In 2030, Romania will have around 11-12 GW of installed capacity in wind and solar, in approximately equal proportions, also estimating a doubling of capacities in biomass and biogas, to 0.5 GW, while units 3 and 4 from Cernavodă are to double nuclear energy production capacity, says Zsuzsa Bereschi, senior project manager, Horvath & Partners. Romania has enormous potential and numerous projects under development, but new investments need the removal of barriers and the lack of predictability as quickly as possible, claims Zsuzsa Bereschi, in an exclusive interview for Energynomics.
What are Romania’s new targets for renewables for 2030? What will be the optimal mix of the future?
There are national targets for renewables, which are now being reviewed for the new version of the PNIESC, which corresponds to the legislative package Fit for 55, considering the fact that Romania approved in 2021 a PNIESC not adapted to these new European objectives. If in the PNIESC of 2021 Romania had defined additional renewable energy production capacities of almost 7 GW, mainly solar and wind, to keep up with the new targets in the Fit for 55 package, we estimate that the revised PNIESC will have capacity objectives of at least 10 GW of installed renewable energy capacity, just to reduce the carbon footprint through direct electrification.
The national targets for renewables are derived from the very ambitious targets defined by various European Union institutions, for example by Directive (EU) 2018/2001 on the promotion of energy from renewable sources (RED II) which is under review. We will have a RED III and it is advisable to shape national expectations and targets according to the new provisions. But more than that, the entire Fit for 55 legislative package and the REPowerEU program will increase the need for renewable energy, not only through direct electrification, in industry, transport, etc. but also by replacing fossil fuels with alternative solutions, for example, synthetic fuels, which increase the need for clean electricity in the national system.
Thus, on the horizon of 2030, I think we will have approx. 11-12 GW of installed capacity in wind and solar, in approximately equal proportions, also estimating a doubling of capacities in biomass and biogas, towards 0.5 GW. Offshore wind capacities I expect to come into operation after 2030, given the complexity of the projects and the costs of the technology, they will have to be national strategic projects. But I expect that Cernavodă plants 3 and 4 will double the nuclear energy production capacity. I believe that our national energy mix is a great strategic advantage, being balanced across technologies; we will still have about a quarter of the capacity on hydro, but coal and lignite will be replaced by gas and renewables, nuclear power respectively. The good news is that through gas and hydro plants we will be able to balance the production of renewable energy from intermittent sources, namely solar and wind.
What will the Renewables Directive bring new to industry and transport?
The revised RED II, or as we already call it RED III, imposes very ambitious targets, namely at a high level it starts with energy consumption from renewable sources of at least 32% by the year 2030 and a share of fuels from renewable sources of non-biological origin (RFNBO – Renewable Fuels of Non-Biological Origin) in the energy consumed in the transport sector of at least 2.6% in the proposal of the European Commission, or 5.7% in the version proposed by the European Parliament.
This means that in industry fossil fuels must be replaced by renewable sources, and it depends on the nature of each industry and the available technologies how this can be achieved. Where it is possible to electrify, sources of renewable electricity will be sought, where electrification is a more difficult process, the aim is for example to partially replace methane gas with hydrogen, respectively synthetic or biogenic gases. Specifically, the chemical and petrochemical industry, the chemical fertilizer industry will have to replace hydrogen from fossil sources with renewable hydrogen, produced by electrolysis of water, with the consumption of renewable energy. The steel industry must undergo an equally profound transformation to replace methane gas with hydrogen in production processes. In general, industrial processes at high temperatures will need to reduce their carbon footprint, and this can be achieved by mixing hydrogen into methane gas.
In the transport sector, the transformations are equally complex. On the one hand, we will witness the electrification of some means of transport, and for others, where this is not an efficient solution, we will switch to the use of hydrogen propulsion engines (Hydrogen mobility). Hydrogen-based technologies will be adopted at first mainly in heavy-duty transport, in rail transport where electrification is not feasible and in common public transport. In the long term, however, hydrogen will be a basic component for synthetic fuels, but it will also be a raw material for the “green” chemical industry.
Refineries will choose according to their individual strategy the mix of technologies needed to achieve clean, low-emission fuel targets, and there are already significant biofuel production projects, but in my view, the quantities of biofuels will not be able to cover current consumption, respectively expected consumption in the future, that is why there is a need to use fuels of non-biological origin, but from renewable sources.
What should we do to develop hydrogen projects in Romania?
First of all, Romania must define its strategic priorities in the European and international context, and establish its intended role in the hydrogen economy. We are working with the Ministry of Energy on a national hydrogen strategy, and the first bill to integrate renewable and low-carbon hydrogen into the industry and transport sectors has been tabled in Parliament. But it is very important, and the representatives of the ministry expressed this objective, for the strategy to be very well anchored in the Romanian economic reality, to find an optimal balance between the ambitions to reduce the carbon footprint, the costs that are associated with these transformation processes and efficient use of the asset base in our economy. Since the population will bear both the harmful effect of pollution and the costs of the transition to a clean economy, we must pursue the maximum utilization of national resources, natural gas, refineries, fertilizer factories, steel industry, chemical industry, etc. with minimal long-term costs.
Hydrogen projects will develop in Romania, I have no doubt, but we have to think about what kind of strategic advantages we have, compared to other countries, for example the potential for renewable energy production at relatively low costs at the European level, access to sea and river transport, industrial platforms, etc. and how we can maximize them. We don’t want to become just a producer of cheap electricity to be exported for electrolysis and hydrogen production, we don’t just want to produce clean hydrogen, we want to create added value with these energy resources, for example low-emission chemicals, green steel, green building materials, etc.
Along with the strategy, there will also be an action plan for its implementation, and the institutions responsible for coordinating the implementation of the actions must ensure that there is an appropriate regulatory framework, sources of funding and a monitoring plan. It is also very important for there to be a constructive dialogue between the public authorities responsible for implementation and the private sector, because ultimately it depends on the involvement of the latter, so that the positive effects of a strategy are felt in the economy.
What are the main barriers to the development of green projects, including large ones, but also those of prosumers in Romania? What can be done?
The first, and most pressing, problem reported by a number of investors with good reputations and portfolios of large, established and successful projects would be the lack of long-term price and regulatory predictability that would allow them to make credible long-term business plans. As credit becomes more expensive, financing conditions become increasingly difficult because there is a recession, maintained, even exacerbated by the energy crisis, if our country cannot show stable conditions, with relatively low risks for investments, it means that these projects will be oriented towards other countries, which over time will lead to the worsening and deepening of the energy crisis. I do not think it is beneficial in the long term for the economic environment to rely only on investors who accept a higher degree of risk because ultimately the costs are borne by the population.
The second problem, which is encountered equally frequently by small and large investors in renewable projects, i.e. prosumers, refers to the fact that the late launch of green investment programs compared to other countries means delays in the equipment supply chain and materials. With the launch of the European Green Deal, as well as similar commitments to reduce greenhouse gas emissions internationally, countries that made their investment strategies quickly managed to secure their supply chain and design and construction specialists. Later entrants into this investment phase are already finding bottlenecks in suppliers of, for example, solar panel and wind turbine components, finding specialist designers and builders busy. Of course, even the first countries that made their national strategies have to review and adapt them to current conditions, they have the advantage of the first mover. From what we see, this is also happening in Romania: until investors wait for the launch of funding programs and calls, energy prices, as well as demand for equipment and materials.
Last but not least, I think that there must be some concerted measures, which allow the networks to absorb the energy produced variably (wind and solar), the prosumers to effectively capitalize their production by discharging into the networks and the adaptation of the energy markets to the new phenomena, such as energy communities, distributed generation, aggregation of production or consumption, energy storage, new actors like Utility in a Box, etc.
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This interview first appeared in the printed edition of Energynomics Magazine, issued in March 2023.
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