The electricity price crisis is manifesting itself at the level of the entire European Union, underlines Mihai Drăghici, Director of Business Consulting, within EY Romania. Among the factors responsible for the price increases, Mihai Drăghici mentioned the increase in natural gas prices and the increase in the price of carbon dioxide emission certificates. In the conference “Investments – private funds, public funds, support schemes”, organized by Energynomics, he then referred to the solutions available to the energy sector and what are the financing options for them.
In the period 2015-2016, the electricity prices on the market for the day-ahead were relatively stable, with a maximum level of 200 lei/MWh. “The doubling of prices in 2017 was just the beginning of a period of price volatility in Romania that culminated in mid-2021 when prices rose significantly to 1,400-1,500 lei/MWh,” he recalled, referring to the factors that influenced the local market: low energy interconnectivity with other countries, planned shutdown for refurbishment of one of the nuclear reactors and CE Oltenia restructuring and decommissioning plan. “We now see a kind of a recovery, a decrease in these prices, and we hope that it is sustainable”, added Mihai Drăghici, emphasizing that he does not believe “that we will return to what we had before 2021”. The market seems to anticipate price reductions, given that for 2022 contracts were concluded at an average of approximately 900 lei/MWh, for 2023, at 850 lei/MWh and for 2024, at 550 lei/MWh. “Current prices seem not to be sustainable, including in terms of the cost of installing and operating a new generation fleet – LCOE – which is now between 50 and 70 euros per MWh, depending on technology and region.”
EY promotes two main approaches: power purchase agreement, which can be physical or virtual, and on-site power generation, for consumers who use a large amount of energy in a particular location. “We saw quite a few clients last year and at the beginning of this year who chose financing from their own funds. Given the prices in the energy market, they preferred not to wait for other financing from the European Union precisely in order to benefit from these prices during this period”, said Mihai Drăghici, who also referred to the option of European funds and financing through an energy service company (ESCO). “In the area of European funding, current estimates show that more than 15 billion euros are available for the energy sector in Romania in the coming period to support the transition to a low-carbon society,” said the EY representative.
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Regarding the funds available through the National Recovery and Resilience Plan (NRRP), the first calls for projects are expected in early spring, and “about 1.6 billion euros are allocated for the energy area”. Mihai Drăghici also presented a synthetic picture of the milestones that must be reached through NRRP. “We don’t have to wait for the calls to prepare the projects, because at the moment they are launched, we probably have a period of two or three months to actually submit the documentation. Therefore, the documentation should be prepared in advance; I am referring to the project concept, the feasibility study and other preliminary steps that should be prepared before the call date, as well as a series of steps that should be documented, prepared and developed after the launch of the call”, warned the consultant.
“EY helps companies in the energy sector in carrying out such an end-to-end approach, from project identification to project implementation assistance,” concluded Mihai Drăghici.
The conference “Investments – private funds, public funds, support schemes” was organized by Energynomics with the support of its partners: EY and BCR.