and is expected to be built by 2030, in Cluj-Napoca. The

European trends lead to the falling of initiatives number and the share of nuclear

sources in total energy production.

The plants on hydrocarbons are still frequently used but all stringent

environmental and socio-economic trends contribute to a significant reduction of new

projects and initiatives. Development costs of oil-based plants range from 807 USD /

kW in South Korea to 2.719 USD / kW in Japan. Coal power plants are more

expensive: their implementation requires investment between 1.802 USD / kW in

Australia and 3.485 USD / kW in the Czech Republic and the average is 2.300 USD per

1 C. Matache - We will have four nuclear reactors but no uranium will remain, in “Financiarul”,

august 12, 2010, http://www.fin.ro/articol_49121.html

kW of capacity. For gas exploitation, a thermal power plant can be installed with a

minimum investment of 635 USD / kW (in Korea) and with maximum 1.747 USD / kW

in Australia.

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

Nuclear

plants

Oil Coal Gas On-shore Off-shore Photovoltaic

Hydro-

power

Geothermal

plants Thermal power plant Wind farm

Figure no 1 - Amplitudes of unit costs of achieving energy projects based on technologies exploited

In the recent years, building thermoelectric units has not been anymore a

priority for Romania. The investments are directed now toward the re-tech of certain

units, the decommissioning of others and also to develop some co-generation units and

implementation of hybrid-projects.

Regarding the renewable energy sources, data submitted by the I.E.A. are not

so conclusive since for many states (with latent potential or already exploited) the

necessary data are not available. We also note that the values used in our analysis

reflect many approximate situations and also, the costs (although updated) hide many

undeclared elements and must be adapted with additional information.

To estimate the development costs of electricity generation capacities from

wind sources, we need to consider different values for on-shore / in-land sites and off-

shore (more expensive both in terms of construction and operation). The cost of

building on-shore wind turbines rises from 1.821 USD / kW (France) to 3.716 USD /

kW (Switzerland), considering an analysis performed for units with installed capacity

of 2MW - 200MW. Any construction for off-shore turbine imposes investments

between 2.540 USD / kW and 5.554 USD / kW.

C Z Group is the main investor on indigenous wind energy domain: Fântânele-

Cogealac complex is estimated at an investment of one billion euros. 139 turbines were

connected at the grid in 2010 at Fântânele and their total capacity is 347.5 MW. By

completing an additional capacity of 252.5 MW at Cogealac, in 2011, the land of

Dobrogea will be the "capital of on-shore wind power generation" (A. Lee in

Renewable World Energy Magazine, p. 14) and will exceed twice the largest on-shore

park in Europe - Whitelee in cotland. The large companies’ interest (Iberdrola - with

projects totaling 1.5 GW - wants to build 50 wind farms between 2011 and 2017;

Petrom intends to invest 100 million euro; General Electric consider the Romanian

potential as being the third one in a european top, following the Finland and Austria) is

partially supported by Transelectrica, this Romanian energy carrier considering that the

integration of up to 4 GW capacity will not bring problems.

807$ S.Kor

2.719$ Jpn.

1.802$ Austrl.

3.485$ Cze.

635$ Kor

1.747$ Austrl.

200- 300$ S.Kor

5.863$ Swz.

1.821$ Fra.

3.716$ Swz.

2.540$

5.554$

3.067$ Cnd.

7.381$ Cze.

787 $

7.000-8.000$

1.752$ U.S.A.

12.887$ Cze.

The official reports of the ANRE evaluates the possibilities to install 14 GW of

capacity in Romania (the annual production of wind power could reach 23 TWh) of

which, at the end of 2009 were put into service only 14 MW plus another 460MW

capacity commissioned in 2010. By correlate the potential and the investment needs, we

can emphasize the investors' preference for this energy-production segment in

Romania; the large and cheap resources, the economic and environmental performance

and also the minimum logistic infrastructure are encouraging factors rather than

restrictive.

The same study insists on the learning economy or the experience economy for

wind power: a larger capacity project involves a significant decrease of the average

cost. The optimistic forecasts until 2020 expected the decrease of construction cost to

1,400 USD / kW in the case of terrestrial parks and to 2500-3000 USD / kW for off-

shore parks. The mentioned companies (CEZ, General Electric, Iberdrola Renewables)

count on this advantage and they already announced its intention to develop its market

presence in the medium time horizon.

The photovoltaic capacities for energy production ranging from 0.002 MW

(panels installed on building's roof) up to 20 MW (industrial outdoor units). The

installation unit costs decrease to 3.067 USD / kW for a photovoltaic solar farm in

Canada and reach 7.381 USD / kW for a project in the Czech Republic. These

investments are considered expensive today, but there is a high rate on the conversion

of experiences in lower costs. The average costs (4000-6000 USD / kW) can be reduced

by 2015 with a rate of 40% and with 20% by 2020; for 2030 it is expected that

technological advances will allow the installation of each kW of production capacity

through investments of 1200-1800 USD.

Table no 2 - Average unit costs of achieving energy projects listed by the applied technologies

Type of project Unit costs

($ / kWh)

Guarantee period

for exploiting Comments

Thermal power plant

2300 – coal;

2000 – oil;

1300 – natural gas

40 years

40

30

Hydro plant 4000 – 7000 30-70 years

Nuclear plant 4100 60 years 7 years average time of

project development

Geothermal plant 5000–7000 40 years

Wind farm 2000-3000 on-shore

4000 off-shore 25 years

Photoelectric plant 4000 – 6000 25 years the highest rate of techno-

logical costs's decrease

Source: processed International Energy Agency data - Coûts prévisionnels de production de

l’électricité, Paris, 2010. Costs are indicative; they are not updated and they involves only the

initial investment value, without further exploitation

Romania benefit of a good heatstroke averages (annual and daily) but the

cumulate installed capacities are insignificant (only 0.5 MW). The promulgation of new

laws on renewable energy in Parliament and the granting of 6 green certificates for each

MWh generated makes from the government support a major factor that blur the

disparity between the high potential and the big investment needs.

Globally, the largest investment offer is represented by hydroelectricity, which

projects abound, from those for micro hydro units (0.05 to 0.30 MW) to huge projects

(China’s Three Gorges plants whose installed capacity will be 18GW). The values of

construction costs oscillate from 757 USD / kW to 19.330 USD / kW.

The large hydro-power plants have already in our country a lifetime of several

decades, but they exists also new projects. However, high investment needs, the

dependence on natural rainfall, the large number of agreements and the massive

changes in environmental architecture all are obstacles for major investment initiatives.

Excepting the recent modernization projects (Lotru-Mălaia, adu etc), we notice only

one new investment which follows actually a preliminary stage in Tarnița-Lăpuștești

(1000 MW) for which estimated cost of the investment is valued at 1.5 billion €.

The biggest part of the investment in a geothermal project is spent on drilling

wells (30-50%) and the total cost of establishing go from a minimum of 1.752 USD /

kW (recorded for a 50 MW project in the U.S.) and reach 12.887 USD / kW for a ten

times lower project in the Czech Republic.

In a recent article (September 2010) A. Lee, one of the world experts in

renewable energy, believes that the Romanian geothermal potential put the country

among European leaders. In the contact regions between the Southern and Western

plains with the Carpathian mountain arc operates around 200 geothermal installations

but predominantly exploited in the fields of tourism and recreation. Only part of the

Călimăneşti town is supplied with geothermal heat. The investments for power

capacities are too expensive if we consider the average operating time, the projects

doubtful efficiency and even the natural resource quality; all of this justifies the

insignificant share of this market segment.

4. OPPORTUNITIES AND INITIATIVES IN ROMANIA

Target goals for renewable energy production were assumed at government

level in the last decade (Government decisions no 443/2003 and no 958/2005 and also

the National strategy to exploit renewable energy resources approved by government

decision no 1535/2003) and was represented by the increase of electricity consumption

produced from renewable sources, namely to reach a threshold of 33% of consumption

until 2010. Quarterly statistics for 20102, reported by the National Institute of Statistics,

reflect the accomplishment of this critical value (27% in the first quarter, 32% in the

second, 35% in the third quarter and 34% in the last one)

European Community Directives promotes the renewable energy and sets for

Romania the achievement by 2020 of a 24% share of energy from renewable sources in

gross national energy consumption (corresponding to a 38% value of renewable’s

share in electricity consumption). This commitment is perfectly feasible, even if the

target for 2010 was not fully achieved (annual average is slightly below 33%). Next

interim target is 35% by 2015.

For contemporary Romania, the major hydro power plants (Porțile de Fier,

Lotru-Ciunget, Vidraru, Bistrița and others, totaling an installed capacity of 6.438 MW)

is the only competitive renewable alternative in terms of electricity prices that can cope

with the power plants that exploit fossil fuels.

It should, however, to distinguish between estimates of renewable energy

global costs and the real costs that depend on local conditions. Thereby it must to take

2 http://www.insse.ro/cms/rw/pages/comunicate/resurseenergie.ro.do

into account many parameters when the pre calculations are carried out to estimate the

investment costs. The development projects opportunity depends, among other things,

of: the territory's configuration, the possibilities to land adjustment for energy

exploiting, the favourable natural conditions (sunny days, the flow, speed and wind

consistency's, the suitability of crops as biomass, etc.); the accessibility of general and

energetic infrastructure or the availability of technologies suite the conditions offered

by the Romanian landscape.

Perhaps the most important feature of renewable initiatives is on attracting the

investors who can assume the risk of such great projects. The enormous investment size

constitutes a significant obstacle against the entrepreneurs who want to penetrate this

market. We question the impact of government's policies and government's support: the

energy market are regulatory imperfections, the lack of transparency in the decisions

and transactions made by the market's coordinators, the financial support is preferential

and ambiguous - are just some of the problems that occur with the interference of the

political factor in this area (this however is not the subject of our study).

The general context of the evolution of these renewable energy production

capacities must be correlated with two major trends, namely: the increasing of total

electricity consumption (the media estimated an average increase of 2% per year over

the next decade) and the increased prices at the energy distributed to population and

industry, that because the market will require to thermoelectric plants to pay their own

taxes on emissions in 2013, fact that will raise the prices.

We present an example of calculations that reflect the comparative costs for the

categories of initiatives carried out in Romania. To determine the calculations, we used

the direct estimation by including two costs categories: the initial investment cost

covers all expenses up to the inauguration of power plant and the operating and

maintenance costs, calculated by using the update method:

whith: CN = The net cost of investment;

C0 – Initial cost (the investment)

CE – annual operating cost

1+r – update coefficient of operating costs, r = interest rate

i=1,n – number of exploitation years

The calculations are illustrative and are not binding their consistency with the

reality. We were not able to make estimates for biomass, biogas and geothermal sources

that because of the lack of major projects and data regarding the initiatives to build such

power plants.

The most important hydroelectric project is actually in the pre-start stage, being

promoted by a 7 companies group; also its construction will start this year near Cluj-

Napoca. The financial burden is huge and will outcome in a large power system which

will reach 1,000 MW of installed capacity, whose operation will be guaranteed at least

70 years. For SHP situation we used the example of CEZ company portfolio, consisting

of four hydro power plants whose individual power is less than 10 MW but

cumulatively reach 18 MW and will operate at least 30 years.

Table no 3 - Example of calculation regarding the Romanian investments in energy projects (financial costs exclusively related with investment and operating)

Initial cost

-C0- (cap.)

Exploitation (% of C0)

Net cost (Transelectrica

distribution charge will

be added)

Installed unit

cost € kW

Large hydro-power

– Tarnița-Mărișel

€ 1,5 billion

(1.000MW) 0,2 € 1.505,8 billion 1.506

Small hydro-power

CEZ – Văliug ystem

€ 30 million

(18MW) 1 € 34,61 million 1.923

Photovoltaic *

- Politehnică Univ.

€ 250.000

(30kW) 0,2 € 256.200 8.500

Wind power plants –

Dobrogea farms, CEZ

€ 1,1 billion

(600MW) 0,5 € 1.177,5 billion 1.962

Notes: The photovoltaic project, although the largest in Romania, is experimental and

unimportant in production (40 MWh/year). The calculation does not include extraordinary or

social, environmental costs etc.

Data sources: Press statements of some entrepreneurs involved in these projects

The exploit of solar potential is not important in Romania and the annual

production is insignificant (0.5 MW). Even if the resource is sufficient, our example

indicates that the investment could be profitable only in the long term. Basically, only

two projects were developed, one in Târgoviște and the largest at the Polytechnic

University of Bucharest. The last project has rather an experimental value and proves

the limited efficiency of this energy production sector (at least in present). What we

consider obvious is the reducing tendency for the manufacturing costs and prices at

photovoltaic panels; the actual international market is well served by producers. For the

coming years, we expect the halving of the technologies costs and this will refocus the

attention of investors toward clean energy production. The producer's support system

can contribute to accelerate the recovery of large investments because the law

applicable from 2011 will provide six green certificates for each delivered megawatt.

5. ADVERSE IMPLICATIONS FOR INVESTMENT STRATEGY OPTIONS

To reflect the funding's weaknesses and to distinguish the investment strategy

implications, we analyzed the strategy implemented by the leading producer of biomass

energy in Romania.

The biomass has 65% of the exploitation potential of Romania’s renewable

energy. The energy potential of biomass is estimated at about 7.6 million tons / year or

318.000 TJ / year and represents about 19% in total consumption of primary resources

in Romania. We can consider the biomass energy's as a niche business with high profit

opportunities but that keeps investors away because of high infrastructure expenses. For

this reason, the industry investments cumulate, so far, only 60 euro million, being made

by the largest market operator, Gerfor SRL.

Gerfor is a company from ebeş controlled by the Holzindustrie chweighofer

group, the local wood industry leader. Since 2003, this Austrian group has invested in

Romania about 250 million euros in two wood processing factories at ebeş and

Rădăuţi. The extremely profitable wood field allowed the ustrians to achieve good

financial results, those who have offered the invest opportunity in this risky field of

power generation.

The first biomass power plant starts his activity at May 7, 2009 inside of the

Holzindustrie chweighofer timber factory from Rădăuți. The power plant works

exclusively with biomass (bark, sawdust, wood chips or wood by-products resulting

from the daily production of timber or forestry activities): much of this raw materials

are production's residues of Group's companies. The investment costs were quoted at

about 20 million € of which small part was subsidized by the Authority of Environment

Fund (AFM). The total capacity of the cogeneration plant is 22 MW (17 MW thermal

and 5 MW electric powers). Thermal energy is used exclusively for the operation of

wood drying plants.

Holzindustrie Schweighofer continued its investment in biomass energy, and

finalised two other cogeneration plants in ebeș, lba County, in 2010. The capacities

of the two plants are 8.6 MW thermal / 2.4 MW electric powers, respectively 24 MW

thermal / 8.5 MW electric powers3. The investments in these two units reached almost

40 million euro and was supported by own funds. Thermal energy is used for drying

wood products and the electric power is delivered to energy system to obtain green

certificates.

For such investment, nearly 60 million, the company reported large enough

losses. “It was a huge mistake to make these investments. […] I not suggest anyone to

invest in biomass electricity in Romania”, says the Schweighofer Holzindustrie Group

owner4. We believe that the owner's reaction is justified, given the green certificate

received for each MWh after the energy supply to the Power System. With the

220 2008 Law’s application is likely that the company could report profits, thanks to

the implementing procedures of this law: the owner will get three green certificates for

each MWh. The gap of value is considerable (the market pays each MWh with the unit

price of € 55, but with the law's enforcement, the producers can get € 165).

6. CONCLUSIONS

The above example demonstrates the negative impact of the delays in applying

the law to boost renewable energy producers. These situations affect the investment

strategies and justify why the mentioned three operating biomass plants are the largest

operating in Romania, although their contribution to total energy production is

insignificant (equivalent, for example, to a rounding error in Hidroelectrica total

production of electricity).

We can notice the same deficiencies in the field of solar energy production; the

few initiatives undertaken so far are rewarded with a single green certificate, although

the new legislation promises six certified for each MWh delivered.

We found that after the beginning and the expansion of economic and financial

crisis of 2008, many organizations with interests in energy production applied prudent

investment strategies. The best example is the national company, Electrica, who started

an attractive business but had to abandon it because of the state’s budget difficulties and

the need to reconsider the available funds allocation. The state society already

established a joint venture called Electrica Bio-Heat, with the Warmebetriebe

Austrians, to cooperate for a biomass power plant with a 200 MW capacity. The

3 http://www.schweighofer.at/ro/unitati-de-productie.html

4 in the article published on September 16, 2010: “ chweighofer spune ca investitiile realizate în

România în energie verde sunt o mare greseala”, Obiectiv de Suceava and accessed on July 29,

2011 at http://www.obiectivdesuceava.ro/v2/economic/schweighofer-spune-ca-investitiile-/

foundation documents were signed in 2008, but the activities have evolved by the end

of 2009 and the Electrica Bio-Heat was dissolved in 2010. The equity of Electrica

(almost € 100 million) was forwarded to the state budget5.

Obviously we cannot discern all the causes that keep the investors away from

the opportunities and local renewable projects, but there are some particular

considerations regarding the market imperfections that reduce the prospects for

competitive strategies (strategies that investors wish to apply it).

During two years of monitoring the specialised media comments and the energy

expert's opinions6, we noted several obstacles for achieving these much-needed

investments in the producing energy segments of renewable sources. A summary of

these restrictive factors is presented in Table No 4.

Table no 4 – Causes that have removed the investors from the renewable energy industry

Current

number Disadvantages

1. Truly profitable projects requires the building of huge capacities

(with prohibitive investments)

2. Uncertainties on the power system capacity (total capacity of

approved projects exceed the grid takeover capability and increase

the risk)

3. Delays in the 220 law enforcement regarding the investors support

through mandatory quotas and green certificates (the producers

have received until 2011 a single one certificate / MWh - the new

law would bring them 3 certificates for the power generated by the

biomass, the fermentation gases and by the new SHP and 6

certified by the solar farms)

4. The on sale electricity prices have large oscillations, being often

distorted

5. The Romania’s credit rating granted by the rating agencies has

withdraw the financers (the rating was improved at the beginning

of 2011)

6. The impact of financial crisis on general credit conditions

7. Importance of the primary provider status (received from the

ANRE) whose production is dispatched with priority

Among the presented drawbacks, is necessary to make clarifications for some

of them. The investment rating seriously determines the allocation and terms of loan

contracts. The credits are obtained by the prove of profitability, stability and

predictability, and the Romania's rating does not recommend the investments until

5 Electrica sources cited in the article http://www.jurnalul.ro/bani-afaceri/economia/gazul-si-

curentul-salveaza-bugetul-print-551890.html accessed on July 19, 2011. 6 It can be said that in Romania there are several energy business gurus, known in the industry,

including: Jean Constantinescu – the project coordinator for RENEL's restructuring , and also

establishing coordinator of ANRE and Transelectrica, former President of ANRE, current president

of the Romanian National Researches Institute for the Energy Planning and Resources Using;

Alexandru Săndulescu - general director of Energetic Policies Department in the Economy Ministry,

Jean Valvis - President of the Energy Working Group of the Foreign Investors Council etc.

2008, has evolved to stability in 2010 and get the favourable investment category only

in 2011. The lack of transparency in the energy supply market prices (from producers to

distributors) also increases the risks and determines the wary of investors regarding the

profit size and also the payback period.

Following the general market investigation, we concluded that the local (and

European) political impact is huge and push the green energy production to a dependent

growth and not a self-sustained growth.

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