Adding to the solar projects, Premier is also considering the construction of a 99 MW wind farm, and the gas network is expanded by about 200 km annually, says Iuliana Pănescu, Head of Treasury at Premier Energy. “From 2023, the plan is to expand our gas supply activity in Hungary and Bulgaria as well. We are already present on the natural gas market in Hungary from 2022, testing our capabilities and we want a controlled regional expansion in neighboring countries,” she said, in an exclusive interview offered to Energynomics.
What are the main green investments and M&A transactions carried out so far in Romania and what are your plans for 2023, as well as in the medium and long term?
Right at the beginning of this year, we completed the acquisition of the Nalbant (Tulcea) wind farm, owned until the time of the transaction by Enex SRL. We have thus finalized Premier Energy’s seventh transaction, after the six acquisitions and mergers in 2022, with the total value of green investments rising to more than 50 million euros in the period 2022/2023. The project is being carried out in two phases – Phase 1 (Nalbant I), already operational, with an installed capacity of 13.75 MW (five General Electric wind turbines, with a nominal power of 2.75 MW each) and Phase 2 (Nalbant II ) which is currently in the approval stage and which will double the installed capacity of the park at the time of completion. Nalbant II will become operational in 2024, with a total capacity of 27.5 MW.
Nalbant has an above-average production yield, due to its positioning in a strong wind area, making it one of the most efficient wind farms in Romania. Cumulatively, in two to three years, the Ecoenergia that we bought in 2022, together with Nalbant I and II will have a cumulative capacity of over 60 MW.
As short-term plans, we are starting in 2023 the development of a wind greenfield at Războieni, Tulcea, a wind farm of 99 MW operational installed capacity, with 16 turbines, an investment of over 100 million euros. After completion, the park will be in the top five renewable energy production projects in Romania.
Also, the acquisitions and moves already made and in the works support the strategy of transforming our group into a regional energy platform. In Romania, we are active in the sphere of distribution and supply of natural gas and, respectively, production and supply of electricity from renewable sources. We are continuously expanding the business, both organically and inorganically, wanting to become a vertically integrated business. In the Republic of Moldova, we are the main distributor and supplier of electricity, with a market share of around 70%.
What are the main investments and developments in the natural gas segment?
Currently, Premier Energy owns a gas distribution network with national coverage, with a concentration in the areas bordering the capital, the Center, South and West of the country – a total of more than 2,500 km of gas pipelines. We continue the expansion on the main activity segment, natural gas in Romania, the growth rate being about 200 km per year. Last year we continued the horizontal consolidation of our gas operations, through the acquisition of HarGaz (August) and the merger with BERG Sistem Gaz (December), which brought to our portfolio more than 6,500 new customers and 35 concessions.
From 2023, the plan is to expand our gas supply activity to Hungary and Bulgaria as well. We are already present on the Hungarian natural gas market from 2022, testing our capabilities and we want a controlled regional expansion in neighboring countries – Bulgaria, Moldova, etc.
Premier Energy, the third player in distribution and the fifth in supply, plays an important role in ensuring the stability of the energy system in Romania.
At the same time, we are analyzing how much of the 2,500 kilometer network we operate in Romania could be calibrated in the coming years to be able to distribute gas in parallel with hydrogen, especially since, starting in 2010, the infrastructure built by Premier Energy was made of materials suitable for this process. Officials of Romgaz announced these days that in the next 90 days, they will make public an estimate of the consumption and potential of hydrogen in Romania based on the results provided by a feasibility study for hydrogen. But even though hydrogen projects are currently at an early stage, we believe that hydrogen is now the star of the green energy transition, given a major role in the EU plan. Other related aspects remain to be solved along the way, without which hydrogen projects remain only at the paper project stage, such as transportation, distribution, end-user systems, etc.
What are the main changes after the conflict in Ukraine on costs, operations and speed of implementation of green projects and also in the field of gas?
When the post-pandemic price pressures was already high, the war created an unprecedented situation for European countries and energy companies. The war in Ukraine was a shock that forced the EU to think about a new design of the European energy market in the direction of creating an energy system dependent on the sun, wind, nuclear reactors and not on classic extraction wells. In other words, geopolitics has accelerated humanity’s transition from to the so-called ‘petrostates’ to ‘electrostates’, the energy transition being necessary anyway for climate reasons.
The European Commission foresees, in the new strategy to decouple Europe from Russia’s resources (RePowerEU), investments of tens of billions of euros in alternative sources.
The EU’s energy strategy envisages achieving energy independence from Russia by 2030 – partly through the discovery of new gas resources, but also from the development of energy production from renewable resources. Nuclear power is also coming back into fashion. The paradigm has completely changed in terms of gas transport in Europe – new supply routes have been found. Virtually everyone is on board with this epic green transition effort, and the effort to build a cleaner and safer energy system will not be without operational and financial risks alike.
Starting in 2022, Premier Energy completed its first transactions in the area of renewable energy and started the vertical development of the group owned by the Czech investment fund, Emma Capital. Starting from December 2021 and throughout 2022, Premier Energy has made six M&A deals in this area, aiming to have 300-500 MW installed in operation in Romania and in the region in the next five years.
What are the main barriers to project development in Romania? What can be done? What should Romania do to allow an acceleration of investments and to ensure our energy independence from the supply from Russia?
Romania can become the largest gas producer in Europe, it can play an essential role on the continent in these geopolitically complicated times, in which all countries are looking for gas sources. In the short term, Europe managed to organize itself, to find transport and supply routes and new sources to be able to do without Russian gas. Romania can become independent of Russian gas in 2026-2027.
Significant investment is needed in transmission and distribution networks, especially in the energy sector. On the infrastructure side, by 2030, it is desired that 40,000 km of gas pipeline network can accommodate the distribution of hydrogen. 70% of the pipelines that will distribute “green” hydrogen in the future should come from the conversion of existing networks. The estimated investments for this reconversion of the networks reach 80 billion euros. Romania benefits from half a billion euros strictly for the development of these networks.
What are the main measures Romania needs to take to develop the onshore, offshore wind and other green energy sectors?
There is talk of an offshore wind potential of up to 15 GW in 2050 – it would mean a share of 40% of Romania’s total energy production, thus becoming the dominant form in the energy mix. We do not have the legislative framework yet and this will be the first measure to finalize.
The requirement at the European level is to shorten the authorization process for renewables, and the process should be a maximum of one year for onshore and two years for offshore.
If we look at how the energy mix was 20 years ago and how it has evolved, we see that now there are more and more competitive technologies – wind, solar, onshore and offshore.
For onshore, likewise, there are legislative breaks – amendments are needed to unlock projects that exceed 50 ha. Premier Energy is currently focusing on onshore wind and solar projects for the next three to five years.
How do you see, from a personal point of view, the evolution of 2023 for the business environment in Romania?
The challenges of the business environment are still largely related to the lack of stability on the regulatory side, and the approach of an important election year (2024) will bring new challenges.
When we manage to have stability on the regulatory side, financial institutions, investment funds, and foreign capital will bet more on Romania, which in terms of potential no longer needs to be convinced. In Europe, Poland and Romania are already perceived as the energy markets of the future, in the case of Romania – with the new resources discovered in the Black Sea (offshore) and with those not yet exploited (Caragele, onshore).
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This interview first appeared in the printed edition of Energynomics Magazine, issued in March 2023.
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