Over the past several months, we have focused several articles on Romania’s potential to attract significant investments in renewable energy because of the nation’s unique geographic attributes. In our November article - "Creating Renewable Energy in Romania" - and our December article - "New Incentives to Invest in Renewable Energy" – (see The Romanian Digest™ Archive at www.hr.ro), we discussed two important and rather specific aspects of the process of attracting and developing renewable energy projects in Romania. In addition to the authorizations and licenses required from the National Regulatory Authority in the Energy Field (“ANRE”), and the incentives awarded to investors, interested companies face many other issues in developing a renewable energy project in Romania. For example, they must secure the land upon which to develop a wind plant or hydro power plant, and obtain other governmental authorizations in addition to the ones issued by ANRE. This article focuses upon the major steps to be taken by a potential investor who intends to develop a wind or hydro power plant in Romania.
Securing the land
Types of agreements/rights achieved
The first thing that a potential investor must consider is how best to secure the land on which the wind or hydro power plant will be located, together with all of the equipment necessary for its functioning and for the connection to the national electricity grid. If the land is owned by private owners, the investing company may conclude agreements directly with those owners, which are usually sale-purchase agreements to acquire the ownership right over the land, or superficies agreements in which they acquire the right to use the land in order to erect a certain building on it, as for instance, the turbine, and the ownership right over such building. In case of wind plants, the investing company must obtain the right to install on certain plots of land the wind measurement equipment, and this can be an ownership right, a superficies right, or a rental right based on a rental agreement.
In case the land is part of the private domain of a local authority, then obtaining the title over the land, either through ownership or superficies, can be done following a public tender. On the other hand, if the land is part of the public domain, then a concession right can be obtained over the land through a concession agreement, and such agreement can also be concluded following a public tender.
With regard to the formal requirements for such agreements, a sale-purchase agreement for a plot of land must be concluded in authentic form before a public notary. Also, the ownership right over the land has to be registered with the local authorities for fiscal purposes. The agreement by which the superficies right over the land is established can be concluded as a private signature deed or as an authenticated deed before a public notary, the latter alternative being the one most often recommended.
The investing company must also consider the land upon which the cables for the grid connection will be placed – underground, above the ground and aerial right of way, which can be exercised based on a convention concluded with the owner of the land. Potential investors will also benefit from a lawful right of use over the neighboring plots of land for the construction, refurbishment and intervention on the plants, as provided in detail in the Electricity Law, i.e. Law No. 13/2007, but this lawful right can only be granted to holders of licenses issued by ANRE. Therefore, before the company has obtained the corresponding license from ANRE, it can exercise a right of use over neighboring lands only on the basis of certain agreements concluded with the owners of those plots of land.
Registration with the Land Book
Romanian law provides for a sole system of cadastre and land registration throughout the entire country, by Law No.7/1996, aimed at harmonizing and unifying the different systems put in place before the effective date of the law. However, despite legal provisions in force, in reality, cadastral studies have not, generally, been drafted with regard to agricultural land located extra muros, which is almost always the situation of the land where wind or hydro power pants can be developed.
Therefore, a potential developer in this field must also consider, when assessing the costs for the entire project, that it will have to have cadastre studies performed in order to be able to register its right over the plots of land in the land book pertaining to that parcel. Notwithstanding the fact that registration in the land book does not affect the validity of the rights acquired based on different types of agreements, as mentioned above, such registration is essential as against third parties. The registration will be done with the competent regional office of the National Agency for Cadastre and Land Registration.
The expropriation procedure
A company interested in investing in a renewable energy project can also make use of the expropriation procedure, according to which, after a parcel is declared of public utility, with prior and just compensation to the owner, the company will be able to obtain its concession, for the duration of existence of the energetic facility. Because this right is granted to the company seeking an incorporation authorization from ANRE, at the moment of submitting any request for the commencement of any procedure, the company doing so must, at a minimum, have previously submitted a request for an incorporation authorization with ANRE.
Determining whether or not the erection of wind plants is of a national or a local interest is very important, since the authorities dealing with expropriation procedures are different, as are the ones determining the public utility of the objective. The expropriation has to be performed according to the provisions of Law No.33/1994 and, once such procedure has been accomplished, the land enters into the ownership of the state and can be used only after the conclusion of a concession agreement in this respect.
Zoning Regulations, Authorizations and Approvals
Once title for the land is obtained, an investor must also obtain certain zoning regulation approvals, in order to be able to develop the project. According to Law No.350/2001 on rural and urban planning, an urbanism certificate must be obtained for the envisaged area, which must show whether the existing zoning plan for that area permits the construction of the wind plant or hydro power plant. If no zoning plan exists, then one should be drafted, and if the zoning plan does not allow the construction of a wind plant or hydro power plant, which is usually the case, then the zoning plan must be amended in order to allow for such plants, together with all their grid connection installations and equipment and any related infrastructure, such as cable networks and access roads. A local zoning plan need to be drafted on behalf of the investor by urbanism experts and needs to be approved by way of a decision by the local authorities.
However, in order to be able to proceed with the construction, the investor must obtain a building authorization according to the provisions of Law No.50/1991 and, in that respect, a plan for the construction will have to be prepared by technical specialty groups, and signed by technical and highly trained personnel in the areas of architecture, construction and building equipment. The building authorization is actually the document by which the construction of the applicant’s project is approved and gives the applicant the right to start actual construction.
Special authorizations and approvals from environmental authorities
According to the legislation on environmental protection, the competent territorial environmental agency must issue an environmental permit and an environmental authorization, which grants their holder the right to construct the project and the right to the total or partial exploitation of an installation under conditions which ensure that the installation corresponds to the requirements for prevention and integrated control of pollution. The environmental authorization is obtained after the investment is made, but before commencing its operation. In order to obtain these approvals and authorizations, the investor must commission an environmental report for the land in question, which must be prepared by a certified environmental company.
Authorizations and licenses issued by ANRE
For the conditions applicable to the incorporation authorization and licenses to be issued by ANRE, as well as for the corresponding procedure, please visit The Romanian Digest™ Archive, i.e., the November Digest article – “Creating Renewable Energy in Romania” – on our web-site at www.hr.ro.
Special authorizations and approvals concerning the legal water regime (Law No.107/1996)
Companies interested in establishing hydro power plants must also observe the legal water regime. An interested company must obtain a location approval which establishes if the proposed project has the required degree of safety and observes the technical norms and standards for the location and the environmental protection necessary for the site conditions. Moreover, it must obtain a water management approval which is the document which permits a new project or equipment/installation related to waters, including the building of a new hydro-power plant, to commence construction. The water management authorization is the document on the basis of which any project or equipment/installation related to water, including new hydro-power plants, is set up and operated.
Connection to the public interest network, et al.
The connection to the grid is another important step that must be considered, and this is done by way of two approvals: the location approval and the grid connection technical approval. Furthermore, for the sale of electricity, the producer must conclude a sale purchase agreement for electricity with the company dealing with the distribution and supply of electricity.
In order to obtain green certificates and transact them on the green certificates market, the renewable energy producer must undertake certain steps, detailed in The Romanian Digest™ Archive Article from December 2008 – “New Incentives to Invest in Renewable Energy” – available on our web-site at www.hr.ro.
Other issues related to hydro power plants
For the purposes of using water resources in order to produce electricity, it is necessary that the producer conclude with the National Administration “Romanian Waters” an agreement for the use of water resources. This actually is a framework agreement approved by an Order of the Minister of Environment no. 798/31.08.2005, and the fees for the use of the water are established by the same order. Each hydro power plant needs to be registered with the Office of the Trade Register as a secondary headquarters of the investor. For registration as a secondary headquarters, the investor must obtain approvals from the fire department, labor authorities and public health authorities.
A potentially successful business such as the development of a wind or hydro power plant in Romania must take into consideration the steps as well as the duration of time that it will take to conclude agreements with owners of land located in rural areas where cadastre studies still need to be performed, and with the need to obtain a significant number of authorizations beyond merely the ones specifically related to energy issued from ANRE. Considering this, a company interested in investing in renewable energy in Romania must objectively bear in mind the cost and the time that will be required in order to develop their business efficiently and wisely.
The article was published based upon approval of:
Rubin Meyer Doru & Trandafir
SOCIETATE CIVILA DE AVOCATI / LAWYERS PROFESSIONAL CORPORATION
IN ASOCIERE CU / AFFILIATED WITH HERZFELD & RUBIN, P.C.