Romania, like all other free economies, faces an energy trilemma, a situation that comes from the need to simultaneously fulfill three desired goals: energy security, decarbonization of the energy system, and competitiveness, which depends on the lowest possible energy price. “Romania has as its main duty to ensure energy security for its citizens, this being an all the more important in the current geopolitical context”, the Minister of Energy, Sebastian Burduja, told Energynomics.
Bogdan Tudorache
What did 2023 mean for Romania’s energy transition? What are the predictions for 2024?
Romania, and not only Romania, faces an energy trilemma. We have three desires that cannot always be fulfilled at the same time. On the one hand, safety, and I call this “Safe Romania”, which is we ensure our security, our energy resources, but, on the other hand, it is the “Green Romania”, so the cleanest possible energy and, thirdly, the “Competitive Romania”, so a price of energy as low as possible. We are not the only alone in facing this trilemma, every free market economy faces it, every European economy, mainly, but Romania has the main duty to ensure energy security for its citizens, this being an all the more important desire in the current geopolitical context.
Within the NRRP call – Investment 1 (I1) dedicated to energy production projects from renewable sources (wind and solar energy), 744 projects were submitted to the competitive call with a requested value of 5.6 billion euros, with an installed capacity of 4,707 MW.
The limit of the allocated budget (over contracting excluded), according to the specific Guide, is 457.7 million euros. For projects with installed capacities greater than 1 MW (wind and solar energy), European funds in the amount of 382.7 million euros were allocated. For 106 projects, according to the list, depending on the score awarded, the amount of state aid requested, over contracting excluded, is 376.6 million euros, and a total installed capacity of 1,848 MW is reached.
For projects with installed capacities between 0.2 MW (exclusive) and 1 MW (inclusive), European funds in the amount of 75 million euros were allocated. For 270 projects, the amount of state aid requested, over contracting excluded, is almost 75 million euros and a total installed capacity of 167.24 MW is reached.
So far, 69 financing contracts have been signed on I1 of the NRRP, with a total installed capacity of 597.1 MW.
The allocated budget will make it possible to sign approximately 82 more contracts with installed capacities greater than 1 MW, as well as approximately 225 contracts with installed capacities between 0.2 MW and 1 MW.
What is the current situation regarding the implementation of projects through NRRP?
The zero priority from the beginning of my mandate was to secure financing for investments in the energy sector, especially from the NRRP and the Modernization Fund. We have 18 billion euros at our disposal that we are obliged to put to work.
On Investment Measure I1, we therefore have 69 beneficiaries with signed contracts, who have started implementing projects. In order to support the beneficiaries in the implementation stage, the monitoring teams from the Minister started meetings in physical/online format during which important aspects were addressed such as the need to start the procurement procedures, the identification of any problems that could lead to non-compliance with the completion deadline of the projects.
At the same time, in order to ensure compliance with the contractual provisions, contact was maintained with the beneficiaries and information was sent regarding the documents/reports required to be sent as well as compliance with the DNSH principle, which implies the inclusion in the procurement documents of the contractors’ obligation to comply with the technical guidelines regarding the application of the principle of “do not cause significant harm”, in the sense of Article 17 of Regulation (EU) 2020/852.
On Investment Measure I.3 for the development of gas production capacities, for the cogeneration of electricity and thermal energy (CHP) in urban heating, 4 contracts were signed whose total value of the resulting gas installed capacity is 842 MW with the following beneficiaries: Constanța Municipality, Arad Municipality, Chimcomplex Borzești, Electrocentrale Craiova.
UAT Constanta and UAT Arad are in the stage of technical evaluation of the offer within the open tender procedure carried out for the purchase of the technical solution of the project. Chimcomplex Borzești is in the stage of purchasing the services for organizing procurement procedures. The specification for the technical solution of the project is in the works and it is estimated that the call for participation will be published in December 2023 in SEAP.
Electrocentrale Craiova SA has started the procurement of consulting and site management services, which has a submission deadline of December 4, 2023.
What do we need to know about the projects financed and financeable through the Modernization Fund?
The Modernization Fund, with an allocation of over 15 billion euros, is one of the biggest development opportunities that Romania has in recent history, so the Ministry of Energy manages a strategic investment for the future of Romania and for the Romania of the future.
After the completion of the two calls to support investments in new electricity production capacities produced from solar, wind and hydro renewable sources, financed by the Modernization Fund and the National Recovery and Resilience Plan, the Ministry of Energy continues the strategic approach, by including in the calendar financing of a resource with considerable potential – geothermal energy.
Contributing to the achievement of the European objective of zero carbon dioxide emissions, the investment measure will be fully financed from the Modernization Fund.
As geothermal energy is a local and environmentally friendly, economically efficient source of renewable energy, offering considerable potential to produce electricity and heat, which is then distributed into networks, all projects funded through the Modernization Fund that use geothermal water will include mandatory an extraction well and a water reinjection well.
What is the stage of development in the large investment projects which benefitted from a significant public scrutiny, such as Tarnița Lăpuștești, Iernut and Mintia?
At Tarnița-Lăpușteşti, we are in the process of purchasing the feasibility study, we want to have contracted the feasibility study by the end of the year. We conducted a market research and 13 non-binding offers were submitted to achieve the goal, from some of the most important profile companies in the world.
Here, we are talking about a pumped-storage generation capacity with an installed capacity of up to 1,000 MWh, for a pumped-storage hydro plant that solves several problems, mainly the need to balance the energy system. The cost of the feasibility study is estimated at 3.5 million euros, the study having a maximum duration of 12 months. I estimate that by the end of the year the contract will be signed, and next year at this time, based on a solid, updated study, we will have a competitive selection procedure for a private partner.
At Iernut, the works are on schedule. The stage of finalizing the investment in the new plant has entered, and it is estimated that the commissioning will be completed by the end of 2024.
About the Mintia thermal power plant, I can say that it will be the largest gas-fired power plant in Europe, with an installed capacity of 1,700 MW. Work is progressing at a good pace here as well. The construction of this power plant alone will generate 1,200 jobs. The investor from Mintia, Mass Group Holding, is in the process of obtaining all the authorizations necessary to start the investment. The contract has been signed for the purchase of the turbines and the advance has already been paid. Commissioning of the power plant is scheduled for 2026-2027.
What are the prospects and scenarios for Romanian mining in the coming years?
The future of Romanian mining refers primarily to the future of the families in Valea Jiului and Gorj who live from this activity. We have done everything possible to ensure that this transition to green energy required by the European Union does not affect the people who have been working in the mines for generations.
A few weeks ago I was in the mine at Livezeni, in Valea Jiului, and I will never forget that day, nor those who, generation after generation, extracted energy from the heart of the earth for all Romanians. I said then that it is not enough to save the more than 2,000 jobs, but that we must provide a long-term perspective for Valea Jiului.
That is why we announced a first partnership for the reinvention of the Valea Jiului Energy Complex, together with Green Gravity, an investor from Australia, a country with a successful tradition in mining. Through this agreement, the two companies will collaborate to explore the possibility of applying Green Gravity’s innovative energy storage technology in seventeen mine shafts in four mining operations.
I would like to remind you that we provided support of over 70 million lei for the Valea Jiului Energy Complex, through which we saved the jobs of over 2,000 miners.
The situation is just as complex in Valea Jiului. What are the prospects for CE Oltenia?
At the Oltenia Energy Complex (CEO), we set up a dedicated working group to identify solutions and collect all the data for the restructuring plan and the implementation calendar of the measures. We will do everything possible to support the continuity and development of the activity of the Oltenia Energy Complex. At the CEO we cannot count on a simple short-term solution, but the reinvention of this company with tradition is necessary.
Through the project to build photovoltaic parks through the Modernization Fund, CEO is modernizing and making the transition from coal to green energy. The partnerships with OMV Petrom and TINMAR involve a 50% participation by the CEO, who will benefit from new sources of income and train current employees to implement and operate these investment projects.
In October I went to Brussels where I met with four European Commissioners: Kadri Simson, European Commissioner for Energy; Wopke Hoekstra, European Commissioner for Climate Policy; Adina Vălean, European Commissioner for Transport and Didier Reynders, European Commissioner for Justice and Competition and also with Celine Gauer, NRRP coordinator at European level. During these meetings, I firmly argued that Romania cannot abandon the production of electricity based on coal, without putting something else in place. Following the debates with the European officials, we obtained an opening from the European Commission to continue discussions regarding the future of mining in the Jiului Valley and the Oltenia Energy Complex.
By the middle of next year, Transelectrica will carry out a study of the adequacy of the energy system, on the basis of which it will continue the technical discussions regarding the future of CE Oltenia.
I emphasize that it must be borne in mind that we cannot remove coal from the electricity production mix in Romania and not replace it with anything else, because the production in the strip must be replaced either by gas or nuclear energy in the medium and long term.
How do you see the problem of Bucharest’s thermal power plant solved?
For Bucharest, the solution is an integrated system. An integrated ELCEN-Termoenergetica approach is needed. Rapid investments, the attraction of European funds, the integration of renewable energies, energy storage, hydrogen, geothermal energy and, last but not least, the payment of debts are needed.
There is a need to speed up the measures to modernize this system, and this cannot be done without Mayor Nicușor Dan paying the debts that Bucharest City Hall has towards the heating system.
At the same time, some investment objectives of ELCEN are achieved through the Modernization Fund. It is about a highly efficient cogeneration unit of 617 MWe + 438 MWt, within CET Bucharest Sud and the efficiency of the activity of CET Grozăvești by implementing a combined cycle cogeneration unit of 63 Mwe.
Through the Modernization Fund, amounts were also provided to support the rehabilitation projects of the ELCEN power plants and the thermal agent distribution network.
What is the current situation of payments to suppliers? What’s next?
So far, the Ministry of Energy has paid approximately 12.75 billion lei, of which over 3.24 billion lei were paid during my mandate. On November 20, 367 settlement requests were submitted, with a total value of approximately 2.02 billion lei, of which 326 were validated by energy regulator ANRE, with a value of approximately 1.63 billion lei. The amount of the advance related to requests not validated by ANRE is in the amount of 0.156 billion lei (about 0.39 billion * 40%). The total payment value was approximately 1.79 billion lei.
For next year, we plan to make all the payments that depend on us as soon as the new budget is approved, and we will continue to work with the Ministry of Finance to pay the money owed as quickly as possible.
What is the state of development of legislation for medium-term projects related to hydrogen and offshore wind?
The strategy for hydrogen is out of the consultation period and is being sent to the Ministry of the Environment for the environmental assessment. We hope to get this approval as soon as possible. Immediately after that, the strategy will be approved by government decision. In terms of legislation, there are changes that need to be linked to the strategy and there are measures that need to be considered in an integrated way, together with the hydrogen strategy and the offshore legislation.
The law that will allow the start of offshore wind projects in Romania is on the last hundred meters in the approval route, the project will soon enter the order of the day in the Government and will then be forwarded to the Parliament for adoption. The Ministry of Energy will initiate in the first weeks of 2024 a study to determine the offshore wind perimeters, and for this we will do environmental analyses, archaeological discharge analyzes and ensure the compliance of the perimeters we establish with the maritime space development plan.
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This interview first appeared in the printed edition of Energynomics Magazine, issued in December 2023.
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