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The path on which Romania treads in terms of building green-field large energy projects is wrong, according to a study by consulting company AT Kearney and Fondul Proprietatea (FP). If, however, investment in energy production is made, it is preferred to build small units and biomass-fired generation, more flexible and more efficient. On the other hand, the document proposes taking cost-effective measures and improvement of existing facilities, as projected energy demand by 2025 will be very limited.
According to the baseline scenario, the increase between 2013 – 2025 will not exceed 0.7%, while the alternative scenario forecasts an increase of only 0.2%, especially from sectors with low energy requirements, together with the residential sector. In 2025 Romania is expected to have 18.3 GW installed capacity, of which 9.9 GW certain available capacity, and an hourly consumption of 9.8 GW, including safety margin and net exports. There will be no extraordinary performance for exports; these will range around 3.3 TWh in 2025 so that excess production will not find markets abroad.
Subsidies and inefficiencies in the energy market artificially increase the cost of electricity by 24%
Market coupling poses some challenges for Romania, since electricity prices are affected by subsidies and low market efficiency. The study reveals: “The prices are formed under marginal costs for units using lignite and gas ineffective because of various forms of subsidies and preferential access granted to inefficient capacities, allowing them market entry.” Together, subsidies and inefficiencies in the energy market artificially increase the cost of electricity by 24%.
By the year 2025, the analysts at AT Kearney believe that, due to technological competition and the learning curve of technology, renewable energy would be the most profitable choice, keeping current support scheme. However, for regional competitiveness, renewable projects would not be sufficient.
Ionel David, leading representative of RWEA (Romanian Wind Energy Association), told energynomics.ro that in the last year were installed about 300 MW in wind power, but only because of organizational inertia, since the projects were approved in time for a support scheme more attractive than the one today
Moreover, he says that a year and a half has passed since the support scheme was reduced, to which was added the impact of tax on special constructions and the partial exemption for large industrial consumers from purchase green certificates, and many of the owners/operators of wind farms are registering losses and businesses are sustained through injection of external funds.
Analyzing the hydro potential of Romania, Michael Weiss, the AT Kearney representative, told energynomics.ro that he doesn’t think pumping hydro is a good solution for storage and grid stabilization; plus, in his vision, gas will not be squeezed out from the energy mix by hydro, and it will not be removed anytime soon from producing for peak demand, despite its inefficiency when it is used in this way.