Structural Changes to Romania’s Grid Capacity Allocation Rules

As of Friday, 30 July 2024, a new methodology for grid capacity allocation for projects exceeding 5 MW (applicable as of 1 January 2026) was approved under ANRE Order no 53/2024 (“Order 53”). Order 53 also amends the Connection Regulation on several important matters, highly relevant for the industry.

We have analysed the immediate changes under Order 53 and their immediate impact on the energy players.

 

Main amendments

1. Issuance of ATR for generation projects with a capacity exceeding 1 MW will be subject to a grid bond of 5% of the connection tariff; the bond must be provided before issuance of the ATR.
2. Consumption projects will be subject to grid bonds only if reinforcements are required; the bond must be provided within the deadline set under the connection agreement.
3. The bond may be: (i) a letter of bank guarantee, (ii) a cash deposit or (iii) a cash payment towards the grid operator.
4. Bonds become mandatory immediately even for projects currently under approval procedure. We expect this obligation to have an immediate impact and determine the withdrawal/closure of a number of projects (especially since the more recent ATRs generally show many reinforcements).
5. The grid bond will be enforced if:

• Milestones for payment of the connection tariff are not observed
• Milestones for the utilization installation are not observed
• Milestones regarding the evolution in time of the production/consumption are not observed
• The building permit is not submitted to the grid operator as per the connection agreement
• The connection agreement is not concluded.

6. The grid bond is returned when:

• The utilization installation is put into function; or
• The connection agreement is terminated (for caused unrelated to any party’s fault).

7. If the 12-month deadline for obtaining building permits for the utilization installation cannot be met due to reasons beyond the user’s control, the user may secure a 12-month extension by providing an additional 5% bond. This will address the issues encountered by larger projects facing difficulties due to circumstances beyond their control. It will likely serve as an additional filtering mechanism, favouring financially strong investors.
8. The recalculation mechanism for grid reinforcements has been significantly revised to account for previously issued ATRs that remain valid at the time of energization. It is known that building fast brings the possibility to reduce the reinforcements as they are recalculated considering only operational projects/projects under the energization procedure at that moment (and not all projects authorized/to be authorized “on paper”). Following this recalculation, the investor’s circumstances at the time of ATR issuance must not be worsened (i.e., result in higher reinforcement requirements).

Therefore, the Order states that all prior ATRs must be taken into account at the recalculation date; however, conditional energization of projects that are allowed: if one builds faster, the recalculation will consider only operational projects/ projects under the energization procedure at the time of the application; if no reinforcements are required following the above recalculation, the project will be conditionally allowed to enter testing period.

If a subsequent project with a prior ATR files an application for testing, and the recomputation indicates that reinforcements are needed for the previously conditionally energized project, the previously energized project will bear the consequences. This may include curtailment or cessation of production until the necessary reinforcements are completed.

Compared to the previous recomputation framework, this amendment allows for slow(er) movers to “get back” in line, but also enables the “serious” investors to build their projects, generate revenues and avoid un-necessary reinforcements generated by projects that might never materialize.

While the conditional putting into function may seem to trigger uncertainty, consulting companies have begun conducting probabilistic studies to determine the number of reinforcements required by the estimated energizing date; this may be a useful tool to reduce uncertainty which otherwise might prevent investors from making their final investment decisions.

9. It is now expressly mentioned that grid operators will be subject to a 0.01% penalty per day of delay, calculated based on the value of the reinforcements works (resulted from the above-mentioned recalculation). However, the wording of Order 53 is vague on this issue, and one knows that not all reinforcements benefit of clear deadlines under the development plans of the grid operators.
10. Land rights must be secured at least until end of the year when the facility is expected to be put into function. While most of the developers (rightfully) seek to avoid the unjustified superficies tax (for the entire duration of the agreement payable at signing – i.e. when the project is far from being economically viable), we can anticipate legal strategies to avoid increasing development cost resulting from the mentioned amendment.
11. Ownership of high voltage (i.e. 110 kV or higher) will move to the grid operator; such works are qualified as reinforcements. Consequently, investors will be able to only nominate the designer/constructor, without the possibility to conclude directly the design/construction agreement. This practice had already been initiated and was evident in the conclusion of connection agreements for most large projects since the end of last year.

 

Conclusions

The introduction of grid bonds, which we have been advocating for nearly two years, is merely a natural alignment of Romania with European standards.

It is beyond doubt that the new Order will trigger many questions in practice. For example, there are numerous ATRs which expressly specify that recalculation (upon energising) does not have to consider all prior ATRs (as opposed to the conditional recomputation new mechanism above referred to). Also, there are numerous ATRs with reinforcements where the guarantee is set at 10% or 20% of the connection tariff value; will these guarantees be reconsidered (at connection agreement date) in light of the new 5% threshold?

It is clear that capacity will not be as easily accessible in Romania as before, especially starting from 1^st January 2026. One should examine the immediate impact on the existing ATRs (including whether their prices will increase) and ongoing approval procedures. As such, while the “cost” of capacity appears to be rising, it also brings greater certainty for investors willing to incur these costs.

Serious investors will benefit from these changes, and the Romanian energy sector should see overall positive effects. While Romania is fortunate to have a strong influx of investors entering the sector, we anticipate that more high-level investors — accustomed to grid bonds and capacity auctions — will now focus on Romania.