06 August 2024

Newsletter

Starting with 2 August 2024, the highly anticipated ANRE Order approving the methodology for capacity allocation based on public tenders and amending, among others, the connection regulation entered into force. We have attempted to highlight below the essence of the main amendments.

First of all, we mention that our comments below apply to both production and storage facilities.

I. Provisions Applicable starting with August 2024

1. Financial Warranty

Currently: (i) fixed value of 5% of the value of the connection tariff (ii) to be paid before the issuance of the ATR.

Previously: (i) maximum value of 20%, (ii) was required only when reinforcement works were applicable, and (iii) was paid before concluding the connection agreement (i.e. one year after the ATR).

2. Recalculation of Reinforcement Costs

Note: (i) the recalculation is performed upon the energisation request for the trial period – provided that the reinforcement works are not already performed, (ii) this was a subject highly debated on the market as the previous provisions deviated from the “first come, first served rule”, (iii) the recalculation mechanism has been significantly amended in order to correct the above mentioned deviation.

Currently: among others, the recalculation will consider all projects with ATR issued prior to the one for which the energisation is requested. The calculation mechanism has various scenarios which are not summarised herein.

Previously: the recalculation took into consideration only other projects already finalised.

3. Deadlines for Issuance of Building Permits

Note: the deadlines are: (i) 12 months from the conclusion of the connection agreement and (ii) 18 months from the issuance of the ATR. Failure to comply, triggers the termination of the ATR or connection agreement (as the case may be).

Currently: the deadlines for obtaining the building permit for the project may been extended with maximum 12 months. The extension requires (i) written approval from the grid operator, (ii) notification of ANRE, (iii) proof that the delay is beyond the user’s control, and (iv) an additional financial warranty of 5% applied to the connection tariff.

Previously: no extension was possible.

4. Rights Over the Land

Currently: must be valid until the end of the year when the utilization installation is put into function.

Previously: no duration provisions.

II. Provisions Applicable starting with January 2026

Note: any ATR request which was not finalised with the issuance of an ATR by January 2026 shall be cancelled and the related investor shall be reimbursed for the costs related to the performance of the solution study and the issuance of the ATR. This is a rather interesting provision, and we look forward to seeing how many ATR requests are left unfinalized upon 1 January 2026. We, however, assume that the reimbursement mechanism will be an incentive for the TSO/DSO to issue ATRs until 1 January 2026.

All production or storage projects equal to or above 5MW shall be allocated grid capacities only on the basis of the specific tender proceedings organised by Transelectrica annually for a ten-year allocation period.

The methodology which will comprise the main details of the tender process must be published by Translectrica until 1 July 2025. We are looking forward for these rules which should shine light on the process.

1. Timeline

15 January: Transelectrica publishes available capacity (for which no development works are necessary) for each allocation period year and each grid area.

16 January – 28/29 February: investors submit capacity requests for the total capacity of their production/storage project for a specific year of the allocation period.

16 March – 15 June: global solution study to be performed by Transelectrica. The study will calculate the global grid development costs for the capacity requested cumulatively by all investors.

1 July: start of the capacity allocation tender proceedings.

2. Tender Process

Tenders will be organized (i) for each allocation year and (ii) each grid area, (iii) with a starting price equal to the ratio between the total value of the development costs for the said allocation year (calculated in the global solution study published by 15 June) and the total capacity requested by the investors by 28/29 February.

In order to participate in tenders, investors will have to establish a financial warranty equal to 1% of the starting price. After such establishment, investors will be able to submit their offers for capacity allocation.

The following allocation scenarios can be applicable:

the tendered capacity is less than or equal to the available capacity for which no development works are necessary (published by 15 January): all tender requests shall be accepted, and the tender will no longer be held.

the tendered capacity exceeds the available capacity for which no development works are necessary (published by 15 January), but is less than the available capacity with development works (as requested by investors by 28/29 February): tender will be held, and all offers will be accepted. Investors will pay the starting price and the difference shall be considered available capacity (with no development works) for the following allocation year.

the tendered capacity exceeds the available capacity with development works (as requested by investors by 28/29 February): the tender will be held, and only the highest offers will be accepted.

For the case in which the capacity requested by investors by 28/29 February is less than the available capacity published by 15 January, a specific scenario is included should the the tendered capacity actually exceed the capacity requested by 28/29 February: (i) the tender will be held and the starting price will be calculated on the basis of the related development work costs calculated for the following allocation year and (ii) the development costs for the following allocation year will be decreased proportionally.

Should you have any questions regarding the above, please do no hesitate to contact us.

Anca Mihăilescu
Managing Partner
Mobile: +40 791 454 988
E-mail: anca.mihailescu@mihailesculegal.ro
Uricariu Mihail
Associate
Mobile: +40 732 141 830
E-mail: mihai.uricariu@mihailesculegal.ro
06 August 2024

Newsletter

Starting with 2 August 2024, the highly anticipated ANRE Order approving the methodology for capacity allocation based on public tenders and amending, among others, the connection regulation entered into force. We have attempted to highlight below the essence of the main amendments.

First of all, we mention that our comments below apply to both production and storage facilities.

I. Provisions Applicable starting with August 2024

1. Financial Warranty

Currently : (i) fixed value of 5% of the value of the connection tariff (ii) to be paid before the issuance of the ATR.

Previously : (i) maximum value of 20%, (ii) was required only when reinforcement works were applicable, and (iii) was paid before concluding the connection agreement (i.e. one year after the ATR).

2. Recalculation of Reinforcement Costs

Note: (i) the recalculation is performed upon the energisation request for the trial period - provided that the reinforcement works are not already performed, (ii) this was a subject highly debated on the market as the previous provisions deviated from the “first come, first served rule”, (iii) the recalculation mechanism has been significantly amended in order to correct the above mentioned deviation.

Currently : among others, the recalculation will consider all projects with ATR issued prior to the one for which the energisation is requested. The calculation mechanism has various scenarios which are not summarised herein.

Previously : the recalculation took into consideration only other projects already finalised.

3. Deadlines for Issuance of Building Permits

Note: the deadlines are: (i) 12 months from the conclusion of the connection agreement and (ii) 18 months from the issuance of the ATR. Failure to comply, triggers the termination of the ATR or connection agreement (as the case may be).

Currently : the deadlines for obtaining the building permit for the project may been extended with maximum 12 months. The extension requires (i) written approval from the grid operator, (ii) notification of ANRE, (iii) proof that the delay is beyond the user’s control, and (iv) an additional financial warranty of 5% applied to the connection tariff.

Previously : no extension was possible.

4. Rights Over the Land

Currently : must be valid until the end of the year when the utilization installation is put into function.

Previously : no duration provisions.

II. Provisions Applicable starting with January 2026

Note: any ATR request which was not finalised with the issuance of an ATR by January 2026 shall be cancelled and the related investor shall be reimbursed for the costs related to the performance of the solution study and the issuance of the ATR. This is a rather interesting provision, and we look forward to seeing how many ATR requests are left unfinalized upon 1 January 2026. We, however, assume that the reimbursement mechanism will be an incentive for the TSO/DSO to issue ATRs until 1 January 2026.

All production or storage projects equal to or above 5MW shall be allocated grid capacities only on the basis of the specific tender proceedings organised by Transelectrica annually for a ten-year allocation period.

The methodology which will comprise the main details of the tender process must be published by Translectrica until 1 July 2025. We are looking forward for these rules which should shine light on the process.

1. Timeline

15 January: Transelectrica publishes available capacity (for which no development works are necessary) for each allocation period year and each grid area.

16 January – 28/29 February: investors submit capacity requests for the total capacity of their production/storage project for a specific year of the allocation period.

16 March – 15 June: global solution study to be performed by Transelectrica. The study will calculate the global grid development costs for the capacity requested cumulatively by all investors.

1 July: start of the capacity allocation tender proceedings.

2. Tender Process

Tenders will be organized (i) for each allocation year and (ii) each grid area, (iii) with a starting price equal to the ratio between the total value of the development costs for the said allocation year (calculated in the global solution study published by 15 June) and the total capacity requested by the investors by 28/29 February.

In order to participate in tenders, investors will have to establish a financial warranty equal to 1% of the starting price. After such establishment, investors will be able to submit their offers for capacity allocation.

The following allocation scenarios can be applicable:

the tendered capacity is less than or equal to the available capacity for which no development works are necessary (published by 15 January): all tender requests shall be accepted, and the tender will no longer be held.

the tendered capacity exceeds the available capacity for which no development works are necessary (published by 15 January), but is less than the available capacity with development works (as requested by investors by 28/29 February): tender will be held, and all offers will be accepted. Investors will pay the starting price and the difference shall be considered available capacity (with no development works) for the following allocation year.

the tendered capacity exceeds the available capacity with development works (as requested by investors by 28/29 February): the tender will be held, and only the highest offers will be accepted.

For the case in which the capacity requested by investors by 28/29 February is less than the available capacity published by 15 January, a specific scenario is included should the the tendered capacity actually exceed the capacity requested by 28/29 February: (i) the tender will be held and the starting price will be calculated on the basis of the related development work costs calculated for the following allocation year and (ii) the development costs for the following allocation year will be decreased proportionally.

Should you have any questions regarding the above, please do no hesitate to contact us.

Anca Mihăilescu
Managing Partner
Mobile: +40 791 454 988
E-mail: anca.mihailescu@mihailesculegal.ro
Uricariu Mihail
Associate
Mobile: +40 732 141 830
E-mail: mihai.uricariu@mihailesculegal.ro
06 August 2024

Newsletter

Starting with 2 August 2024, the highly anticipated ANRE Order approving the methodology for capacity allocation based on public tenders and amending, among others, the connection regulation entered into force. We have attempted to highlight below the essence of the main amendments.

First of all, we mention that our comments below apply to both production and storage facilities.

I. Provisions Applicable starting with August 2024

1. Financial Warranty

Currently : (i) fixed value of 5% of the value of the connection tariff (ii) to be paid before the issuance of the ATR.

Previously : (i) maximum value of 20%, (ii) was required only when reinforcement works were applicable, and (iii) was paid before concluding the connection agreement (i.e. one year after the ATR).

2. Recalculation of Reinforcement Costs

Note: (i) the recalculation is performed upon the energisation request for the trial period – provided that the reinforcement works are not already performed, (ii) this was a subject highly debated on the market as the previous provisions deviated from the “first come, first served rule”, (iii) the recalculation mechanism has been significantly amended in order to correct the above mentioned deviation.

Currently : among others, the recalculation will consider all projects with ATR issued prior to the one for which the energisation is requested. The calculation mechanism has various scenarios which are not summarised herein.

Previously : the recalculation took into consideration only other projects already finalised.

3. Deadlines for Issuance of Building Permits

Note: the deadlines are: (i) 12 months from the conclusion of the connection agreement and (ii) 18 months from the issuance of the ATR. Failure to comply, triggers the termination of the ATR or connection agreement (as the case may be).

Currently : the deadlines for obtaining the building permit for the project may been extended with maximum 12 months. The extension requires (i) written approval from the grid operator, (ii) notification of ANRE, (iii) proof that the delay is beyond the user’s control, and (iv) an additional financial warranty of 5% applied to the connection tariff.

Previously : no extension was possible.

4. Rights Over the Land

Currently : must be valid until the end of the year when the utilization installation is put into function.

Previously : no duration provisions.

II. Provisions Applicable starting with January 2026

Note: any ATR request which was not finalised with the issuance of an ATR by January 2026 shall be cancelled and the related investor shall be reimbursed for the costs related to the performance of the solution study and the issuance of the ATR. This is a rather interesting provision, and we look forward to seeing how many ATR requests are left unfinalized upon 1 January 2026. We, however, assume that the reimbursement mechanism will be an incentive for the TSO/DSO to issue ATRs until 1 January 2026.

All production or storage projects equal to or above 5MW shall be allocated grid capacities only on the basis of the specific tender proceedings organised by Transelectrica annually for a ten-year allocation period.

The methodology which will comprise the main details of the tender process must be published by Translectrica until 1 July 2025. We are looking forward for these rules which should shine light on the process.

1. Timeline

15 January: Transelectrica publishes available capacity (for which no development works are necessary) for each allocation period year and each grid area.

16 January – 28/29 February: investors submit capacity requests for the total capacity of their production/storage project for a specific year of the allocation period.

16 March – 15 June: global solution study to be performed by Transelectrica. The study will calculate the global grid development costs for the capacity requested cumulatively by all investors.

1 July: start of the capacity allocation tender proceedings.

2. Tender Process

Tenders will be organized (i) for each allocation year and (ii) each grid area, (iii) with a starting price equal to the ratio between the total value of the development costs for the said allocation year (calculated in the global solution study published by 15 June) and the total capacity requested by the investors by 28/29 February.

In order to participate in tenders, investors will have to establish a financial warranty equal to 1% of the starting price. After such establishment, investors will be able to submit their offers for capacity allocation.

The following allocation scenarios can be applicable:

the tendered capacity is less than or equal to the available capacity for which no development works are necessary (published by 15 January): all tender requests shall be accepted, and the tender will no longer be held.

the tendered capacity exceeds the available capacity for which no development works are necessary (published by 15 January), but is less than the available capacity with development works (as requested by investors by 28/29 February): tender will be held, and all offers will be accepted. Investors will pay the starting price and the difference shall be considered available capacity (with no development works) for the following allocation year.

the tendered capacity exceeds the available capacity with development works (as requested by investors by 28/29 February): the tender will be held, and only the highest offers will be accepted.

For the case in which the capacity requested by investors by 28/29 February is less than the available capacity published by 15 January, a specific scenario is included should the the tendered capacity actually exceed the capacity requested by 28/29 February: (i) the tender will be held and the starting price will be calculated on the basis of the related development work costs calculated for the following allocation year and (ii) the development costs for the following allocation year will be decreased proportionally.

Should you have any questions regarding the above, please do no hesitate to contact us.

Anca Mihăilescu
Managing Partner
Mobile: +40 791 454 988
E-mail: anca.mihailescu@mihailesculegal.ro
Uricariu Mihail
Associate
Mobile: +40 732 141 830
E-mail: mihai.uricariu@mihailesculegal.ro