Sunday, July 21, 2024
HomeClimateNRRP: Romania sets tight deadlines for changing the Energy Law to boost...
Powered by

NRRP: Romania sets tight deadlines for changing the Energy Law to boost RES and promises to deliver a hydrogen strategy by 2022

Romania committed itself to make significant changes to the energy market in order to attract almost 16 billion euros for its Green Transition pillar, one of the six pillars on the National Recovery and Resilience Plan (NRRP).

Only for green energy, gas and hydrogen, Romania hopes to unlock 1,6 billion euros from the Recovery and Resilience Facility (the Facility) with projects that seem more like a list of wishes than a clear development plan, especially given the network restrictions and unclear regulations, experts consulted by CEENERGYNEWS say.

So, by the end of this year, Romania will bring changes to the Energy Law in order to allow PPAs for renewable energy to be concluded outside the OPCOM centralised market in order to attract investors. Also, by the end of next year, the regulations that will allow the contracts for difference will be in place, according to the National Recovery and Resilience Plan submitted to the European Commission at the end of last month.

Furthermore, by mid-2023 the regulations needed in order to develop demand-response solutions on the Romanian market will be in place, a moment in which the legal frame for offshore wind development and biomass generation should be clear.
Also, by mid-2023 Romania estimates to have its first capacity auction for renewables. Meanwhile, the Polish government has already adopted regulations providing support for renewable energy auctions of 2.57 gigawatts (GW) of capacity, up 50 per cent from last year’s auctions that awarded 15-year contracts to 1.7 GW, according to an S&P Global Platts analysis.

So, the next year and a half will prove pivotal for Romania’s ambitions to unfreeze its renewable projects market, but it might not be enough since the biggest obstacle right now is the grid itself.

“In Romania, there are talks about a new start for renewables, but talk is not enough for the country to be again part of the RECAI (Renewable Energy Country Attractiveness Index)”, says Mihai Drăghici, senior manager, consulting, EY România.

Since 2003, the biannual RECAI has ranked in the top 40 markets based on investment in renewable energy, a key part of the energy transition. Back in 2012, Romania was the 10th market worldwide considering its attractiveness for wind investors but it all changed when without any notice the Romanian state decided to cut dramatically the subsidies for renewables. Since then, the green market remained frozen.

But even if the regulations will be in place, the grid represents the biggest challenge this time, since half of the country, north-east and south-east, remains fully blocked for new projects, warns Transelectrica, the national grid operator.

Even so, the Romanian government remains optimistic, at least in its National Recovery and Resilience Plan.

“From 4.405 MW [megawatts] installed in wind and solar, through the National Recovery and Resilience Plan this capacity will grow to 4.640 MW by the second quarter of 2026 and additionally 545 MW will be installed through the support scheme which will be put into place by the NRRP. Additional to this capacity there will be other projects leading us to the envisaged 6,9 GW in new renewable projects by the end of 2030”, the document says.

The poor grid is also mentioned in the Plan.

“The lack of interconnection capacity is proof of the lack of investments”, the official document admits. “Among others, this leads to high energy prices. In the second half of last year, Romanian industrial consumers experienced higher prices than Slovenia, France, Hungary, Luxembourg, Estonia, Bulgaria, Czech Republic, Finland, Denmark and Sweden”, according to the Romanian National Recovery and Resilience Plan.

Hydrogen is another dimension of the Recovery and Resilience Plan in the Green Transition pillar. Unfortunately, although Romania says that by the end of next year will have a functional hydrogen strategy, other countries already attract significant investments.

Last month, for example, global power leader Cummins has joined the Spanish government leaders and partner Iberdrola, one of the world’s largest energy companies, to announce its plans for one of the world’s largest electrolyser plants for the production of green hydrogen to be located in Castilla-La Mancha, Spain. According to the Spanish hydrogen strategy, by 2030 the country hopes to attract 10 billion euros in hydrogen investments and build 4 GW in electrolysers, almost 10 per cent of the UE target. Meanwhile, Romania hopes to have its legislation working by mid-2023.

“By the second quarter of 2026, almost 90.000 consumers will be connected to the gas distribution network and receive a mix of hydrogen and gas”, says the NRRP.

The document also mentions hydrogen as a potential investment in the transformation of 1.300 MW of lignite power generation capacity, by the third trimester of 2026, together with gas-fired high-efficiency cogeneration units.
Romania also says it will develop a plan to promote electric mobility within a year.

“By March 2022 will be elaborated a plan to implement public e-charging networks and encourage private investments for the development of the infrastructure through a support scheme. Romania will have 800 charging stations for electric vehicles by the end of 2022. Now Romania has only 400 electric charging stations.”

Aside from the plans, the government has in order to change the regulations and relaunch the renewable market, there are some very specific investments that should be delivered by 2026 through partnerships between state-owned companies and private groups.

So, Romgaz, the state-owned gas producer, together with GSP Power, the energy division of GSP (Grup Servicii Petroliere), should deliver in Mehedinți a 320 million euros gas-fired power plant of 159 MW, a solar project of 100 MW, a unit to produce green hydrogen and a carbon capture and storage facility. All should be done by 2024, a very optimistic deadline especially given the situation from Iernut, the 430 MW gas-fired power plant owned by Romgaz. This 269-million-euro project started in 2016, with a deadline for 2019, but it’s completely blocked due to the conflict between Romgaz and its contractors. In the best-case scenario, the plant will be ready by mid-2022.

Also, according to the NRRP, Romgaz should build yet another project with the same GSP Power, in Constanța, with an estimated value of 265 million euros. The project consists of a 159 MW gas-fired power plant, a solar project of 20 MW, a unit to produce hydrogen and again a carbon capture and storage facility. The entire project should be done in 3 years.

Hidroelectrica, Romania’s biggest energy producer, should deliver a hydrogen investment of 100 million euros and on the Cernavodă nuclear power plant site should be delivered an investment of 28 million euros in a solar park linked to a green hydrogen production and storage facility.

Electrica, the biggest Romanian energy distribution company, where the Romanian state is still de biggest shareholder, will, according to the NRRP, develop a 32,5 million euros energy storage project with a capacity of 50 MW. Furthermore, Electrica will handle a 10,5 million euros electric mobility project aiming to install 400 electric chargers. Up to this moment, Electrica remains the only big Romanian utility company with an undiversified portfolio of activities, but the expectations according to the NRRP are very high.

Also, the government promises a 167,5 million euros state aid scheme to unlock new investments in the entire production chain of solar panels, cells and solar batteries.

“We really hope to stimulate the competition in this emerging market”, the official document says.

Some other 100 million euros should be distributed by 2026 to energy efficiency projects.

All in all, Romania hopes to attract 29,2 billion euros through the Recovery and Resilience Facility (the Facility), out of which 16 billion euros will be loans. The NRRP stirred a lot of controversies since its final form was made public only after it was submitted to the European Commission. The Plan includes six pillars, the Green Transition being one of them.

In this pillar alone Romania hopes to attract 1,8 billion euros for water management, 1,37 billion euros for reforestation and biodiversity protection, 1,2 billion euros for waste management, 7,6 billion euros for transport, 2,2 billion euros for building renovations and 1,6 billion euros for green energy, gas and hydrogen infrastructure.

Sign up for our newsletters

    Monthly newsletter – Delivering the most important energy stories of the month selected by our Editor-in-chief
    Weekly Oil&Gas roundup - All major news about the oil and gas industry, LNG developments, the upscaling of new gases and related EU regulations arriving in your mailbox every Monday.
    Weekly Renewables&Climate roundup - All major news about investments in renewable energy sources, environment protection, green hydrogen and new innovative ways to tackle the climate crisis arriving in your mailbox every Tuesday.

    Most Popular