Romania has a diversified mix of electricity sources, with around 43% coming from renewable sources (29% hydro, 10% wind, 2.6% solar and 0.7% biomass) and around 57% coming from conventional sources (24.5% coal, 17.5% nuclear and 15% gas).
The strategic investment priority is the renewal of the nation’s electricity production infrastructure as most of it is more than 30 years old. The majority of existing facilities have reached their average life span and many of them are inefficient and/or ecologically inadequate. Remedying these issues will require investment up until 2030 of between EUR 7 and 14 billion. Although gas-based power plants will be the priority, coal-based power plants will also play a role to ensure the stability of the national energy system, but they will have to be replaced after 2025. The new lignite facilities will need to be highly efficient and reduce GGE.
Hydro-electricity is essential to balance the system. Therefore, maintaining and modernising the current hydro-power facilities, together with small pumping facilities, will be required until 2030, at which time investment in a big reverse pumping station will become the major priority.
As to renewable energy sources (RES), the support scheme of green certificates ended on 31 December 2016. Any new RES will need to develop without such support schemes and the determining factor for the profitability of such projects will be access to low cost capital funding. If these projects receive adequate support, the use of biogas and waste will increase and will be used in CHP facilities. Over the last five years, approximately 3000 MW of wind capacity has been established, this is considered to be the maximum capacity to use and still ensure the dependable functioning of the national energy system in its current form. The unpredictability of wind capacity requires a reconfiguration of the balancing market with investments targeting peak units.
Nuclear energy is a strategic option for Romania and Units 3 and 4 at Cernavoda represent by far the biggest potential energy project in the future. It will significantly reduce the capacity required in the region by providing 3000 MW of energy. The Romanian government plans to grant state aid for this project (similar to the one approved by the EC for the United Kingdom) that will also require strengthening of the transport network.
Transelectrica, the national transmission and balancing company, aims to attract investment for the development of the network in northeast Romania and for increasing cross-border connection capacity. Given developments in the RES market, the balancing market becomes essential. The most active producers likely to respond to balancing requests are hydroelectric facilities and gas-based facilities as the balancing of a regional market requires sufficient inter-connection capacity.
Along with the development of intelligent networks, spot prices will influence consumption patterns by improved regulation of consumption and with the support of automated systems and efficient public lighting. Beginning in 2014, the day-ahead market in Romania was connected to similar markets in the Czech Republic, Hungary and Slovakia and which set a regional electricity price. Romania is an electricity exporter and in order to have competitive prices, domestic electricity production should not be overburdened by taxes and levies such as the tariff on the injection of electricity into the network, a tax on the turbined water in hydropower facilities or the water used for cooling the coal-based facilities, which only exist in Romania and not in the neighbouring countries.
Both the market for exportable electricity production and the balancing market are highly concentrated, while the day-ahead and bilateral contracts markets are less so. At present Romania has one of the lowest electricity prices in Europe, although it is expected that the price will rise in the future to an average of 65-85 EUR/MWh, depending on the capital costs required to upgrade production facilities, the price of fuel, the cost of modernising the transport and distribution infrastructure and the cost of certificates for GGE.