Volker Raffel, CEO E.ON Romania, tells Energynomics within an exclusive interview about the newest trends in the appetite of prosumers, the need to expand and modernize distribution networks, but also about the hydrogen pilot project and sustainable heating.
How has the demand for green projects evolved this year, both in the residential segment and for large companies?
We are in the midst of a photovoltaic energy boom, a fact confirmed by the demand for our solutions, which is growing strongly, both in the business and residential segments.
For companies and municipalities, in 2022 we delivered over 120 photovoltaic power plants on a turnkey basis, three times more than in 2021. In total, we reached over 300 completed PV projects in Romania. The total production of photovoltaic energy is over 68 GWh/year, with a reduction in CO2 emissions of approximately 18,500 tons each year.
But that was only the beginning of this boom, which is happening right now, and which is not going to end anytime soon.
Demand for E.ON Solar Home – our turnkey PV generation solution for residential customers – has grown strongly. We have exceeded 1,000 PV systems installed in 2022 and to date, which means we have delivered 3 systems every 2 days for the past 20 months. We already see that the pace is increasing even more, because some of those who have approved files in the Green House program come to us to buy and install photovoltaic systems from 3 kW to 15 kW.
Our customers choose E.ON for the quality of the solutions, equipment and services we offer, including after sales. For example, small suppliers may fail and will no longer be present if you need them later for repairs or other services. That’s why so many customers now choose E.ON.
We also focus on the sustainable heating area. Although we are quite behind in Romania, the interest in heat pumps for heating and cooling the house is growing and we aim to be as present as possible in this market segment as well. Those who opt for the installation of a heat pump receive a “turnkey” solution from us. We provide advice, equipment delivery, system installation, commissioning and maintenance. This equipment has low running costs and are more energy efficient than combustion systems.
This technology works well across the country, but is of particular interest in areas without gas supply, where modern and efficient heating/cooling systems are also available. It is true that in the beginning an investment is needed which we try to make attractive through our offers. I am convinced that for a sustainable Romania, the state will also support the purchase and installation of heat pumps as it happens in other European countries, for which European funds are available.
We are also involved, since 2018, in the construction of infrastructure and solutions for the development of sustainable transport. At the end of the first eight months of 2023, we reached a total of 375 electric car charging points.
We are also involved in the development of a national network of public charging stations along the main transport corridors, through the CONNECT-E project, co-financed by European funds, but also financed by us.
E.ON will run, in the next two years, a European project that provides for the installation of 60 ultra-fast charging points of 150 kW. These stations will represent a significant improvement to the electric car charging infrastructure, giving users the opportunity to charge their electric cars in a much shorter time.
What are the obstacles holding back the development of green projects in Romania?
During the development of photovoltaic products, we faced several challenges, including those of a legislative and regulatory nature, related to authorizations/licenses, the availability of specialists in the field and even on the procurement side of the necessary products/components. However, this year things are a little better and, moreover, we now have enough stock to support market demand.
But the biggest problem is on the distribution side. At E.ON we are convinced that the investments of prosumers and producers of photovoltaic energy are very important for Romania. It helps the environment, and the electricity produced will allow Romania to have abundant and therefore cheaper energy more often.
Also, in distribution we do everything we can to support the success story of prosumers. However, the need for investment is huge for the urgent modernization of the network, and the freezing of distribution tariffs in the past years has slowed down this process. To make the necessary investments in the distribution network, only a small increase in a component of the electricity bill is needed, but which would allow the networks to develop in such a way that they can properly take over and deliver the electricity produced by photovoltaics in quantities of those produced by the Cernavodă nuclear power plant units!
For these reasons, prosumers are currently a big challenge for us. I am proud of our distribution company, Delgaz Grid, which has improved the way we handle prosumer documents and notices. We still need to optimize the integration of the place in the network to avoid disruptions. Also, large renewable projects require grid consolidation and large investments to be integrated.
Even though we will strengthen our distribution network, I am convinced that every new PV program must also come with storage capabilities, be it batteries or electric cars.
It is a huge opportunity and at the same time a challenge: in 2022 we connected 3,759 prosumers to the network, more than double from 2021. In total, at the end of 2022, there were 5,505 prosumers connected to the network. This year, in the first 8 months alone, we connected 6,463 prosumers to the network, about 70% more compared to the whole year 2022. Thus, at this moment we have approx. 12,000 prosumers connected, and by the end of the year we expect to have about 5,000 more prosumers, which will bring us to a figure of about 17,000 prosumers in the Delgaz Grid network.
With the increasing demand for electricity and the number of connection requests piling up, the grid is at risk of experiencing congestion and breakdowns. This is already happening in several European countries.
Hungary, for example, recently issued a ban on connecting new distributed sources to the grid. Similarly, the Estonian and Dutch networks are now very congested, to the point where there are fears that they will not be able to allow new connections.
We have, therefore, right in front of us, the biggest transformation of the energy system since electrification and gasification. The key to solving this situation lies in massive investment, well above the historical levels needed to strengthen and modernize the networks. Faster and simplified procedures for the authorization of the construction of networks are also needed, so that the infrastructure can keep pace with the developments that are being made in the direction of “net zero”.
I am talking about an approach capable of anticipating and adequately dealing with the reality that networks need to be strengthened and developed so that they can integrate more projects from renewable sources and can support the unprecedented electrification of transport, buildings and industry to match the speed and the extent necessary for the energy transition.
Once again: we cannot do all this without a new, different approach from regulators and legislators. An energy policy that ignores distribution blocks the key to the development of electricity production in Romania.
Compared to Romania, how are projects developing in Europe, in the various countries where you are present, aimed at solar and wind energy?
There is a great diversity of support systems for renewable energy in European countries. Among the key mechanisms in national policies are for example: regulated tariffs for small renewable energy producers (Feed-In Tariff), quota obligations with tradable green certificates, loan guarantees, investment grants, tax incentives, etc.
Therefore, thanks to the support schemes, as in Romania, in all European countries we see an avalanche of PV projects.
But – I insist on this idea – what good are thousands of photovoltaic panels, if they are either not connected or do not work due to network constraints? Huge investments are needed until 2030, of tens of billions of euros per year at European level, especially in networks. We want to invest even more, as we said earlier. But these investments are recouped through tariffs. That is why it was not a wise decision to freeze distribution rates for a year. Because of this ANRE decision we are facing a cash deficit.
Therefore, Delgaz Grid had to take loans from banks to finance grid modernization projects, and this money is expensive.
We intend to attract around €500 million in EU funds over the next few years. But the EU funds are only for co-financing, so each project also requires additions from the company’s own sources. Successful absorption of EU funds and own-source investment requires a stable and stimulating regulatory framework for 2024 and beyond.
On the other hand, EU projects are a unique chance for Romania. To obtain co-financing from the modernization fund, for every lei invested you get 4 extra lei! If the 1 lei investment is not made because of a wrong policy, it would mean that 4 extra lei will not come to push the Romanian energy infrastructure to become truly modern in a few years.
And without these massive investments the energy transition will hit a wall!
How is the hydrogen pilot project progressing?
20HyGrid is progressing very well, we enjoyed the opening, first of all from our customers who support us in the realization of this project, one of the first in Romania, but also from the local and central authorities.
In Dârlos, Sibiu County, the home tests of the 50 selected customers were recently completed, the results being as expected, i.e., all appliances working without any problem with a mixture of natural gas (80%) and hydrogen (20%), the supply being made with a bottle containing this mixture. Here, Delgaz Grid begins preparations for the last part of the 2nd stage in this locality, namely the testing of the mixture of natural gas and hydrogen by introducing it directly into the natural gas distribution network.
The project will be completed in 2024, and the results will serve as a model of good practice for future projects and for the use of hydrogen in various fields, including heating, domestic hot water and food.
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This interview first appeared in the printed edition of Energynomics Magazine, issued in September 2023.
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