Economic slowdown freezes energy projects

Energy consumption faithfully mirrors the state of an economy. The energy market has already experienced a massive decline in demand in the first semester, of 10-12% for electricity and 25% for natural gas. Ion Lungu, the chairman of the Association of Electricity Providers of Romania (AFEER), said: "The drop in consumption in the semester, which will not persist in the second semester, reflects the 8% drop of our economy, which the authorities predicted. I believe that this estimate is far more realistic than the 6% drop that the Government announced one month ago".

Mr. Lungu added that the drop in consumption was stabilized at a certain level and that by year end, demand will have dropped 12% over 2008, so it"s unlikely the economic decline will exceed 8%. Ion Lungu said that given the current context however, things aren t looking too well for next year: "Investments in the energy sector will decrease proportionally with the drop in earnings caused by shrinking demand. There are no favorable conditions for a rekindling of industrial energy consumption. Energy service sectors will be affected, with wage freezes and cuts being the most visible symptoms. In the energy production sector we will see new, more efficient units, but this will happen in the long run, because our plants are extremely old and they need replacement. What"s certain is that our economic decline is significant and it will lower the appetite of investors".

So far, several wind farm investors have announced they would postpone their projects for the coming years.