The free energy market will lead to an increase in revenues and the timing could not be better since the need for new investments in clean power generation is bigger than ever, says Cosmin Ghiță, the CEO of Nuclearelectrica, the company that operates the Cernavodă Nuclear Power Plant in Romania.
With two reactors, 700 megawatts (MW each), Nuclearelectrica covers 20 per cent of Romania’s energy needs and the envisaged increase in capacity, with the Units 3 and 4 projects, is pivotal for covering the future energy demand and reaching the national goal regarding the decarbonisation.
“Decarbonisation means that we will have to invest both in our big projects and also move in the direction of the Small Modular Reactors (SMR) technology. No matter the perceptions, we need both technologies in order to meet our decarbonisation goals”, says Mr Ghiță.
How green is the nuclear energy?
According to a document recently reviewed by Reuters, experts tasked with assessing whether the EU should label nuclear power as a green investment will say that the fuel qualifies as sustainable. Reuters adds that the European Commission is attempting to finish its sustainable finance taxonomy, which will decide which economic activities can be labelled as a sustainable investment in the EU, based on whether they meet strict environmental criteria and nuclear might just make it into the final cut. This would be a huge boost for all the nuclear projects in terms of financing.
Also, in mid-March, Romania, together with a group of countries like the Czech Republic, Hungary or Poland, underlined, alongside the biggest European nuclear producer, France, that the role of nuclear in reaching the UE’s climate goals is essential.
“We are convinced that all available zero and low-emission technologies that contribute to climate neutrality while supporting other energy policy objectives should not only be recognized but also actively supported by the European Union,” read the letter, bearing the signatures of Emmanuel Macron, President of the French Republic, Andrej Babiš, Prime Minister of the Czech Republic, Florin Cîțu, Prime Minister of Romania, Igor Matovič, Prime Minister of the Slovak Republic, Viktor Orban, Prime Minister of Hungary, Janez Janša, Prime Minister of the Republic of Slovenia and Mateusz Morawiecki, Prime Minister of the Republic of Poland. “This is especially valid for nuclear power whose development is one of the primary objectives of the Treaty establishing the Euratom Community, obliging EU institutions to promote it.”
“We call on the European Commission to ensure that the EU energy and climate policy accommodates all paths to climate neutrality according to the technology neutrality principle,” continued the official document. “In this context, all available and future zero and low-emission technologies have to be treated equally within all policies, including a taxonomy of sustainable investments, aiming at achieving climate neutrality by 2050.”
Regional unprecedented cooperation
Mr Ghiță also says that given the context, with the Green Deal accelerating the transition towards greener energy sources and the huge demand for replacing the existing capacities not only in Romania but also in the region, the cooperation between the states in CEE is unprecedented.
“It is obvious that many countries do see in nuclear an opportunity to reach that new energy mix, that will lead us all towards the envisaged decarbonisation,” he says. “The 3 and 4 Units from Cernavodă are a necessity for Romania to meet its energy needs after 2030. The other European nuclear projects are, again, projected to assure in the first place the local needs. We do see an unprecedented level of cooperation among the States, the common objective being the facilitation of these investments, acquiring new technologies, like the SMRs, the green hydrogen production using nuclear power. We see efforts to make the proper regulations for all of this to happen so that the entire development chain around these nuclear projects to be put in place.”
Nuclearelectrica CEO also gave an example. Each reactor from the Cernavodă power plant saves 5 million CO2 tonnes being evacuated into the atmosphere, making 20 million tonnes the total savings if the 3 and 4 Units will be built.
“Adding to this we have the security of supply, the low weather dependency and a big capacity factor,” he explains. “We still are the number one when it comes to the capacity factor from over 440 nuclear reactors worldwide.”
According to the current plans, Unit 3 will be connected to the grid in 2030, with a construction period estimated at 69-78 months. Additionally, the Unit 1 revamping will be ready in 2031. If the two new reactors will cost roughly 7 billion euros, the modernisation of Unit 1 is estimated at 1,2-1,5 billion euros.
“Last year, we were able to sign the contracts for the feasibility studies and the technical analysis, and we will continue the process this year,” recalls Mr Ghiță. “All of these are necessary to have The Feasibility Study in place, this being the final step of the first stage for the modernization of Unit 1. We had no significant delays in 2020 due to the sanitary crisis and I do believe we will be able to maintain the development plan in 2021. The modernisation of Unit 1 is a 1,2-1,5 billion euros project, entirely managed and financed by Nuclearelectrica.”
So, Cosmin Ghiță is very thankful for the full liberalisation of the Romanian energy market starting from this year because this will lead to bigger revenues and thus more resources to finance the ongoing projects.
“I do hope that with the market liberalization we will see a growing interest for long term contracts,” he continues. “But in my opinion, the biggest gain from the free market is the synergy we see between liberalisation and investments. Romania is exactly in a moment where it needs more than ever new investments in its power generation fleet, Nuclearelectrica having under development some of the biggest projects.”
Mr Ghiță also underlines that Romania is right in the middle of the energy transition, which means a huge need for investments in new, greener capacities, so it is more important than ever to have a predictable investments environment.
“The sudden changes proved their inefficiency and negative impact on the investors’ confidence,” he says.
Last year, Nuclearelectrica had to sell 20 per cent of its entire production on the regulated market, a significant increase from 13 per cent in 2019. The regulated price in 2020 was almost 27 per cent lower than the free market price, so the company missed 22,5 million euros in potential revenues just because of that.
A new breed of nuclear technology
Besides the modernisation of Unit 1 and the completion of Units 3 & 4, Nuclearelectrica is very interested in SMR technology. At the beginning of this year, the US Trade and Development Agency (US-TDA) and Nuclearelectrica announced the awarding by US-TDA of a non-refundable grant in value of 1,27 billion US dollars that aims to fund the cost of services required in connection with the delivery of technical assistance related to identifying and performing a preliminary assessment of new potential SMR compatible nuclear sites in Romania, outside in Cernavodă Nuclear Power Plant. The Grant Funds to be provided by US-TDA will be used to fund the costs of technical assistance for identifying and assessing suitable sites for small and modular nuclear technologies (SMR) and a licensing roadmap for these.
“We are interested in features like flexibility, modularity and higher efficiency that could provide advantages for both the energy system and businesses after 2035,” Mr Ghiță says. “The grant awarded by US-TDA will allow us to further explore sitting and technology compatibility with the proper technical assistance and have this assessment process initiated in due time for further decision-making.”
A digital organisation
Mr Ghiță says that although the SMR is a relatively fresh technology, it is very promising.
“It adds flexibility, contributing to the decarbonisation targets either by itself or in a hybrid scenario involving renewables,” he points out.
Operationally, Nuclearelectrica is a changing company, with an accelerated digitalization objective.
“Last year allowed us to radically change the way we work,” Mr Ghiță adds. “We will continue what we started last year and redesign the entire business model of the Group.”
Mr Ghiță is also confident that energy consumption will start growing this year, after the 3 per cent drop in 2020. Nuclearelectrica finished 2020 with revenues of 505 million euros and a net income of 142 million euros.