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Romania has a huge, but unused potential not only when it comes to economic growth. In the area of electricity and heat cogeneration projects, Romania has several biomass production capacities, but they are not used even at their average potential.
Investments in cogeneration projects require two-three times more money than those for other type of renewable energy, climbing up to EUR 3-4.5mln per MW installed, but the advantage compared to the solar or wind projects is that cogeneration systems operate without disruption and thus produce more predictable energy quantities. An additional reason for the banks to finance such projects, which have certain incomes.
Romanian projects in the biogas segment are few and funds remain unspent, Şerban Ţigănaş, CEO TEB Energy Business, says. “An example would be the Romanian Energy Efficiency Fund, which has money from the World Bank which it does not grant because there are no projects”, Ţigănaş says.
Romanian projects in the biogas segment are few and funds remain unspent
“Moreover, large industrial companies must reconsider their strategies and invest in energy efficiency. Industries that complain (of the effects of green certificates subsidies – Ed.) do not invest in energy efficiency because «it doesn’t worth it»… as long as energy is cheap, they are not willing to invest…” he says.
But Zoltan Nagy, member of the Regulatory Committee of the National Energy Regulatory Authority (ANRE), says Romania has huge biomass and hydro energy resources, maybe even greater than the wind and photovoltaic ones.
Potential of 7.6mln toe per year
Romania has a production potential of biomass-fired energy of 7.6mln toe/year, Victor Racolţa, general manager Eneas Romania, says. Of the total, over 63% can come from agricultural waste, 15.5% from forest residues, 6.4% from wood waste and 7.7% from biogas. Urban household waste can be used at a rate of 7.2%, Racolţa says.
Unfortunately, although the installed power in biomass-fired power plants has doubled to 70MW, it only has a 2% share in total green energy.
“How do I see from my office at ANRE the biomass segment? The first thought that comes to my mind is that we’ve had for almost six years the Law no. 220 and a functional scheme since 2011. Of all the renewable resources, wind and photovoltaic energy dominated the market and deprived the other segments of attention. Romania has a huge potential in terms of biomass and hydro energy, maybe higher than wind and photovoltaic energy. We started in 2011 with this support scheme with great hope, but we see that a bubble that will burst is about to be created. 2,500MW of wind units and 1,200MW solar units were built, but almost nothing on hydro or biomass. In terms of biomass, we currently have 70MW installed in power plants, double compared to last year, but very little however. For now, there is no market for this type of power plants”, Nagy claims, quoted by Agerpres.
Farmland in Romania are very scattered and most of them remain uncultivated
According to ANRE official, costs with biomass power plants are very high, for this reason the investor having difficulties in developing the business plan in this segment.
“What is different in biomass compared to the other support schemes? The greatest difference is that for biomass there is a fuel cost that hampers the investor’s business plan. Why is this cost so decisive? The essence of the support scheme is that those producing energy from renewable resources receive a certain number of green certificates, depending on energy sold in the market. They will be bought by energy suppliers to fulfill a certain share. By this green certificates share, demand is created for these certificates. As the scheme was designed, by the end of 2013 it hasn’t developed as it should have, because Law 220 provides certain renewable energy quotas, certain percentages of the annual electricity consumption undertaken by Romania. These percentages started from 8% in 2008 and reached 20% in 2020”, Zoltan Nagy explained.
Biomass, closely related to the agricultural problems
Farmland in Romania are very scattered and most of them remain uncultivated. However, they cannot be integrated in the agricultural circuit or in other large projects, which require unitary areas. The foreign or Romanian funds and investors acquiring land try to speculate the discontinuity of properties and merge them, to resell them in profit. Maybe for this reason as well the area of uncultivated land started to decrease, from 800,000 hectares in 2010.
“The uncultivated area decreased every year, given the payment requests (for subsidies) offered by the Ministry of Agriculture”, Tatiana Preda, senior adviser with the Ministry of Agriculture, said.
Preda claims that Romania supports investments in renewable energy by allocating EUR 758mln during 2014-2020, as well as through the Rural Development Program (PNDR), which offers EUR 150mln in the same period, for agricultural exploitations used for other purposes than consumption or economic farming the respective lands.
After the investors solve the property issue, they hit all sorts of problems.
The green certificates market, blocked
A first problem that puts energy producers in a difficult situation: currently green certificates cannot be sold, the market being blocked.
“We have the spot market, it’s true that demand is very low”, Nagy admits.
A difficult situation is also created by the fact that biomass produced in Romania is exported legally and illegally, investors say.
Moreover, “40% of GC are not sold”, they say, and next year “we will see a number of bankruptcies” in the renewable sector, especially that the limit of dispatchable projects decreased from 10MW to 5 last year, and it means that the dispatching center “may stop and start you whenever it wants”, the investors say.
Austria’s Egger invested over EUR 473mln in Romania, where it has 750 employees in a chipboard factory. Egger invested in its own thermal power plant, but without facing problems.
“We faced difficulties in obtaining the connection permit and with connection contracts, which took 4-5 months. We obtained the license and certification for a project of 30MW together with Schweighofer in December 2013 and we obtained in several months of operation 35,000 green certificates, which we currently try to trade. The demand is very low however”, Iulian Baciu, director of Egger Romania, says.
Following the investment, Egger reduced its gas consumption by 28% and provided 60% of the electricity demand by capitalizing the biomass quantities available.
Cogeneration, only 2% of the total installed capacities
According to Transelectrica data, energy generation projects from renewable sources reached a total capacity of 4,728MW in late March, by 146MW more compared to the end of February. So far, cogeneration projects probably reached 100MW, from 70MW early this year. It accounts however 2% of the total renewable projects and a sub-unitary amount of the total installed capacity of Romania.
According to Eurostat, Romania ranked eight in 2012 in the top of EU Member States in terms of renewable energy share in the final gross consumption. The largest share of energy obtained from renewable sources in total consumption in 2012 was recorded in Sweden (51%), Latvia (35.8%), Finland (34.3%), Austria (32.1%), Denmark (26%), Estonia (25.2%), Portugal (24.6%) and Romania (22, 9%), the lowest rates being in Malta (1.4%), Luxembourg (3.1%), UK (4.2%) and the Netherlands (4.5%), while the EU share is 14%.
Between 2004-2012, the largest increase in the share of energy obtained from renewable sources in total consumption was recorded in Sweden (from 38.75 in 2004 to 51% in 2012), Denmark (from 14.5% to 26%), Austria (from 22.7% to 32.1%), Greece (from 7.2% to 15.1%) and Italy (from 5.7 % to 13,5%). Romania registered an advance of 16.8% in 2004, to 22.9% in 2012, while in the EU the growth was from 8.3% to 14.1%, according to Agerpres.
The renewable energy sources are considered, according to Eurostat communique, solar, thermal and photovoltaic, hydro, wind, geothermal and biomass.
40% of GC are not sold
Romania committed that 24% of electricity consumption in 2020 to come from renewable sources, but the National Energy Regulatory Authority (ANRE) has announced that this target had already been reached on 1 January 2014.
Estonia was in 2011 the first EU Member State to fulfill its objectives for 2020, followed in 2012 by Bulgaria, Estonia and Sweden.
At the end of last year, the total installed capacity in wind farms was approximately 2,500MW and in solar parks 1,150MW, according to official data.
Share of energy obtained from renewable sources
Between 2004-2012, the largest increase in the share of energy obtained from renewable sources in total consumption was recorded in Sweden (from 38.75 in 2004 to 51% in 2012), Denmark (from 14.5% to 26%), Austria (from 22.7% to 32.1%), Greece (from 7.2% to 15.1%) and Italy (from 5.7 % to 13,5%). Romania registered an advance of 16.8% in 2004, to 22.9% in 2012, while in the EU the growth was from 8.3% to 14.1%.
The renewable energy sources are considered, according to Eurostat communique, solar, thermal and photovoltaic, hydro, wind, geothermal and biomass.
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This article first appeared in printed edition of energynomics.ro Magazine, issued this June. In order to receive the next issue (September 2014) of energynomics.ro Magazine for free, we encourage you to write us at [email protected] to include you in our distribution list.
