The Energy Ministry is planning to reorganize energy production by setting up a new company to include both coal and hydro power plants, Doru Visan, state secretary at the ministry, said at ZF Power Summit. The announcement came while E.ON Romania general manager said that OUG 114 will reduce their investment by up to 40 percent.
OUG 114 has affected companies’ investment plans, which are now facing unpredictability and prefer to keep their money and wait for future deployments, according to Frank Hajdinjak, general manager of E.ON Romania.
It’s a pity for this country, for customers and for our company because we want to invest, but unfortunately we have to reduce the investment figure. Compared to the previous investment plan, we will invest less by 35-40 percent,” says Hajdinjak.
The Energy Ministry explained that we need new energy production plants because Romania has been importing increasingly more energy in the first two months of winter, as a result of the high domestic price, and if the structure of production is not rethought, the will have the same problem.
Visan showed that a study carried out by the ministry before the start of the cold season revealed that, although statistically Romania has a production capacity of 24,000 MW, about 8,000 MW are missing.
“Of the 24,000 MW, 8,000 are missing due to legal conditions, financing, environmental conditions, technical conditions. This is the reality we take on for the next year’s approach, and these 8,000 MW must disappear as licensing in order to come up with additional investments. This de-licensing process is mandatory and it will start after April,” the state secretary explained.
In November, Romania exported 40-50 MW, in December the import was 198 MW, and in January the import increased to 400 MW.
“The reasons are strictly commercial: the energy flows from the lower price to the higher price. The main cause is the imbalance between supply and demand, the demand was much higher at every moment. The increase in the price of the emission certificate also had a major influence, and it was not even anticipated, it rose from EUR 7 to EUR 25, with an average of EUR 23 in recent months,” the ministry official said.
“So, in the market, we had a marginal price dictated by coal, which internalized the cost of emissions certificates and, hence, the behavior of other market participants who put up for sale small quantities at high prices,” said Visan. “So the consumption coverage was commercially imported from the Czech Republic.”
Asked whether the solution he is considering is to combine coal and hydro-electricity production, Visan replied: “The state is also a shareholder in Hidroelectrica and coal producers. The best combination is coal with Hidroelectrica in a new company.”
Another idea is that the state will redeem the shares owned by Fondul Proprietatea to the energy producers. “This proposal will be launched in a public debate. It is a working variant. We are aware of the difficulties that exist, because this has been the intention of the past years, in a very advanced study, and has been blocked,” he added.