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BUCHAREST (Reuters) - Romania's government capped the amount of renewable energy that large industrial consumers must buy this year in a move to help offset their high energy costs and stave off the threat of job cuts ahead of elections later this year.
The cap is part of a wider set of measures the leftist government plans to enforce this year to help industrial consumers, who have repeatedly warned that high power and gas prices could lead to production cuts, layoffs and even plant relocations.
However, the measure also boosts uncertainty for private investors in the electricity and gas sectors, which could scare off badly needed investment. The government has already lowered its support scheme for renewable energy projects.
The support scheme gives developers green certificates for each megawatt generated and forces power suppliers and large industrial users to buy them based on a gradually increasing annual quota set by the country's energy regulator.
Green energy investors gain once by selling certificates and again when they sell their electricity.
On Wednesday, the government said it capped the annual quota at the 2013 level of 11.1 percent of gross power consumption.
The incentives, which have been in place since 2012, were once deemed too generous by the European Commission. But they have also brought droves of foreign investors to Romania, particularly to wind energy, including Czech energy company CEZ, Italy's Enel or Energias de Portugal.
The renewable support scheme is not the only factor pushing energy prices higher. The government is also in the process of deregulating its gas and power markets in stages, as agreed under an aid deal from the International Monetary Fund and the European Commission.
Romania has put off deregulation for years to protect voters in a country where the average individual income is roughly $500 a month. For millions of Romanians and some industrial consumers tariffs are capped below market prices.
Reporting by Luiza Ilie; Editing by Susan Fenton