This is the transcript of the message delivered by Frank Hajdinjak, CEO E.On România, during the 2016 Energy Strategy Summit, held on May 31 at Snagov Palace. For a sum-up of the main ideas, check our previous material: 27 essential ideas after Energy Strategy Summit 2016.
Thank you very much for the invitation! I am happy to be here with you.
The sustainability has got many aspects in which you can look at it. In one aspect, you can look at it as sustainability from an environmental point of view and I think this discussion in Romania is still too low in comparison with other countries. I am happy to see the new initiatives that you are adding to the [Environmental] Ministry. If you look at what is happening in Germany, the Energiewende is focusing extremely much on sustainability from an environmental point of view. But there is also its price, that is another dimension of the sustainability, and of course, the affordability of energy invoices for the final costumers. They have an important role to the right balance.
On one side we have to develop the energy system. As Mr. [Vasile] Iuga said, the whole business model is changing. All the energy companies who are present in the market – and also E.ON is very much affected – are going to be affected by this change and it is a dramatic change – things which we could not have foreseen 10 years ago. And there is another insight driven by technology, which was coming and helping not only us, but also the customers. And the third set of factors is the one which I mentioned earlier, related with the environmental policies, not only in Germany, but everywhere.
If you look at it, as Mr. president [Niculae] Havrileţ said earlier, ANRE has to keep the invoice under control, that’s right, that is really right, but there is only one role of ANRE. The second important role of ANRE is to develop the market, develop also the energy business in the way energy policies also drive the market. So, yes the consumer’s point of view is one point of view, the other point of view is the investor’s point of view, committed to this, and then of course the policy makers.
As an example, let me remind you what happened to the renewable industry and also what this means in terms of sustainable policy and sustainable investors. We started a few years ago with the most attractive renewable support scheme in Europe. This happened in a country which is, let’s say, at the lower end of the European Union in terms of capital and it was not sustainable. It was clear that this support scheme was too attractive, but then we went into the totally opposite direction – the investors in renewable energy are fighting to survive, because the system was destroyed, from the most attractive one to the least manageable one. That is not a sustainable way of supporting investors! There must be a balance in here all the time.
In terms of consumers, clearly, an affordable invoice is the topic, and trust me, not only in Romania, but also in other countries. In Germany, also, energy poverty is the topic right now, and that has to be addressed. First of all, of course, by policy instruments which will provide a viable support scheme for vulnerable customers, and I mean, real vulnerable customers. Fortunately, I am in the position that I can afford my energy bill, but many Romanians cannot afford it and this needs to be put into the right direction. I don’t need support, but other people have to get the right support in order to avoid energy poverty. That is for the policy makers [to be addressed], and ANRE is asked to develop a system that is sustainable.
If you look at the energy consumption profile, at the Romanian typical household level, you can see that there is huge potential for energy efficiency measures. I have to say that I am married with a Romanian woman and my parents in law are also Romanian. There is no day when the TV is not running for 14 hours, it doesn’t matter there is no one watching the TV. It is matter of behavior, but is also a matter of other technical measures that can be taken in order to reduce energy consumption. There is a lot of education needed, and there is also a support scheme that needs the right support mechanism in order to support energy efficiency measures, to make also the invoice, at the end of the day, affordable for consumers that means we have to foster energy saving mechanisms that can be controlled by modern technologies, by smart phone technologies, through which we can control and reduce the household consumption. That can be done with what you see here, with Casa Eco. We need to have the right incentive scheme. If you enter into a market, usually new technology is not given the right return on investments, neither for the private households, not for investors. In order to make this technology developed you have to have the right incentive to bring it to the market and then automatically the technology will develop and we can reduce the support schemes. But in order to bring it to the market, you have to push it with a support scheme because otherwise nobody will put money on the table.
One more thing mentioned earlier, about energy business, about long term investments and big investments. You also have to rethink the model here completely. On one side, yes, it’s a long term investment, investing into lines, into pipelines etc., into something which has to pay off after a period of 10 to 15 years. On the other side you also have to get rid of the paradigm of huge power plants. For example, I cannot see that any of the big energy companies will invest into any big sized power plants as we did 10 to 15 years ago. That will not happen! The market is changing. We are talking about decentralized generation, cogeneration, can be a tri-generation unit, meaning heating, cooling and electricity. We are talking about also finally energy generation on the household side. Why not have a PV installation? Germany is full of houses with PVs on the roof. Unfortunately, there is no sunlight like in Romania, so it will make a lot of sense to have this photovoltaics in Romania. We need some support scheme, tobring the newest technology in the market and to make it feasible for investors and for the households to run it. This is also another way of generating energy, there will be a whole change of the roles of the players in the market. The typical consumer will most likely also be a producer in the future. So, with your PV installation on the house you can become the producer of energy in the future and feed it into the network, especially in combination with other new technologies, like batteries which are developing rapidly and which will be probably be a really disruptive development on the market and will change the energy world.
Yet, the regulation is lagging behind in order to get into this market for the developers and Mr. President, we need you!