Changes in Renewable Energy Policy and Their Implications: The Case of Romanian Producers

Abstract

This paper analyzes the impact of policy changes on the Romanian renewable energy producers. Attracted by a generous subsidy scheme, foreign and domestic investors flocked to the market. Consequently, the sector witnessed remarkable progress, especially in the wind power category. Romania fast approached 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 was 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 was 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. Subsequently, some recommendations for improved policymaking are suggested, so as to re-establish the trust of investors and to promote the sustainable development of the sector.