The Romanian electricity market is a competitive market and energy is traded on a wholesale or retail basis, as follows:

• the wholesale market – any market in the European Union on which wholesale energy products are traded; and
• the retail market – an organised framework where final customers purchase electricity for their own consumption purposes.

The power industry in Romania is mainly governed by Law No 123/2012 on electricity and natural gas (“the Energy Law”). The Energy Law is complemented by numerous secondary acts (including acts issued by the Romanian Energy Regulatory Authority, ANRE) specific to each segment of the power industry, such as the ANRE Order No 16/2022 on the approval of the rules for the allocation of interconnection capacities or the ANRE Order No 59/2013 on the approval of the regulation on connecting users to the public grid.

In regard to ownership rights over energy capacities, the specific legislation in the energy field is supplemented by the general legislation on public and private ownership, including the Romanian Constitution and the Civil Code. Prior to 1990, the Romanian power industry was operated through a state-owned or controlled monopoly under the supervision of the Industry Ministry, which in the following years gradually undertook a massive restructuring and was progressively unbundled. Nowadays, the players acting on the electricity market mirror a mix of state-owned and private investor-owned facilities.

The largest Romanian electricity generation facilities are owned through a majority shareholding by the Romanian state, such as Hidroelectrica SA (approximately 80% state-owned), the largest hydro-energy producer and system services provider in Romania, and Nuclearelectrica SA (approximately 82% state-owned), the owner and operator of nuclear power reactors. The generation of electricity is also ensured by state-owned generators from so-called “classical sources” (ie, coal), such as CE Hunedoara and CE Oltenia and various other privately owned companies.

The electricity transmission services are exclusively provided by the National Energy Transport Company, Transelectrica S.A., which is 59% owned by the Romanian state and is listed on the Bucharest Stock Exchange.

With respect to distribution system operators (DSOs), currently there are eight regional electricity distribution companies operating in Romania, which have been granted distribution service concession agreements in this respect. Out of the eight DSOs, following privatisation procedures, only three currently have state-held shareholding.

One of the largest electricity suppliers in Romania is Electrica Furnizare SA, a partially state-owned company, listed on the Bucharest Stock Exchange. The supply side of the market is rather granular, with numerous suppliers active on the market. All of them are involved in the supply of electricity to final customers and competition is fierce, particularly after the full liberalisation of the market starting on 1 January 2021. 

In terms of restrictions/protections that apply to the Romanian power industry, the operations of taking control over undertakings or assets through foreign investments which pose risks for the national security are subject to assessment by the Foreign Direct Investment Examination Committee. If a certain operation is considered a risk for the national security following such assessment, the Romanian government, according to the advisory opinion of the Foreign Direct Investment Examination Committee, will issue a decision prohibiting it, subject to the European Commission's competence in this area.

On 18 April 2022, Government Emergency Ordinance No 46/2022 on implementing measures of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union and for amending and supplementing the Competition Law (the “GEO No 46/2022”) entered into force. GEO No 46/2022 changes the foreign direct investments (FDIs) approval regime in Romania and regulates a new authority – ie, the Foreign Direct Investments Examination Committee – with prerogatives in this respect.

Falling under the scope of the screening procedure of FDIs are, among others, investments in the energy infrastructure, energy storage technologies or energy supply with a value higher than a EUR2 million threshold. FDIs that do not meet the above-mentioned threshold value may also be subject to the screening procedure if they would have a significant impact on or pose a significant risk to public security.

Other indirect restrictions on foreign investment that can also be relevant for the power industry can be found in the public procurement-related legal framework which establishes an equal treatment to that offered to economic operators in the European Union only for entities from the signatory countries to the WTO Agreement on Government Procurement or other international agreements which impose free access to the market in public procurement.

Generally, foreign investors benefit in Romania from the same incentives and protection measures as those offered to Romanian investors, as provided under the Energy Charter Treaty, as well as in other international treaties and instruments to which Romania is a party.

Except for some specific rules applicable to distribution assets or for the rules applicable to the sale of state-owned assets, there is no particular legislation in Romania with respect to the sale of energy assets or merger between energy operators. Consequently, the general legal framework applies – eg, the Civil Code, Competition Law, the Romanian Company Law No 31/1990, as well as the general national and EU competition rules.

Basically, with minor exceptions, any entity conducting its business activity in the power sector must pass through a licensing procedure before ANRE which, depending on the market segment, includes consideration of certain financial and technical requirements. There are no specific prohibitions for licence transfer, except for rules concerning prior and/or post-transfer procedures, as the case may be, ANRE’s notification and the submission of the required documents in this respect. TSOs may not transfer the rights and obligations provided under the licence to third parties.

On a specific note, ANRE Order No 205/2020 for the approval of the methodology for the purchase of energy distribution capacities provides that concession holders are the only category of purchasers of such capacities:

• if the connection of new users or the modification in the users’ initial characteristics resulted in the change of distribution facilities, with new expenses incumbent upon customers; or
• if the distribution network owner intends to sell the public interest network or if it becomes unable to perform the distribution service or to provide the required power surplus.

In the second scenario, as a limitation to the freedom of supply, the owner is obliged to make an offer for sale to the concession holder, at a justified value which cannot exceed the net book value of the component assets. If the sale value cannot be proven by accounting documents, the network owner may request an independent authorised expert to certify such value, also considering the technical condition of the network.

The energy sector in Romania is overseen by the Ministry of Energy, which is responsible for the implementation of the Government Programme with respect to energy-related objectives. The Ministry of Energy also represents Romania and the Romanian government in its relations with foreign authorities and with respect to strategic documents and initiates sector-specific legislative changes.

The electricity sector is regulated and supervised by ANRE, which was established as an autonomous administrative authority under Government Emergency Ordinance No 33/2007, and which has, among others, the following responsibilities:

• to ensure the efficient, competitive and rational functioning of the electricity market through the development, adoption and application of specific regulatory acts;
• to supervise the observance by all the participants to the electricity market of the regulations and obligations provided under the law and apply sanctions in case of non-compliance;
• to grant specific authorisations and licences to companies operating in the energy sector and establish the corresponding conditions by which their holders must abide;
• to develop and approve the methodologies for calculating the regulated tariffs and prices in the energy sector;
• to establish, in accordance with the law, the framework contracts for the transmission and distribution of electricity.

Over the past years, significant amendments have been brought to the Romanian power industry legislation, including the following.

Electricity Market Liberalisation

In theory, the Romanian electricity market was fully liberalised at the end of December 2017. However, pursuant to amendments to the Energy Law enacted in the period 2018–20, until 31 December 2020 the supply of electricity to household customers was carried out in line with the regulated conditions approved by ANRE, which resulted in what has been generally seen as a setback in the liberalisation process.

This led to the Romanian electricity market being (again) fully liberalised starting from 1 January 2021; electricity is now supplied on a competitive basis, including to household customers. As a result of this change, each household customer may choose an electricity supplier depending on its specific needs and on the offers made on the market by electricity suppliers.

This change was aimed at implementing EU Regulation No 2019/943 and EU Directive No 2019/944. For the sake of clarifying the novelty brought by the liberalisation of the market, ANRE issued Order No 171/2020 on the approval of the conditions for the supply of electricity by the suppliers of last resort.

Amendments Brought to the Energy Law

Additionally, on 30 July 2020, Law No 155/2020 entered into force, amending the Energy Law and other regulatory acts. Law 155/2020 was partly aimed at implementing the regulatory framework necessary for the development of an integrated EU energy market through common energy market rules and a cross-border infrastructure, pursuant to the Clean energy for all Europeans package.

Specifically, the developments brought by Law 155/2020 refer to independent aggregators, energy storage, new trading products on the electricity wholesale market, closed distribution systems, additional provisions favouring prosumers, a partially amended sanctioning regime, etc.

In addition, on 31 December 2021, Government Emergency Ordinance No 143/2021 for the amendment of Energy Law, as well as for the amendment of other regulatory acts (“GEO No 143/2021”) was published in the Official Gazette of Romania and entered into force on the same date.

GEO No 143/2021 was mainly intended to transpose into national law Directive No 2019/944 and, as such, to close the infringement procedure initiated by the European Commission (EC) against Romania in relation to the transposition of Directive No 944/2019. However, the most anticipated amendment and the main novelty brought by GEO No 143/2021 consists in exclusion of the obligation to trade electricity exclusively on centralised markets. This put an end to the ten-year ban on conclusion of directly negotiated bilateral power purchase agreements (PPAs), an amendment intensely requested by market players, which resulted in a partial success in 2020 when PPAs were allowed only for production capacities commissioned after 1 June 2020.

Following the amendments brought by GEO No 143/2021, the following types of transactions can be concluded on the wholesale electricity market:

• directly negotiated bilateral transactions;
• transactions concluded following auctions on organised markets;
• electricity import and export transactions.

In addition, long-term hedging products are now tradable on exchanges in a transparent manner, and long-term supply contracts may be negotiated on over-the-counter markets, subject to compliance with European competition law.

GEO No 143/2021 implemented a massive legislative reshuffle by amending the Energy Law in line with the EU electricity market principles: competitiveness, customer-orientation, flexibility and non-discrimination. The amendments brought to the Energy Law under GEO No 143/2021 are numerous and substantial and refer, inter alia, to: electricity supply price, new electricity market participants, "prosumers", dynamic electricity price contracts, universal service, vulnerable consumers, flexibility service, aggregation activity and contraventions.

On the other hand, although GEO No 143/2021 is already in force starting with 31 December 2021, it should be underlined that, according to the Romanian legislative procedures, GEO No 143/2021 (as any other government emergency ordinance) will still be subject to approval by the Romanian Parliament, and also the fact that there is no specific deadline within which such approval (that can be adopted with or without amendments) or rejection, as the case may be, should occur.

The Romanian Energy Strategy

On 18 November 2020, the Ministry of Economy, Energy and Business Environment published the draft Government Ordinance for the approval of the Romanian Energy Strategy 2020–30, with an outlook to 2050.

The objectives of the Energy Strategy support the achievement of the national targets for 2030 assumed by the Romanian state, namely:

• 30.7% share of renewable energy in the gross final energy consumption (proposed to be raised to 34% in the context of the more ambitious targets contemplated by the EU Commission under the REPowerEU);
• 43.9% reduction of emissions related to the ETS (emissions trading system) sectors compared with the level of 2005;
• 2% reduction of emissions related to the non-ETS sectors compared with the level of 2005; and
• 40.4% reduction of the final energy consumption compared with the PRIMES 2007 reference scenario.

The Energy Strategy includes the key development directions, namely:

• gradual transition from coal to gas;
• investments in renewable energy (wind and solar in particular); and
• nuclear energy – development of Cernavoda Nuclear Power Plant (NPP) units 3 and 4 and the refurbishment of Cernavoda NPP unit 1.

The 2021–30 National Energy and Climate Plan

On 8 October 2021, the National Energy and Climate Plan for 2021–30, issued in line with the Energy Union Strategy (COM/2015/080), which aims to build an energy union that gives EU consumers secure, sustainable, competitive and affordable energy, have been finally approved by Government Decision No 1076/2021.

National Recovery and Resilience Plan

Important changes for the Romanian power industry were also outlined by the Romanian government in the National Recovery and Resilience Plan (PNRR) approved by the European Commission on 27 September 2021. The Plan sets out six main reforms planned for the energy sector, namely:

• the reform of the power market by replacing coal in the energy mix and supporting a legal and regulatory framework stimulating private investments in renewable energy (“First Reform of the Energy component under PNRR”);
• the development of a legal and regulatory framework favourable to technologies such as hydrogen and storage solutions;
• the improvement of corporate governance of state-owned companies in the sector;
• green budgeting;
• reducing the energy intensity of the economy by the development of a sustainable mechanism for stimulating energy efficiency in industry and increasing resilience; and
• the increase of competitiveness and decarbonisation of the heating-cooling system;

Modernisation Fund

One other instrument for access to EU funding is the EU Modernisation Fund (estimated at approximately EUR13 billion), an instrument aiming at contributing to the objectives of the European Green Deal by supporting transition to a green economy.

The Modernisation Fund was established by EU Directive 2018/410, in view of supporting investments in the modernisation of energy systems and the improvement of energy efficiency, including the financing of small-scale investment projects, in line with the objectives of the EU's 2030 climate and energy framework and with the long-term objectives set out in the Paris Agreement.

On 9 May 2022, the Romanian government approved 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, in accordance with the EU Commission Implementing Regulation 2020/1001 of 9 July 2020 laying down detailed rules for the application of Directive 2003/87/EC of the European Parliament and of the Council in regards to the operation of the Modernisation Fund, supporting investments to modernise the energy systems and to improve energy efficiency of certain member states.

Long-Term Renovation Strategy

Moreover, on 27 November 2020, the Romanian government approved Decision No 1034/2020 approving the Long-Term Renovation Strategy for supporting renovation of the national park of residential and non-residential buildings, both public and private, and for its gradual conversion into a high-energy efficiency and carbon-free park by 2050, involving the implementation of renewable energy sources technologies, such as installation of heat solar panels, photovoltaic panels and heat pumps.

Additional material changes for the power industry should come from the following.

• A new support scheme based on the contracts for difference (CfD) mechanism. It was first announced at the beginning of spring 2019 and further formalised in mid-2020, being aimed at supporting new low-carbon electricity generation. The preparation of the legal framework around this mechanism will probably be finalised within the next 12 months, according to some public sources.
• An offshore wind law should be enacted according to Romania's Energy Strategy – a draft law is currently under parliamentary procedure.
• A law implementing the Renewable Energy Directive II, which should have been transposed by the member states by 30 June 2021. The transposition process is in an early stage. 

Romania has a well-established power market structure and clear assignment of responsibilities between the regulatory authorities (eg, the Ministry of Energy, ANRE, Transelectrica), also benefiting from a balanced energy mix between conventional energy sources and renewable energy sources.

In order to observe the EU Third Energy Package 2012, Romania has unbundled the generation and distribution/sale operations from transmission operations for every company acting in the Romanian power market.

The obligation to trade electricity exclusively on the centralised markets operated by OPCOM was repealed by GEO No 143/2021, which put an end to the ten-year ban on conclusion of directly negotiated bilateral power purchase agreements.

The renewable energy sector is an important part of power generation in Romania. The Romanian state has encouraged renewable development in the context of the first renewable wave back in 2011, through a support scheme based on a green certificates trading mechanism, combined with a mandatory green certificates acquisition quota that is annually set by ANRE. The support scheme is still available for projects which became operational by the end of 2016, while for new renewable projects the Romanian state is currently assessing a new support mechanism based on contracts for difference.

The transactions on the wholesale electricity market are conducted on the competitive market and cover the sale/purchase of:

• electricity;
• principal ancillary services;
• ancillary system services;
• transmission services; and
• distribution services.

The current form of the Energy Law sets forth that on the electricity market, commercial transactions are wholesale or retail and prices are set according to supply and demand, as a result of competitive mechanisms. In regard to the wholesale component, the following types of transactions can be concluded on the wholesale electricity market, in all timeframes:

• directly negotiated bilateral transactions;
• transactions concluded following auctions on organised markets;
• electricity import and export transactions.

In addition, long-term hedging products are now tradable on exchanges in a transparent manner, and long-term supply contracts may be negotiated on over-the-counter markets, subject to compliance with European competition law.

Specifically, transactions on the wholesale electricity market can be conducted, among others, on the following electricity trading platforms organised and administrated by OPCOM:

• day-ahead market;
• intra-day market;
• centralised market with double continuous negotiation for electricity bilateral contracts;
• centralised market for electricity bilateral contracts with different trading arrangements;
• centralised market for electricity from renewable energy sources supported by green certificates;
• centralised market for universal service;
• electricity market for large consumers; and
• centralised market for awarding long-term electricity contracts.

Another notable platform is the balancing mandatory market, intended to balance deviations from the programmed values of electricity production and consumption, which is organised and administrated by the TSO.

Prices on the Wholesale Electricity Market

Commercial transactions of wholesale electricity are conducted on the competitive market, as described above. As of 1 January 2021, the Romanian electricity market has been fully liberalised and the electricity prices deregulated, including for household customers.

Thus, prices on the wholesale electricity market are set according to supply and demand, as a result of competitive mechanisms.

Nonetheless, the electricity market segments related to electricity transmission and distribution services are currently regulated, representing a natural monopoly of the state under the Romanian law. Therefore, in this case, the tariffs charged by TSOs and DSOs are laid down or determined by orders of ANRE.

The allocation of cross-border capacity (auction-based) for transmission services is implemented by the TSO according to regulations enacted by ANRE and additional rules set by the TSO itself.

Both import and export transactions to and from other jurisdictions are permitted under the Romanian legislation. Aspects related to certain indirect restrictions imposed on electricity export transactions were subject to the CJUE Decision in case C-648/18 (related to a dispute between ANRE and the producer Hidroelectrica SA).

CJUE stated that a national legislative provision which requires national electricity producers to offer for sale all the electricity available to them on centralised markets (ie, the platforms managed by the only operator designated for national electricity market trading services) constitutes a measure having an equivalent effect of a quantitative restriction on exports that cannot be justified on grounds of public security connected to the security of energy supply, in so far as such legislation is not proportionate to the objective pursued.

The Romanian transmission interconnection system amounts to a total of 486.2 km in overhead power lines and is operated and administered by the TSO, which ensures the performance of import and export transactions with neighbouring power systems – Serbia, Hungary, Ukraine, Bulgaria and Moldova. The TSO is the entity responsible for the allocation of cross-border capacities and organises actions in this respect.

As a result of the coupling of electricity markets, the Romanian day-ahead market is functioning in conjunction with the spot markets in Slovakia, Hungary and the Czech Republic (the “4M Market Coupling”) and the intra-day market with 20 other European countries (participants in the European Single Intra-Day Coupling). Moreover, since 17 June 2021 the 4M Market Coupling has been integrated into the pan-European day-ahead electricity market, which aims to increase the overall efficiency of trading by promoting effective competition, increasing liquidity and enabling an improved use of production resources across Europe.

In 2021, compared to the pre-pandemic year of 2019, an increase by 44.8% in cross-border import flows has been reported. Circumstances that determine the need for import transactions usually imply various damages to the Romanian transmission network or an overall decrease in electricity production, as well as the competitive electricity prices existing in neighbouring countries, which have determined a constant increase in the import of electricity in Romania over the last years.

In terms of export transactions, 2021 also represented a year of growth for Romania, compared to 2020. Exports typically occur under conditions of higher electricity consumption in Europe, and a surplus electricity production by the Romanian capacities.

According to public information provided by ANRE, on 23 May 2022, Romania had an installed capacity in electricity production facilities of 18,307.613 MW, including renewable, which is mainly distributed as follows:

• hydro – 6,642.15 MW (36.3%);
• coal – 3,092.2 MW (16.9%);
• wind – 3,014.91 MW (16.5%);
• hydrocarbon – 2,615.91 MW (14.3%);
• nuclear – 1,413 MW (7.7%);
• solar – 1,393.14 MW (7.6%);
• biomass – 106.896 MW (<1%).

There are no specific laws stipulating a percentage limit for electricity supply that is controlled in the market. However, general laws regulating the protection of competition on the market are applicable and concentrations resulting from mergers, acquisitions and similar operations may be subject to merger control exercised by the Romanian Competition Council.

Generally, the obligation to notify the Romanian Competition Council is triggered by any economic concentration where the aggregate worldwide turnover of the undertakings concerned exceeds the equivalent in Romanian lei (RON) of EUR10 million, and there are at least two undertakings involved in the operation that each achieved on the Romanian territory a turnover exceeding the equivalent in RON of EUR4 million.

In regard to the dominance/market power, there is a relative presumption of dominance when one or more undertakings hold(s) a (cumulative) market share of 40% or above, which triggers the obligation not to abuse such a position.

In addition to the European Union legislation, the main pieces of law governing competition in Romania are the Competition Law, Unfair Competition Law No 11/1991 (“Unfair Competition Law”) and Order No 30/2022 on the implementation of the regulation for the organisation and functioning of the Romanian Competition Council.

The Romanian Competition Council, as an antitrust regulatory authority, is responsible for monitoring energy market participants’ compliance with the Competition Law and the Unfair Competition Law, as well as for ensuring an effective competition and for addressing distortions or restrictions of competition. The Romanian Competition Council may conduct investigations, request information, arrange interviews and may also adopt decisions imposing administrative fines of up to 10% of the company's turnover generated in its last fiscal year for wilful or negligent violations of certain prohibitions. However, fines may vary according to circumstances and depending on the particular violation.

In addition, Regulation (EU) No 1227/2011 on Energy Market Integrity and Transparency (REMIT) sets out the monitoring of wholesale energy trading in Europe and prohibits insider trading and market manipulation. ANRE is responsible for the national monitoring of compliance with REMIT, and it has authority with regard to specific anti-competitive behaviours. According to its oversight competences, ANRE co-operates with and informs the Romanian Competition Council when it has good reasons to suspect that certain acts that could constitute violations of competition laws are or have been committed on the wholesale energy market. 

Pursuant to the Energy Law, ANRE Order No 67/2018 on the methodology for monitoring the wholesale electricity market and ANRE Order 62/2013 regulating the investigation activity, ANRE has both investigative and enforcement powers. In other words, it may require disclosure of data, information, and documentation and may also adopt decisions imposing administrative fines for market manipulation and insider trading, ranging between 5% and 10% of the company's turnover generated in its last fiscal year preceding the application of the sanction.

While environmental protection legislation includes general references to climate change, Romania’s most recent National Strategy for Climate Change and Economic Growth based on low carbon emissions, dates from 2016 and covers the period 2016–20.

Emission levels allowed for a given installation are set in the (integrated) environmental permit issued by the relevant Environmental Protection Agency (EPA) in line with the relevant best available techniques (BAT) or with the environmental quality standard, if the latter provides for stricter conditions. Emission levels exceeding the above may be allowed only in specific cases where assessment provides that compliance with BAT values involves disproportionate high costs compared to the environmental benefit in the given situation. In any case, the maximum values set under the Romanian law implementing the Industrial Emissions Directive must be complied with. Specific provisions concern burning installations with a thermal capacity of 50 MW or more.

Failure to comply with emission levels provided in the permit represents a breach thereof, sanctioned by the imposition of fines and business suspension for up to six months, with withdrawal of the permit and interdiction to continue the activity, if not remedied within the suspension term. The sanctioning regime can be expected to change, in the context of the infringement procedure opened by the European Commission in February 2021 regarding the implementation by Romania of the Industrial Emissions Directive, in particular regarding low penalties and sanctions in case of installations functioning without the relevant permit.

The mechanism aimed at limiting emissions provided under the environmental legislation includes the following.

• Implementation of the EU emission trading scheme, including in regard to CO₂ emissions from fuel burning in installations with an aggregate nominal thermal power equal to or greater than 50 MW. Undertakings subject to the scheme that failed to return at the end of the year a number of certificates corresponding to the emissions issued must pay a penalty of EUR100 per CO₂ emission tonne.
• An emission tax due by operators of stationary sources for emissions, in an amount provided by law.

The objective of the Energy component under the PNRR is to address the main challenges of the Romanian energy sector in terms of decarbonation and air pollution. In particular, this component aims at accelerating decarbonation of the energy sector by phasing out lignite and coal-fired power plants by 2032 and facilitating the implementation of renewable and alternative energy sources such as green hydrogen. In this regard, the First Reform of the Energy component under PNRR concerns the entry into force and implementation of two pieces of legislation, namely: (i) the law on decarbonation (and related secondary legislation) approving the coal/lignite phase-out calendar and (ii) the new energy law (including the related secondary legislation), with an impact on increasing the share of renewable energy in the energy mix.

Specifically, according to the PNRR, the law on decarbonation (and related secondary legislation) establishing the calendar for the decommissioning by 2032 of the total installed coal and lignite capacity will enter into force by the second quarter of 2022 at the latest. Steps in this direction were made by the Ministry of Energy, which launched into public debate on 31 May 2022 the draft emergency ordinance on decarbonation of the energy sector, on which the interested persons could send their proposals/suggestions within ten calendar days from the publication thereof.

In order to ensure that the above target for decommissioning is achieved, an implementation calendar is envisaged under PNRR, as follows:

• retirement of 1,695 MW by the end of 2021;
• retirement of 2,355 MW by the end of 2022; and
• retirement of 3,780 MW by the fourth quarter of 2025.

In particular, the 2021–26 Decarbonation Plan for Oltenia Energy Company (CEO) aims at ensuring a sustainable transition to low-carbon electricity generation by replacing lignite-based electricity generation with electricity from natural gas and renewable sources and includes the intention to develop:

• eight projects for electricity production from renewable sources (photovoltaic parks), with an installed capacity of 735 MW, representing an investment of approximately EUR671 million, with 70% of the amount coming from the Modernisation Fund; and
• two gas-fired generation units (Turceni and Ișalnița), with an installed capacity of 1325 MW, representing an investment of approximately EUR841 million, with 50% of the amount coming from the Modernisation Fund.

In January 2022, the European Commission approved Romania's plans to grant EUR2.66 billion in restructuring aid to CEO, the measures being designed to allow the company to finance its restructuring plan and restore its long-term viability.

Romania promoted the development of renewable energy sources (wind, solar, hydro, biomass, biogas, geothermal) under a green certificates support scheme available for projects which became operational until the end of 2016, providing for:

• the granting to producers of power from renewable energy sources a number of green certificates per MW produced and fed to the grid (different depending on the energy source);
• the obligation of power suppliers and certain producers to purchase a certain number of green certificates.

The green certificates are traded on dedicated markets and failure of suppliers to comply with the purchasing obligation will result in the imposition of penalties for the number of certificates not purchased.

Romania promoted high-efficiency cogeneration capacities under a bonus-type support scheme covering the difference between generation costs and the price of energy supplied to the grid, the extension thereof until 2033 being approved on 20 December 2021 by the European Commission Decision C(2021) 9.774/20.12.2021.

In addition, in accordance with the Operational Programme for Large-Scale Infrastructure 2014-2020 (POIM), a new state aid scheme for supporting investments in high-efficiency cogeneration was approved under Government Decision No 195/2022. This support scheme, which is applicable only to newly installed or refurbished capacities that use natural gas, biomass or industrial waste gas, aims at increasing the installed capacity of high-efficiency cogeneration by approximately 50 MWe.

Contributions for these support schemes are reflected in power invoices received by customers.

The development of alternative energy sources is an important part of Romania’s energy strategies, including the development of a legal and regulatory framework, as well as specific infrastructure investments for:

• developing the introduction of alternative energy sources and fuels with a focus on hydrogen, but including LPG (liquefied petroleum gas), CNG (compressed natural gas) and LNG (liquefied natural gas);
• developing sustainable alternative fuel networks, thus starting the implementation at national level of the alternative fuels network located in the main sections of the central TEN-T network (Trans-European Transport Network), with installation of infrastructure recharge.

For instance, the PNNR envisages the development of a legislative and regulatory framework favourable to future technologies, in particular hydrogen and storage solutions, and the development of industrial chains for the production and/or recycling of batteries, photovoltaic cells and photovoltaic panels.

The construction and operation of generation facilities in Romania are governed by a rather large number of regulatory acts considering the various steps and procedures that need to be followed, including the following.

The General Civil Construction-Related Framework

The general civil constructions-related framework is comprised of three main pieces of legislation, namely: Law No 50/1991 regarding the authorisation of construction works; Law No 350/2001 regarding land planning; and Law No 10/1995 regarding quality management in construction works. Various secondary pieces of legislation regulating specific situations (eg, the category of land on which the facility is to be built, which can determine legal and technical specificities) exist as well.

Environmental-Specific Aspects

In regard to the environmental-specific aspects, the construction and operation of generation facilities must in principle abide by the provisions of: Government Emergency Ordinance No 195/2005 on environmental protection; Law No 292/2018 regarding the environmental impact assessment of certain public and private projects (the “EIA Procedure”); and Order No 1798/2007 for the approval of the environmental permits’ issuance procedure.

Specific Energy Regulatory Framework

The main relevant piece of legislation is the Energy Law, supplemented by various ANRE orders and regulations (ie, ANRE Order No 12/2015 approving the Regulation for the award of licences and authorisations in the electricity sector and ANRE Order No 80/2013 for the approval of the general conditions related to the setting-up authorisation and the general conditions related to the power production licence). The type of facility can also attract the application of specific pieces of legislation.

The Construction of Generation Facilities

For a proper understanding of the construction permitting phase of generation facilities, an analysis should be performed covering three distinct levels (which to some extent overlap).

Civil construction permitting

From a strict civil construction perspective, an envisaged generation facility must obtain the general approvals required under the Romanian law for the erection of any constructions.

This involves, as a first step, the procurement of an urban planning certificate, which will determine whether or not the construction of the envisaged facility is possible on a specific site (depending on the existing urban parameters), as well as which additional approvals and endorsements are required prior to obtaining a building permit (usually required from various authorities that may be interested in the construction as well as from the nearby utility providers and owners).

If all required prior approvals and endorsements have been obtained, the application for the building permit can be submitted. This permit allows for the commencement and development of the facility construction works, according to the conditions laid down therein.

The civil construction permitting phase also requires the information and consultation of the interested public, including through public hearings.

Environmental assessments

The construction phase of generation facilities is also, in principle, conditional upon an environmental impact assessment (EIA procedure), usually finalised with the issuance of an environmental approval. Except in certain cases, expressly provided for by law, which are automatically subject to this EIA procedure (ie, thermal power plants and other combustion plants with a thermal power of at least 300 MV, nuclear power plants), usually for other facilities in the energy industry, the need for an EIA procedure to be carried out must be established in advance by the competent authority, in an initial screening stage.

This environmental assessment will also determine the potential impact of the envisaged generation facility by reference to water bodies and protected natural areas, which may trigger the obligation to carry out other specific assessments and obtain relevant approvals for the generation facility’s construction.

The EIA procedure is usually conducted by the relevant local county environmental protection agency, with certain exceptions – for example, if the construction covers more than one county, has a cross-border impact or is developed within the perimeter of the Danube Delta Biosphere Reserve or at the limits of its perimeter, in which case other authorities have competence in the matter.

This represents a rather detailed procedure and involves the active participation of the public, to whom the applicable legislation offers the possibility to intervene at each stage of the procedure, including through public hearings.

Energy-specific permitting

In addition to the above, several energy-specific approvals must also be obtained in the construction phase of a generation facility, namely:

• a grid connection permit, issued by the relevant TSO or DSO, necessary to connect the facility to the power grid; and
• a setting-up authorisation, issued by ANRE which can be viewed as an “electricity-specific” building permit.

The setting-up authorisation must be obtained before any commencement of the construction works and is required for the establishment of new electricity generating facilities of over 1 MW power. In those cases where the setting-up authorisation is not mandatory, the applicable legislation still requires the notification of ANRE about the conducted construction works, which shall also be kept informed about the status thereof through regular reports.

The Operation of Generation Facilities

Following the construction of a generation facility, several approvals are also necessary for its operation, mainly governed by the relevant environmental and energy-specific regulations.

From an environmental standpoint

Under Romanian law, energy generation is qualified as an activity with a significant environmental impact, regardless of the source used for electricity production or the capacity of the plant. Thus, a generation facility shall require the issuance of an environmental permit, which shall be maintained for the entire operation period of the facility.

Depending on the generation facility’s potential impact on water bodies and protected natural areas, specific endorsements and authorisations shall be subsequently required.

The environmental permits’ issuance procedure also involves the participation of the public, including through public hearings.

Regarding energy-specific necessary approvals

Generation facilities can be operated only after obtaining the required power production licence, with some exceptions expressly provided for by law, for the commercial exploitation of the generation facility (ie, strictly for performing the electricity generation activity).

The power production licence is issued by ANRE, after a specific procedure is conducted before the regulatory authority.

The commercial exploitation of power generation facilities may be carried out without holding a power production licence in the case of: (i) power generation facilities that can be started without voltage from the national power grid, self-starting groups, used for internal purposes; and (ii) generation facilities with a total electricity power of less than 1 MW.

In connection with all of the approvals presented under 4.2 Regulatory Process for Obtaining All Approvals to Construct and Operate Generation Facilities, the relevant authorities impose on their holders various specific terms and obligations determined on a case-by-case basis, depending on the nature of the generation facility and the conditions under which it has been built and operates.

Typical Terms Imposed in Relation to the Construction of Generation Facilities

The building permit imposes on its holder all relevant obligations and terms that must be met in connection with the construction works, including:

• the commencement of the works during the building permit’s validity period (usually no more than 24 months from the date of issuance);
• the timeline of the construction works;
• various obligations in connection with the construction and site organisation (eg, the appropriate signalling of the site and the decommissioning of the temporary site constructions at the end of the works).

At the same time, the environmental approval contains all technical and legal conditions relevant from an environmental standpoint that must be observed during the construction phase of a generation facility, including references to the type of environmental parameters that need to be monitored and their duration, as well as the measures imposed in order to avoid, prevent or reduce and compensate for significant adverse effects on the environment generated during the construction works.

Through the setting-up authorisation, ANRE imposes, among others, a time limit for the completion of the construction (corresponding to the duration of the setting-up authorisation), which is decided by ANRE, on a case-by-case basis, depending on the particularities of the construction. This authorisation also imposes on its holder the obligation to establish and apply, throughout the works execution, measures for the protection of persons, property and the environment and to obtain all the approvals provided by law for the completion of the authorised facility.

Typical Terms Imposed in Relation to the Operation of Generation Facilities

Once the environmental permit has been issued, it will be valid only for the period for which the annual visa is granted, which imposes on its holder the obligation to annually conduct a specific procedure in order to obtain such visa. Other than aspects related to its validity, the environmental permit also imposes certain obligations on its holder – often technical in nature – which ensure the compliant operation of the generation facility from an environmental perspective, usually in the form of a compliance programme.

The power production licence is valid for a maximum of 25 years and lays down the holder’s rights and obligations, the conditions for its transfer, modification, suspension, withdrawal, the conditions under which ANRE is entitled to apply sanctions to the holder, etc.

Amendments Regarding Terms Imposed in Relation to Construction and Operation of Generation Facilities

As a general principle, once the above-mentioned approvals have been granted, their terms and conditions must be complied with accordingly.

They are usually amended if subsequent changes affect the holder’s statute or structure, if new elements become relevant or the conditions or circumstances underlying their issuance have changed (ie, any updates of the specific conditions associated therewith, such as amendments to the technical characteristics that lead to the modification of a facility’s installed power).

The modification of the approvals issued by ANRE can also be initiated by the authority itself as a result of the change in the conditions existing at the date of their award (including in the case of amendments to the applicable regulatory and legislative framework and/or legal decisions) or as a result of events substantially affecting the authorised/licensed activities or hindering the performance of the authorised/licensed activity.

Expropriation Rights

According to the Energy Law, if the land necessary for the construction and operation of the facility is the private property of a third party, the applicant for a setting-up authorisation must, as a first option, seek to purchase the land from the owner; alternatively, the law offers applicants the possibility to initiate the legal procedure of land expropriation for public utility causes. Following the expropriation procedure, the applicant must also obtain the concession of the land in question during the facility's existence.

The general expropriation procedure involves the completion of specific procedural steps, both administrative and judicial. The procedure is finalised with a decision of the Romanian courts which, if the expropriation has been ascertained, shall also establish the amount of the required compensations. The compensation must be fair and prior to the actual expropriation and, in principle, amounts to the circulation (“real”) value of the land, as established under an expert report and the value of damages caused to the owner. The amount of compensation can also be established by mutual agreement with the expropriated person(s).

Romanian law also regulates a more streamlined expropriation procedure in the case of works for the construction, development of production, transmission and distribution of electricity which are considered to be of national interest.

Limitation Rights

In addition, given that the works for the construction of generation facilities for which the setting-up authorisation is granted, and that the activities and services for which licences are granted by ANRE (including the power production licence) are considered, with small exceptions, as being of public interest, certain limitation rights arise as a consequence of these approvals, for example:

• right of use to carry out the works for the facility’s construction and to ensure its proper operation;
• right of way to instal/dismantle electrical networks or other equipment related to the facility;
• right of access to public utilities;
• right to obtain the restriction/cessation of certain activities that endanger the power capacity.

Pursuant to the applicable regulations, except for the nuclear power plants, there are no energy-specific requirements regarding decommissioning of generation facilities.

However, generation facilities are deemed to be “constructions” in the meaning of the applicable related legislation and, therefore, decommissioning of a generation facility is subject to the general civil constructions-related framework.

In addition, the general conditions attached to the licence for the commercial exploitation of power generating facilities approved under ANRE Order No 80/2013 provide a general obligation incumbent on such licence holders to gradually perform, based on economic grounds, the generation facilities’ modernisation and refurbishment or their conservation or decommissioning, as the case may be.

Concerning nuclear facilities, specific requirements for their decommissioning are stated mainly in Law No 111/1996 on the safe deployment, regulation, authorisation and control of nuclear activities.