#ESS2023 | Addressing Energy Poverty, Market Maturity, and Capital Investment in Romania

Day 2 of the Environmental & Sustainability Summit 2023 was marked by an engaging panel discussion featuring key figures in the energy sector, who addressed critical issues including energy poverty, capital investment, and the market’s maturity in Romania.

The experts shared their insights into the evolving energy landscape, highlighting the country’s commitment to sustainable energy and the transition towards a more resilient and eco-conscious future.

“We have witnessed a global shift towards cleaner and more sustainable energy sources, with Romania being among those nations that are already predisposed to turn wind, solar and hydropower into the backbone of a greener future. We are not only talking about protecting our planet, but also about creating jobs and strengthening energy security. From the perspective of the World Energy Council, the notion of sustainable energy translates into three main elements: energy security, energy equity and sustainable environment. By harmonizing these three elements will obtain the basis of prosperity and competitiveness at the level of each country”, said Mioara Iofciulescu, President of Atlantis Romania and VP of OFA UGIR, on the opening of the energy panel.

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The Environmental & Sustainability Summit 2023: Challenges and opportunities for a better future

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Dan Dragos Dragan, State Secretary, Ministry of Energy

Certainly, we are all concerned about the issue of energy poverty, which affects the most vulnerable among us. Romania has committed to certain obligations through the European Green Deal, and all the measures and strategic decisions that the Romanian state has taken and is financing through various energy-related instruments in the National Recovery and Resilience Plan or the modernization fund should have a common purpose. This common goal is to support consumers, whether they are industrial or household consumers, with a crucial motto that no one should be left behind in this energy transition.

On the other hand, within the Ministry of Energy, we primarily address the economic aspects of the manufacturing industry. But certainly, what happens in the energy industry has an impact on the final consumers, including households. These are measures that we are developing, and these measures can start to bear fruit. For example, the implementation of Directive 944 in December 2021, through which we introduced quantitative and financial compensation for prosumers.

Today, we have over 1 gigabyte installed, with more than 78,000 prosumers connected to the grid, and this energy leads to lower prices, including for other beneficiaries and consumers in the market. All these measures have their effect on the final consumer, and the effect is to have access to energy resources that can be financially sustainable.

Valentin Bargau, VP of Corporate Operations, Restart Energy

I’ll start by saying that at least in the energy sector, we indeed need more investments. The capital market represents one of the most important tools at our disposal, and here I refer to the players in the energy segment. Unfortunately, in Romania, this instrument has not been widely used for various reasons. Restart Energy was one of the first energy companies to choose this path of the capital market through the bond issuance we carried out in 2021.

We will continue on this path because we are preparing for an IPO next year, and we want our example to be followed by as many players in the energy sector as possible. There are multiple instruments that can be accessed by economic actors in Romania. We have the Aero Market, which targets smaller companies in growth, and the main market, which is aimed at mature companies. The IPO this year at Hidroelectrica proved that we can have a successful capital-raising process with significant amounts in Romania.

Indeed, there is some work required to access these opportunities offered by the capital market. On the one hand, companies in Romania need to go through a maturation process. But we also see those in the sector following the same pattern. Companies in Romania are gradually becoming more attentive to how they build their business from the beginning, so that when they move towards a listing or accessing the capital market, it’s easy for them to do so. We see more openness from entrepreneurs towards the capital market, which is a good thing because there was some reluctance in the past. I’m glad we’ve reached this point, and the IPO done by Hidroelectrica is a very important catalyst for energy sector firms.

Ecaterina Gheorghe, Energy Expert, Management and Strategic Advisor, General Meel Electric

It is evident that there is an evolution, although not always linear, because the market was not prepared, infrastructure was not ready, and expectations were not concrete because from 2008 to 2010 there was interest, but constructions were on a relatively small scale. From 2011 to 2013, there was a boom, partly due to the support scheme based on six green certificates and, of course, falling technology costs. Once the support scheme was closed, things moderated and entered a period of stagnation.

The energy price was not well defined, and everyone based their income on green certificates. When the price of green certificates was regulated from a maximum of 55 to a minimum of 29, there was a significant impact.

Now we are entering a market maturation phase. Interest in self-consumption and household photovoltaic systems has seen spectacular growth, as well as the new commitments that Romania has made in terms of sustainability. This gives us hope that we will continue in the same direction of growth.

We are in the process of ESG, but not unconditionally tied to participation in the stock exchange. General Meel, through the core of its activities, addresses sustainability by following international practices and regulations. The transition to green energy through preventive and corrective maintenance that addresses any negative impact on the environment is creating new jobs, from less than 100 employees to 250 at present. An important factor is educating the public about the sustainable use of energy through the company’s activities.