The Evolution of the Romanian Renewable Energy Market: A Critical Assessment

Abstract

This research assesses the evolution of the renewable energy market in Romania. Attracted by a generous support scheme, foreign and domestic investors flocked to the market. Subsequently, the sector witnessed remarkable progress, especially in the wind power category. Romania closed in rapidly on the national target set by the European Union concerning the share of the country‘s energy consumption from renewable sources. However, frequent changes in the support scheme and in the regulations issued by public authorities led to chaos. The aim of the paper is to emphasize the evolution of renewable energy policy in Romania, to investigate the incentives and their effects, and to critically assess the impact of the changes on renewable energy producers. It highlights, by means of an exploratory study and several interviews with executives of renewable energy companies, the challenges and shortcomings of policymaking. The main finding is that the revision of the subsidy scheme and the changes in energy policy that followed are the major determinants for the declining financial performance of renewable energy producers. Some recommendations for improved policymaking so as to re-establish the trust of investors and to foster the sustainable development of the energy sector are suggested in the final part.