Main scenarios of the National Energy Strategy
- Written by Adrian Stoica
Romania’s future energy strategy would cover the interval until 2030. Experience shows that none of the two strategies developed in this field has been finalised and, given that by the end of this year we will have parliamentary elections that will lead to a new government, a new strategy is likely to pass through the mixer of changes. Perhaps even radical.
Whatever the lifetime of the Ministry of Energy’s document to be presented in autumn, one thing is certain. Romania must kick-start the investments in energy because it has an aging production capacity, many units of the thermal energy sector, at least, being at the end of the road. In the new draft strategy, the baseline scenario is focused on the closing of thermal power plants (CET) and of power plants that would not meet the environmental obligations by the end of 2016 or the expiry term of the National Transitional Plan agreed with the European Union, i.e. until July 2020. On the list there are 36 units, each of them having a clear deadline to meet the environmental standards.
THE REACTORS AT CERNAVODA, REJUVENATED
The second scenario focuses on extending the lifetime of reactors 1 and 2 at Cernavoda. “Unit 1 has six more years of operation until refurbishment, during 2023-2025, subsequently lifetime would be extended for another 25 years, until 2050. Unit 2 has 17 years of operation until refurbishment, during 2034-2035, subsequently lifetime would be extended by 25 years, until 2060,” reads a document from the Ministry of Energy.
TWO MORE REACTORS AND A HYDROPOWER PLANT
The third scenario aims at building reactors 3 and 4, which would become operational in 2023 and 2024. This investment is expected to be completed by the construction of the Tarnita-Lapustesti hydroelectric plant. The Ministry of Energy estimates that it will enter into operation in stages. The first 500 MW would be put into operation in 2021 and the next 500 MW in 2023.
A NEW GROUP AT ROVINARI
Besides extending the lifetime of reactors 1 and 2 at Cernavoda and the construction of Tarnita-Lapustesti hydroelectric plant, a 300 MW lignite power plant in Rovinari is considered, with an underground carbon dioxide storage capacity, to be commissioned by 2020. Another analyzed variant is that the future lignite group would be projected at a far greater power of 500-600 MW at Rovinari.
CAPACITY CUTS AT CE HUNEDOARA
Regardless of the variants analyzed, one thing is certain: the Hunedoara Energy Complex will close down production capacities due to unsustainable costs. Thus, only two energy groups (numbers 3 and 4) at Mintia thermal plant will remain operational and the Paroseni thermal plant will be closed down. Regarding Mintia, there is the option to maintain operational only group no. 3 and to built a new group on gas. Coal mines Lonea and Lupeni are also to be closed down, while Livezeni and Vulcan mines will remain operational.
UNDER QUESTION MARK
According to a report by the working session members of the electricity sector within the energy strategy for 2016-2030, with prospects for 2050, electricity generation technologies in many plants on coal and natural gas in Romania are at the level of 1960-1970 and must be replaced, however there is a risk that this will not be achieved in due time. “Today, after more than 30-40 years in use, new capacities need to be built to gradually replace the closed down facilities, but at a sustained pace. Because of the global rapid and profound transformations in the electricity sector and due to uncertainties created by price on the electricity market, there is a risk that these investments are not made in due time. Thus, even the development of conventional generation capacities could require state aid mechanisms: cogeneration bonuses (possibly trigeneration) or contracts for difference (CfD) if their application will be finally allowed by the decision of the European Court of Justice,” the specialists report reads.
THE STATE COULD INTERVENE
If market conditions discourage investors from investing in any new capacities, impacting on security supply, state intervention could be considered under support schemes, such as creating a capacity market to ensure the temporary operation of the groups on coal for energy security reasons. “It is important is that any state aid mechanism for non-renewable energy sources to be built around the imperatives of adequacy and safety for the National Energy System operation, without favouring specific technologies or production units for other reasons,” the authors say.
THE ENERGY MIX DISCUSSED AGAIN
In order to ensure the sector’s competitiveness and its modernization, the new strategy could be addressed from the prospect of integrating within large companies the producers which rely on various primary energy sources - the authors of the report of the working session in the electricity sector have drawn attention. “One possible approach to the problem of competitiveness, sustainability and modernization of the generating sector may consist in integrating within the large companies of the manufacturers that rely on different primary sources of energy: coal, natural gas, hydropower, renewable energy sources (RES). In any case, first of all it is necessary that all manufacturers in mono-fuel system to correctly size the operational cost and staff structure, in order to operate efficiently during a limited number of hours of access by order of merit. The streamlining can take place within integrated companies or outside them, by access based on order of merit,” the report reads.
THE MOST EXPENSIVE ENERGY SOURCES
In the current structure, the producers using only one type of primary source (gas or charcoal) cannot be profitable. “The electricity production plants based on coal and natural gas are needed in terms of energy security. The current diverse mix has allowed, hitherto, overcoming the difficult conditions. The problem is that the mix of electricity is made up by several companies operating as mono-fuel producers in competitive market conditions. Electricity suppliers are the ones to aggregate and obviously they head for the cheapest electricity. This makes the electricity produced from natural gas and coal not to be among the favourites. Under the circumstances there is the risk that electricity producers using mostly these fuels might not accumulate enough hours of operation to become profitable,” the report reads.
These being said, it is clear that the need for investments to restore the energy mix will become pressing in the near future.