The year 2022 was the year of investments in energy in Romania, 2023 also continues to be a year in which massive investments are made, and the effects of these investments will be seen soon, says Virgil Popescu, the Minister of Energy, in an exclusive interview provided by Energynomics. At the same time, the Ministry of Energy concluded strategic, solid, long-term partnerships to ensure the energy security of the country, says Virgil Popescu.
What are the main local and regional energy policy initiatives, partnerships, actions and decisions that Romania has taken to ensure energy independence and security of supply up to now and for the period 2023-2030?
I want to say something important about the period 2022-2023. There have not been years since Romania organized the energy field with its own ministry, in which energy was used as a vector of national security through the partnerships concluded in the civil nuclear field, more than in this period. Also, there have not been years since Romania has organized the energy field with its own ministry, in which attention has been focused both on system problems (energy mix-decarbonization-new technologies), but also on the problems that impact the final price paid by household or non-household consumers, more than in these years.
First of all, about energy security and the elimination of dependence on Russian gas. We have entered into strategic, solid, long-term partnerships to ensure our natural gas needs both for the cold season we have come out of and for the cold season to come.
It’s a whole process that started a long time ago, which initially involved discussions that I had with officials in Azerbaijan. Then came the visit from Sofia, in the fall of 2022, where I was present with the Prime Minister of Romania, Mr. Nicolae Ciucă, through which we secured the delivery of gas from the Caspian Sea. After this important moment for the Romania-Azerbaijan relationship, I participated in the official visit that the President of Romania, Mr. Klaus Iohannis, made to Baku, to secure the volumes of gas that we are going to import. And here we are over the winter of 2022-2023 without any problem. We filled gas storage to a record level, made sure we had a buffer of gas ready for delivery, if needed, from Azerbaijan, and then secured 1 billion cubic meters of natural gas from that country.
Then, in terms of electricity, by far the most important pillar is nuclear. Units 3 and 4 at Cernavodă, together with the small modular reactor at Doicești, will make the share of the nuclear sector in the energy mix the majority. We cannot decarbonize without nuclear, and in the nuclear sector, we have concluded partnerships and long-term relationships strategically, with NATO member states and with European partners who share our security values. We secured the integrated nuclear circuit within the National Nuclearelectrica Society and created the conditions for this sector to be the driving force in the production of clean electricity, with zero greenhouse gas emissions, in Romania for decades.
To give just one example of recent evolution. Nuclearelectrica SA has selected the company Candu Energy Inc., a member of the SNC-Lavalin Group, to carry out additional pre-design work for the CANDU reactor of Unit 1 at Cernavoda, before its life extension. Under the two-year agreement, worth approximately 65 million dollars, SNC-Lavalin will perform long-term engineering and front-end engineering services, in order to prepare the future re-engineering project of Cernavoda CNE Unit 1. The refurbishment will extend the operating life of the Unit 1 reactor by another 30 years, until the year 2060. Starting from 2029, through the refurbishment of Unit 1, approximately 5.5 million MWh of energy will be delivered annually to the SEN (National Energy System) clean, accessible, and over 5 million tons of CO2 will be avoided annually for another 30 years.
The large investments in new natural gas electricity production capacities should also be mentioned, such as the mammoth investment that will be carried out by the private investor who bought the Mintia Thermal Power Plant and will install 1.7 GW hour of power there, using the newest technology in the field. It is not the only investment of this kind – natural gas electricity production, but it is by far the largest. To emphasize the scale of the investment from Mintia, we are talking about a private investment worth 1.5 billion euros, which represents a record value for an electricity production capacity in Romania.
It is also important to emphasize the major investments that will be made at the Oltenia Energy Complex from the Modernization Fund. We are talking about 8 projects submitted by the CEO for the production of energy from renewable sources, totaling 670.8 million euros, of which 469.5 million euros from the Modernization Fund. At completion we will talk about production of 735 MWh. Then, we have to talk about the powers installed through the programs we run through the PNRR, that is another almost 1GWhour.
Another example of a particularly important partnership and project is the submarine cable. The governments of the Republic of Azerbaijan, Georgia, Hungary and Romania signed, in Bucharest, an Agreement on Strategic Partnership in the field of green energy development and transport. This document is the basis of the financial and technical framework for the realization of the project of the submarine cable for the transport of electricity from renewable sources between Romania and Azerbaijan, via Georgia and the Black Sea, and, subsequently, for the transport of this energy to Hungary and the rest of Europe, through the European system of Transport. Romania plans to operationalize a green electricity transmission cable on the Tuzla – Podișor route, then on the corridor of the BRUA gas pipeline, to ensure the connection from the East to the West of Romania. This agreement is based on the interests of the four states related to the consolidation of national and regional energy security and connectivity in the Black Sea basin, the diversification of supply sources, the exploitation of the renewable energy production potential in the Caspian area and the increase of the share of renewable energy in the national energy mix.
In as real terms as possible, energy independence from Russian gas is given by a diversification of the gas supply sources. When I assumed the mandate of Minister of Energy, Romania had only one source of gas supply through a single interconnection point in the east of the country. In just 3 years, we managed to be interconnected in terms of gas infrastructure – gas import/export, or reverse flow as they say in specialized terms, with all the countries in the region. We are talking about Hungary, Bulgaria, the Republic of Moldova and Ukraine. This means that in Romania gas can come either through the Vertical Corridor, or through the Trans-Balkan Corridor, or through the BRUA-which was also completed during the period in which I held the portfolio of Minister of Energy. Thus, we have access to gas from the Caspian Sea, but also to liquefied natural gas from LNG terminals in Turkey or Greece. More options means real independence and that’s what we have now.
We do not stop here with the interconnection projects, we want, and we are working in this direction, to be interconnected with Serbia from the point of view of natural gas as well.
How do you see the evolution and prospects of the energy year 2023?
2022 was the year of energy investments in Romania, 2023 continues to be a year of massive investments, and the effects of these investments will be seen soon. From this point of view, 2023 is another year in which we build, prepare investments, finance them. Compared to previous years, we now have a European mechanism for the centralized purchase of natural gas, as well as a mechanism that no longer allows the price of gas on European markets to gallop, and we notice that electricity prices have also stabilized. Internally, we have both the mechanism of the centralized purchase of electricity at 450 lei per MWh, as well as capping measures for domestic and non-domestic consumers. So 2023 should bring much more stability and be a springboard to the results we expect to see with the commissioning of the installed powers that will result from these investments.
What the Romania must do to attract as many European funds as possible, in the next period? What is the status of the shootings and projects from this moment, through the lens of the most important tools of financing?
The Modernization Fund (MF) is a key financing instrument established for the period 2021-2030 for the development of investments in energy projects that provide for improvements in energy efficiency, the modernization of energy systems and the transition in coal-dependent regions in Member States. The Ministry of Energy submitted a series of investment projects, as well as a multi-year scheme for which the European Commission has issued its decisions on payment, and the EIB has already transferred to the dedicated account amounts exceeding 1.4 billion euros.
For the nine projects approved for Transelectrica, the financing contracts were signed on October 10, 2022. The non-refundable value of the nine investment projects to be implemented with financing from the funds allocated to Romania from the Modernization Fund, is 424,4 million euros.
With an allocated budget of 1.62 billion euros, Component C.6 Energy within the PNRR aims, through the proposed reforms and investments, to address the main challenges of the Romanian energy sector in terms of air pollution and the decarbonization of this sector through the gradual elimination of power plants based on coal and by facilitating the deployment of renewable and alternative energy sources such as green hydrogen.
What are the main developments in the electricity generation segment?
We have decisive developments in electricity production in the nuclear sector, which is important because decarbonisation cannot be done without nuclear, as well as important investments in natural gas electricity production capacities, like what happens in the Mind. Of course, the situation regarding micro hydropower plants in protected areas remains to be resolved. But I am convinced that we will find the appropriate legislative solutions.
At the European level there are discussions regarding the reform of the electricity market. We discussed with our European counterparts the options for changing the design of the electricity market in order to limit the negative effects of potential future energy crises and ensure stable prices for consumers and industry. I reiterated the fact that Romania supports an effective market reform that leads to limiting the effect of the natural gas price on the electricity price. Romania is interested in the implementation of a mechanism of the constructs for the difference or the agreements for the purchase of electricity – PPA, which would ensure predictability on the electricity market in the long term and stimulate investments in new production capacities in the field of renewable and nuclear energy.
What are the next steps Romania will take for the just transition of the mining sector?
The most important thing to mention is that we will not leave anyone behind. The Romanian government treats this transition as seriously and responsibly as possible. The ordinance on the decarbonization of the energy sector provides for the establishment of the Interministerial Coal Committee, for the implementation of the decarbonization process, which is led by the Minister of Economy.
It should also be said that, in December 2022, the European Commission approved the Just Transition Operational Program (PTJ). With an allocation of 2.5 billion euros, PTJ will finance measures to mitigate the impact of the closure or transformation of dominant economic activities in the local economy of 6 counties in Romania – Gorj, Hunedoara, Dolj, Galați, Prahova and Mureș and will facilitate their transition to climate neutrality.
The 2.5 billion euros will generate in total, in the 6 counties included in the Just Transition Program:
- 11,000 newly created direct jobs;
- 6,000 enterprises that will benefit from support for the diversification of the territories’ economy and the creation of sustainable and quality jobs;
- 30,000 people will benefit from professional retraining programs for employment;
- 266 ha of surfaces will benefit from decontamination and reconversion actions;
- 24,000 households supported to acquire prosumer status.
How has Romania helped and how can it continue to help the Republic of Moldova?
Romania understood to be an ally, a brother, a partner and a provider of regional energy security in relation to the Republic of Moldova. Both the companies in the portfolio of the Ministry of Energy, Hidroelectrica and Nuclearelectrica, supplied electricity to the Republic of Moldova last fall, and the Romanian state continued to support the Republic of Moldova in the worst energy crisis in the last 30 years, which was manifested by the halving of gas supplies, electricity shortages and extremely high price increases.
Romania provided electricity to protect the citizens, fuel oil as an alternative fuel for the central heating system, firewood for the population in rural areas and allowed the storage of natural gas of the Republic of Moldova. Bilateral cooperation plans are even bigger and involve long-term collaboration in concrete power infrastructure projects and electricity and gas supply contracts.
From the point of view of gas interconnection, during my mandate we managed to complete the Ungheni-Chisinau gas pipeline, as well as the development works of the SNT in the North-Eastern area of Romania, investments that allowed the delivery of natural gas to the Republic of Moldova this winter.
In the future, we plan to build the Suceava-Bălți Overhead Power Line, which will allow us new margins of maneuver in terms of supplying electricity to the Republic of Moldova.
_____________________________________________
This interview first appeared in the printed edition of Energynomics Magazine, issued in March 2023.
In order to receive the printed or electronic issue of Energynomics Magazine, we encourage you to write us at office [at] energynomics.ro to include you in our distribution list. All previous editions are available HERE.
