Back in 2013, Romania reduced the incentives offered to renewable energy developers, breaking off its own development as a significant green energy player. After having amassed billions of dollars worth of foreign direct investment up until 2013, its solar industries recorded no new investments between 2015 and 2019, according to fDi Markets.

But now, the solar power industry is starting to show signs of rejuvenation. Favi Stelian, CEO of Israeli renewable energy firm Nofar Energy's Romanian subsidiary*, is confident that the industry has matured into a business. The firm, which is listed on the Tel Aviv Stock Exchange, is bullish on Romania and has a solar power portfolio of more than 600 megawatts in the country. 

Q: Nofar Energy is one of the most prominent investors in Romania’s solar sector in recent years and is building one of the country’s biggest solar parks to-date. Why is Romania so attractive?

A: The answer is very simple. If you look at a map of Europe, the solar markets are generally well developed: Spain, Portugal, Italy or the UK. Romania’s is underdeveloped and so the opportunity is clearly there. Perhaps in Bulgaria too, but it is a smaller country. So this is the opportunity; to come in with the knowledge, the finance and a good price, and reap the rewards.

Q: An underdeveloped market can also be a double-edged sword with higher risks. What challenges do you face in Romania?

A: The solar legislation in Romania is incomplete. There are also limited grids, which means that the first developer gets the best plot. Our strategy is to get in there first. As for the authorisation processes, I don’t think the bureaucracy in Romania is any different than countries elsewhere. Perhaps there is more bureaucracy, but it’s all part of the game. 

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Q: Romania’s renewable energy potential garnered investor interest in the past, but roughly a decade ago a lot of that activity dried up. Are you concerned this might happen again?

A: The cause of the drying up was the incentives — it wasn’t wise. Developers’ revenue was based on government subsidies.

But this time, with auctions, we believe that we will be here for the long-term. I don’t know of any government subsidies or power purchase agreements on the market that only have 10% worth of private investment, like in the past. The parameters that were set up before are not comparable to what the market looks like today. It’s not the same market.

Now, it is a business. It doesn’t depend on the government. It is about price, demand and so on.

Q: Has Nofar’s activities been hit with other difficulties such as rising interest rates or land restrictions?

A: Rising interest rates drive up the cost, but then again it’s part of the business. We have to sell at higher prices. With the land restrictions, the legislation is incomplete. The Land Law, which was amended last year to accommodate the construction of renewable energy projects, is very clear for plots under 50 hectares, but it is not clear for land above that size. To my knowledge, this is being discussed between lawyers and government officials and should be resolved in two to three months. I don’t think that this is an obstacle that will remain for the long term. 

Q: Do you anticipate competition to intensify as bigger players, like energy multinationals, come into the market?

A: As the industry becomes more reliable, bigger companies will come into the market. If you have demand, the price goes up — and it’s clear that there is demand.

It’s a big country. For a serious developer, and there are few serious developers who are doing what they say they’re going to do, there is space for them in the market.  

This interview has been edited for clarity and brevity. *This article has been amended to reflect Mr Stelian's position at Nofar Energy.