Small farmers, who own land, would like to branch out into clean energy, too, but cannot pay for such projects on their own.
A hectare of solar panels generates about EUR230,000 revenue from green certificates alone, while a hectare of wheat generates EUR1,000. Installing solar panels on a hectare of land costs about EUR1 million, while planting wheat costs EUR500.
The profit in the solar power business, however, comes from the support scheme of the Romanian government, which rewards each megawatt of power generated with six green certificates worth EUR55 each now. Investors can also make money from selling the power on the market.
To install solar panels for a capacity of 1 megawatt, an investor needs about 2 hectares of land and some EUR2 million. The facility generates about 1,250 megawatts of power a year and the investment takes five years to recoup.
The potential profit is what made major local farmers convert old farms into solar farms. The first to do so are Culita Tarata and Stefan Poienaru, who say their solar farms will start supplying electricity next year.
Their reasons for their interest in clean energy are simple: they have enough money set aside for investments and the green power support scheme is attractive.
“We will complete our investment by mid next year. We have 12 hectares we can use, previously occupied by old farms, where we will install 8 MW of solar panels. This is a profitable investment that can be recouped, but I will not quit the farming business,” Culita Tarata said.
Tarata owns TCE 3 Brazi, which manages 55,000 hectares of arable land in the Greater Braila Island (SE Romania), the largest amount of farming land operated by a single company in the country. TCE3 Brazi ended 2011 with about EUR100 million in revenue.
Culita Tarata says each megawatt installed costs EUR1.7 million to EUR2 million, recovered from selling green certificates to electricity suppliers, which are required to supply a certain amount of clean energy to consumers.
The total investment in Tarata’s green power project is about EUR16 million. He plans to expand his solar farm once it starts turning a profit, but will not convert his farmland into green power farms, which he says, “is a stupid thing to do”.
The other major farmer investing in clean energy is Stefan Poienaru, owner of Agrofarm Holding. His company farms about 15,000 hectares of land, generating EUR20 million revenue a year. Poienaru plans to invest EUR50 million together with a foreign private equity firm and build a 20-megawatt solar farm.
This is one of the few attempts of Stefan Poienaru to expand outside his core business (grain and oilseed farming), after other agrifood industry segments turned to be a disappointment.
The plot of land on which the solar power facility will be installed used to be a swine farm, which the entrepreneur said he planned to restore at first, but later reconsidered because the meat market did not show any encouraging prospects.
The final details of the investment are to be discussed with the foreign partners. “We were thinking about [using] 40 hectares of farmland and [building] a 20 MW facility.”
The farmer admits one of the reasons for his interest in such an investment is the support scheme put in place by the Romanian government. He will not quit the farming business, though. “Agriculture remains a priority for us and is essential to us because of our training. We are preparing new investments in irrigation systems over the next few years, and in boosting productivity of the land we farm.”
Only major farmers are now investing in the solar power business, because they can afford to spend millions of euros and wait a few years to get their money back. Small farmers are tempted, too, but lack the necessary funding.
Such is the case of Petrica Azoitei, a farmer working 700 hectares of land in Doaga, north of Focsani (eastern Romania). He was in talks with green power developers but the lack of money to invest and the maze of legal paperwork put before him by lawyers prevent him from getting into the clean energy business.
Romania had 13 MW of solar farms at the end of September, according to national grid company Transelectrica. Early last week, the grid operator said 150 solar farms had their connection contracts signed, which is a major step in the permit-securing phase. These projects should have a 600-megawatt capacity and require EUR1.2 billion investments, which few local investors can afford.
(English version by Loredana Fratila-Cristescu)