The national energy system, prepared for the cold season

George Marinescu
English Section / 15 noiembrie 2023

Image by KamranAydinov on Freepik

Image by KamranAydinov on Freepik

Versiunea în limba română

The Ministry of Energy claims that we have a gas stock of 103% Reservoirs are 74.7% full Sebastian Burduja: "The only problem is Termoenergetica's debt of 700 million lei to Elcen" Suppliers, dissatisfied with late reimbursements of the state regarding the compensation-ceiling scheme

The national energy system is prepared for the cold season 2023-2024, under the conditions of a normal winter, said yesterday, the participants of the 10th edition of the Energy Forum - "Strategy for the winter 2023-2024 in the current political-economic context", organized by DC Media Group.

In the opening of the event, Sebastian Burduja, the Minister of Energy stated: "We are more prepared than ever for this winter and the compensation-ceiling scheme will remain in force until March 2025. We know the impact and importance for end consumers and we are also striving to quickly pay the arrears to suppliers covering the price difference in the invoice. Romanians will not tremble either from the cold or from the fear of bills. (...) We have a gas stock of almost 103% and with this gas stock together with what we produce in the winter from internal capacities, in a normal winter we get by with this Romanian stock. Normal winter means one or at most two episodes of frost with blizzard per month, an episode lasting from 3 to 7 days. If the winter will be particularly hard and we have special requests from the Republic of Moldova or other states in the region, we are ready to access the one billion cubic meters of gas reserved in Azerbaijan and we also have the option of importing LNG on the Greece-Bulgaria-Romania route or Turkey-Bulgaria-Romania. The reservoirs are at 74.76%, i.e. an optimal level, and the coal stocks are at the level required for the Oltenia Energy Complex and for heating the Craiova municipality. (...) We do not take into account the scenario of the interruption of the supply of thermal energy and electricity to large consumers. If there was a heating problem, it is called Bucharest, where the mayor general did not respond to an address sent to me four months ago regarding Termoenergetica's debt to Elcen, of 700 million lei, money that could be used for the purchase of the necessary gas in the coming months".

The Minister of Energy showed that for now our country cannot give up the coal mining that is necessary for the energy production capacities within the Oltenia Energy Complex, but also within the new Valea Jiului Energy Complex.

Sebastian Burduja said: "A month ago we saved the Valea Jiului Energy Complex, approximately 2000 jobs, for which we adopted three normative acts that transferred the assets of the Hunedoara Energy Complex to the new complex and granted state aid , and the European Commission has assured us that this state aid will be approved by DG Competition. These days we will allocate 300 million lei to keep the activity within normal limits until the spring of 2024 and then we will adopt a package to make the mines safe until January 2032".

The Minister of Energy also referred to the law on offshore wind farms in the Black Sea, which he said is awaiting the opinion of the Supreme Council of Defense of the Country so that the Government can then send it to Parliament for debate and adoption as an emergency, but also to the scheme for contracts for difference (CfD), which will be financed with 3 billion euros from the Modernization Fund.

Minister Burduja said: "We will organize an auction for one solar gigawatt and one wind gigawatt, which will fix a price for 15 years and represent predictability for investors. In the last version of the scheme, we allow all those interested to participate, even if they do not have the technical approval for connection, because we want to set a reference price for 15 years as low as possible".

His Majesty also showed that for the new energy capacities in the wind and solar sectors, the Ministry of Energy received 742 applications, signed 62 contracts for a total capacity of 510 MW (megawatts), and estimates that in the following years capacities will be realized whose total production value will be between 2500 and 3000 MW.

Gradual abandonment of the compensation-ceiling scheme

Regarding the compensation-ceiling scheme, George Niculescu, the president of ANRE mentioned that giving it up after March 31, 2025 must be done in a way that does not cause shocks in the market.

George Niculescu stated: "Therefore, it is important that in the period before the end of the support scheme, we have discussions with all market participants, in order to gradually phase-out the support scheme so that consumers do not feel any kind of shock in the bills they will pay after March 31, 2025. I believe that over the next year we can generate such discussions where we are going to find the best solutions for consumers".

With regard to investments in new production capacities, the president of ANRE showed that the point of view of Transelectrica is very important and said that without an energy bearable from the point of view of cost by consumers, the whole investment narrative collapses.

Mr. Niculescu also said: "The narrative tends to return to the market, to the price. We are again talking about returning to an unregulated natural gas market from 2025, obviously if the market does not experience shocks. According to Transelectrica data, in the first 9 months of 2023 there is a 62% increase in electricity exports, compared to the same period last year, which shows that we are consolidating our production capacities and that the amount of electricity produced is increasing nationally. We also notice that investors' appetite is maintained, and in this sense we have the example of last week when we approved authorizations for the establishment of production capacities with a total of 130 MW".

Completion of the hydropower plants started in the 90s - priority for the national energy system

The national energy mix needs the completion of the hydropower plants whose construction started before 1989, said Daniel Zamfir, president of the Economic, Industries and Services Committee in the Senate.

Daniel Zamfir stated: "I am a lover of new technologies and I want Romania to invest in solar, wind, but we cannot remove from production the capacities in the band, which produce energy continuously, because we need this energy. However, through the PNRR, this type of energy in the band was abandoned - coal, nuclear, gas. We are now talking about the hydrogen strategy, but we do not have a national energy strategy, although that document has been in the public debate phase for four years. Due to the lack of this strategy, we prevent ourselves from all kinds of situations, such as the one concerning the possibility of completing the hydropower plants started during Ceauşescu's time, which cannot be completed for bizarre reasons, being in protected areas. The works on some of them are at 95% execution stage, but they cannot be continued even though the Romanian state has invested a billion euros that we are burying if we are not able through a political will to decide what we want: to protect the Ponoare river , the ladybug and the tailor beetle or to produce electricity. We cannot have economic development and a stable energy situation, if we first think of the Ponoare river and do not disturb it, even though it has not existed for 50 years. There the works are blocked because someone is waiting for the Ponoare cold to come from prehistoric times. We have a great chance to produce our electricity from almost everything: coal, gas, hydro, nuclear, wind, solar. I don't think there is another country in Europe that can do this energy mix like Romania can do".

Energy transition - costs and challenges

The representatives of the energy companies emphasized the need for the state to comply with the commitments assumed, in line with the companies' compliance with their obligations in recent years.

Daniela Dărăban, executive director of the Federation of Associations of Energy Utility Companies (ACUE) said: "Suppliers have made every effort to apply the legal framework in force, with the expectation that the Romanian state will also respect the payment terms established by law. We fulfilled our obligations, including on the storage side. The vast majority of the stored quantity was stored by the suppliers, even if the state failed to comply with its obligations established by law regarding ensuring the necessary flow within the terms established by the legislative framework. (...)We must give up these habits. Providers have proven their resilience by pre-funding compensation-ceiling schemes and continue to fund these schemes for periods of 4-6 months. That is why we believe that the return to an unregulated market should be discussed sooner. After the 2024 quantity allocation procedure we can start the discussion of what we will do in 2025, especially since in the spring-summer of 2024 each supplier makes its estimates on the quantities it will purchase in 2025 and needs predictability for prices ".

For her part, Silvia Vlăsceanu, executive director of the Association of Electric Energy Producers (HENRO) said: "I want a strong state so that market operators and NGOs know that assuming responsibility in the energy field rests with the authorities. The electricity market is very sensitive to what is happening around us. (...) The energy transition that Europe wants to impose must be rethought; the steps with which it is taken, the rhythm, must be rethought, because we will reach bearability. Can citizens bear the pace of this energy transition, which costs a lot? We are in the situation after the pandemic, after the war in Ukraine and after the war in Israel, in which we do not know how the citizens will react to price increases not only in energy. Then, recent studies done by researchers on LNG show that it can be three times more polluting than natural gas in gaseous form. Coal cannot be suddenly removed from the energy mix, nor can it be phased out, because it represents the basic capacity of electricity production and nuclear is the least polluting source of electricity production. Hydro remains an option, but the court is preparing to attack the nine projects of national interest announced by the recently promulgated law. Natural gas remains, but here too we have a problem, because Romania will be the only country in the EU that will extract natural gas in the coming period. The other states that extract and supply the EU with natural gas are not members of the Union. That's why I don't think that the decision-makers in Brussels will give legislation favorable to our country, and I think that we have to impose our point of view in order to obtain legislation suitable to the national interest".

The participants in the debate also said that our country has the ability to accelerate the EU's transition to green energy, having a major potential to support a sustainable energy mix in the long term, but it is necessary that investments are no longer blocked by bizarre court decisions of court based on challenges from non-governmental environmental protection organizations.