ANRE reported an overall electricity consumption in Romania of about 49.69 TWh in 2013, as compared with 52.36 TWh in 2012. On the background of the overall decrease of the electricity consumption, one could also notice an important shift that is taking place in the Romanian electricity sector in terms of market shares of various technologies. While the input of electricity from renewable energy sources increased from 3.5% in 2012 to 7.1% in 2013 (over 100% increase), the percentage of electricity from solid fuels shrank by more than 10 p.p. of the overall national electricity output, which overall is a 25% year on year decrease.
Romanian authorities received the message from the industrial consumers that the decrease of the consumption is a consequence of the increase of energy costs, in the case of electricity mainly due to the impact of the support schemes for electricity from renewables and from efficient cogeneration.
The situation in the gas sector was even more dramatic, with the Government and the Regulator embarking in a “liberalization” program agreed with International Financing Institutions leading to a dramatic alignment of the indigenous gas prices to the international levels with direct impact on overall energy bills of many Romanian manufacturers and probably impacting their competitiveness on their globalized product markets.
Year 2013 has been a year of sudden change for support in regard to electricity from renewable energy sources. Amid the adverse changes of the regulatory framework for renewables in various EU Members States, Romania has been perceived as a last investment haven and around EUR 6 billion of Foreign Direct Investment had been channelled towards power generation assets and related grid connection and reinforcement components. However, the strong reaction from the electricity consumers affected with price increases in the range of 10 Euro/MWh has determined the authorities to adopt sudden changes to the application mechanism of the support scheme, that have affected heavily the profitability of the new renewable power generation businesses, up to the level of affecting their capacity of debt servicing, triggering worry and discontent both with boards of ultinational utility companies and small investors, but also with banks.
The Romanian authorities have changed the course of the increase of the purchase obligations in terms of green certificates offered for sale by renewable energy generators, but have also postponed the allocation of green certificates depending on the generation technologies used. The price of the green certificates crashed, with discussions ongoing about eliminating the floor price foreseen in the applicable legislation. Moreover, as of 01.01.2014 the nominal number of green certificates allocated per MWh generated using several technologies has been reduced in a thrive to avoid overcompensation. As per complaints by investors in renewables, at present, the combinations of all these measures has hit hard the profitability of renewable power generation project and one expects major asset impairment reviews, write-offs, withdrawals and bankruptcies.
The spectacular penetration of electricity from renewables, with even more spectacular figures expected for year 2014, has also led to a qualitative assessment that Romania is very close to reaching its EU 2020 Agenda objectives (share of renewables in gross primary energy consumption, level of greenhouse gas emissions and energy efficiency improvements
compared to reference level from the past).
Consequently, the Partnership for Romania 2014-2020, the main planning instrument for structural funds, has focused on more stringent needs of Romania as an EU Member State in its way of convergence.
Hence, the allocations of structural funds for the reinforcement of the transmission networks both for electricity and gas are insignificant and not proportional to the dimension of the challenges.
While the electricity high voltage transmission network is in urgent need of massive investment for coping with the shift of the weight center in power generation, with threats to the system stability because of new flows and threats of network congestion plus increase of network losses due to the spectacular addition of uncontrollable power generation using renewables, the gas transmission network has to cope with important challenges of the moment, such as market opening for cross-border trade (and avoiding the opened specific infringement procedure), such as ensuring sufficient comfort to investors that the possible additional natural gas to be sourced from the Black Sea would find a way towards the Central European market, plus the overall shift of the main direction of gas flows, with a need to eventually supply the Republic of Moldova.
The figures above indicate the evolution of the monthly natural gas consumption in the country, comparing figures for years 2011, 2012, 2013 (see the left graph) and years 2012, 2013 and 2014 (on the right), as available in ANRE market monitoring reports. The decrease of gas consumption during 2013 is confirmed as trend by the 2014 data and can be attributed to the overall end-user gas prices, rather than to spectacular energy efficiency measures. Weather could also have some influence in winter months, but the trend in summer months’ gas consumption hints towards a downward industry behaviour. However, the heated debate about the opportunity of a swift alignment of indigenous gas prices to the international level, started in 2014, ended up in decisions to postpone some steps in the prices adjustment calendar.
To summarize, year 2013 ended with a strong shift in the support for electricity from renewable energy sources and with acknowledgement of the potential impact of gas prices on the Romanian industry, that accounts for some 32.5% of the Romanian GDP, unlike other EU Member States, where such figures average around 19%. This “anomaly” is exactly due to the historical availability of cheaper indigenous gas, that has allowed survival of energy intensive industries in Romania. Practically, year 2014 is to be marked by the attempt to balance interests of private investors in power generation and gas
production (including new sources) and end-users, both residential and non-residential.
