The condition for the support scheme to still work before there is a supply crisis and the entire sector is that the state ensures and reimburses without delay all amounts owed to suppliers, argues Volker Raffel, CEO of E.ON Romania. He insists that the re-liberalization must catch the market already open, with valid offers. “As I said before and I repeat now: the market must open in time. At the latest now for July 2025 and also already for gas after April 2026,” says Raffel, in an exclusive interview with Energynomics.
What are the effects of capping and compensation on suppliers and the market in general, across the entire supply chain, so far? What are the debts to suppliers?
We continue to face delayed and uncertain reimbursement by the state for the amounts allocated to support the price cap schemes, as well as bureaucratic processes, as it takes more than a year to receive the amounts due. For example, we still have outstanding amounts for 2023, totaling 20 million lei.
For the period January – December 2024, the amounts submitted to ANRE for reimbursement were approximately 711 million lei, and these requests have not yet been validated as of the current date. Of these amounts, only 54 million lei had been received by early March.
In total, E.ON Energie Romania still has 677 million lei (approximately 136 million euros) to recover. With this money, for example, we can secure more than half of the gas stock needed for our customers in the upcoming cold season.
How does the extension of the price cap scheme affect the market and suppliers? To what level would the debt increase?
For the extended period of the price cap scheme, in the case of electricity (the second quarter of this year), we estimate additional reimbursement claims amounting to 290 million lei (approximately at a similar level to those estimated for the first quarter of the year).
The condition for the support scheme to continue functioning before we face a supply crisis, and a collapse of the entire sector is for the state to ensure and reimburse all amounts owed to suppliers without delays. Other countries have paid in advance, and both Croatia and Poland, which are also preparing to exit their support schemes, have always made payments no later than the second month after the energy was delivered to customers. The Romanian government has recently paid for December 2023! This is unacceptable, and it was shocking to see how many in the public administration were willing to accept such a situation.
The current scheme of subsidizing everyone, including holiday homes and wealthy individuals, is too costly for the state budget, as we all know. It encourages energy consumption even when it is unnecessary and, as a result, artificially keeps market energy prices high.
Therefore, there is no alternative but to end this scheme. I am pleased that, for the first time, the decision to extend it is now accompanied by efforts to prepare for a free market – this time, a well-prepared one.
How do you estimate the re‑liberalization will take place, and what effects will it have on the market?
It is important to have enough offers available on energy markets at any time and for longer periods. For example, if the energy market for deliveries starting in April 2025 had already been operational in the first quarter of 2024, as we proposed, the first transactions would have started at approximately 400 lei for electricity and 120 lei for natural gas.
Unfortunately, that opportunity was missed. As I predicted, waiting in the market to start selling until the last moment before the second quarter of 2025 has now led to a rush and exposed buyers to electricity prices of around 800 lei and gas prices of about 200 lei in the last week. As I said before and repeat now: the market must open in advance. At the latest, this should happen now for July 2025, and for gas beyond April 2026, to avoid repeating this phenomenon.
I can say with certainty why producers did not offer larger volumes for the post-capping period a year ago. Either it was speculation – in which case it worked for them but was not beneficial for end customers – or, and this is the scenario I find more likely, it was uncertainty about whether the state would intervene again by extending the price cap scheme, as has now happened. This shows that even the end of a price cap scheme must be predictable.
How have the price cap and compensation measures influenced E.ON’s shareholders’ decisions regarding the business in Romania?
As we have already announced, in line with its strategy, E.ON continuously reviews its portfolio to advance its strategic agenda focused on sustainability, digitalization, and growth. This strategic review also included the retail business in Romania. We are currently awaiting the decision of the authorities involved.
E.ON’s strategy is to focus on customer solutions, and we have a well-developed line of business in Romania, alongside our distribution activities. However, when it comes to the “traditional” supply of electricity and natural gas, having a liquid and reliable market is essential for the proper functioning of a company. If the market is not functional – and, after 20 years of experience, we see that we still do not have a fully functional market – this means there is significant exposure to political interventions for companies with a clear focus on supply, solutions, and networks, as E.ON has. Other owners, with a different approach in terms of production, partnerships, or long-term contracts, may have a lower exposure to Romania’s specific challenges.
And this is not about evaluating our overall presence in Romania – the transaction does not involve distribution. As for energy customers, I remain fully convinced that Romania will resolve its energy issues much faster than, for example, Germany, as the country is set to see impressive growth not only in renewable energy but also in new natural gas and power generation capacities over the next 1-3 years.
How do you see the evolution of the green transition, considering there are so many competitiveness risks at the industry level?
I am not a fan of dogmas, but I am open to the advantages of new technologies emerging worldwide and becoming competitive. The total production cost of a kWh in a new PV is much lower today than that of a new high-efficiency coal power plant. We need a stable mix, but this is the real reason why the share of renewable energy sources is increasing. And it will be manageable if we find a way to carry out this transition in a pragmatic and economically viable manner, relying on what we already have.
Romania is taking steps to double its nuclear capacity, enhancing energy security while also supporting climate goals. At the same time, I expect natural gas to continue playing a significant role in the future energy sector. Romania has this advantage, and it is its right to benefit from this resource.
Through a mix of conventional and renewable energy sources, we can make energy more affordable for households as well as for the industry. In fact, the energy transition means the democratization of energy, which is why we promote solutions that allow customers to generate their own energy, consume more prudently, and use energy more efficiently.
Lower electricity prices are possible if all this green energy can be fully and safely integrated into strong and modern networks, ensuring it reaches where it is needed.
Moreover, if the network is modern and robust, connection costs will be lower for industry investors. Lower network connection costs will encourage investors to come to Romania, leading to increased electricity consumption, stimulating GDP growth, while also reducing the distribution tariffs.
We are ready to collaborate with ANRE in developing an action plan for Romania.
What should Romania and the regulatory authority do to ensure future investments in networks?
In 2024, the tariff methodologies for the fifth regulatory period (RP5) were published for both electricity and natural gas.
An important aspect is the allocation/recognition by ANRE of operational costs below the necessary OPEX level for carrying out distribution activities under the best conditions (especially for electricity).
For example, it is necessary that the costs for the acquisition of CT/CPT be fully recognized, in accordance with market conditions and best practices in procuring the necessary quantities.
The RRR (RoR/WACC) level used to remunerate the capital invested in networks is 6.94% (in real terms) for the fifth regulatory period, which is below the estimated level in the KPMG study, which is 9.76% for electricity and 10.34% for natural gas. This WACC level set by ANRE does not encourage investments in networks to increase the safety of energy and gas networks or to improve the quality of distribution services.
In a rather difficult economic context, in 2024 we invested 171 million euros, which is over 90% more than the annual average for the period 2010-2019 (90 million euros/year). For 2025, we have set investment targets of 250 million euros, 46% higher than those in the previous year.
Currently, we are implementing 14 projects with for the modernization and development of the electricity grid, with European funding totaling 410.7 million euros, of which 307 million euros are co-financed by the EU. Through these investments, we are installing about 900,000 SMART meters, modernizing 33 transformation stations, as well as high and low-voltage grids.
It is important to mention that we have allocated over 4.7 billion lei (950 million euros) for the electricity distribution grid during the fifth regulatory period, half of which comes from our own funds, and the rest from borrowed sources and European funds. The later are partially signed, but their additional availability was announced and remains uncertain.
One of the major challenges is the integration of green energy generation capacities, prosumers, and large producers into the grid. By the end of 2024, over 27,000 prosumers (with an installed capacity of about 293 MW) were connected to the Delgaz Grid network.
Considering future prosumers and RES generation capacities, we estimate that by 2030 we will have a total capacity of over 1,400 MW. Therefore, we could say that in Moldova we will have capacities that will produce as much energy as a nuclear power plant of the same capacity as the current one in Cernavodă.
So, the key lies in networks investments! Unfortunately, at this moment, the volume of investments in the sector is far too low to reach our targets. Companies in the sector want to invest more, there is access to financing, only the regulatory framework is missing.
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The interview first appeared in the printed edition of Energynomics Magazine in late March 2025.
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