Energy capacity development - held back by prosumers and project speculators

The development of new energy production capacities from renewable sources is being held back at the moment by some of the prosumers, who instead of satisfying their need for self-consumption have turned into real energy producers, as well as by the speculators of some energy projects, said Sebastian Burduja, the Minister of Energy, and George Niculescu - the president of the National Energy Regulatory Authority (ANRE), yesterday, during the launch conference of the second edition of the "Code of good practices in the renewable energy sector", a work carried out by Romania Energy Wind Association (RWEA) in partnership with the Romanian Photovoltaic Industry Association (RPIA).

Sebastian Burduja, the Minister of Energy, said: "I very much support the idea of optimizing the market, of cleaning the renewable energy market. There are serious investors here. They are uncomfortable with those who do not play the right way. Transelectrica is uncomfortable with those who don't play fair. It has become a phenomenon in Romania, and we have to admit it, speculating with land (ed. - in order to make investments in energy production capacities from renewable sources). We have no interest (ed. - in the development of these energy projects), we have no knowledge, we have no idea what a solar park or a wind farm means, but we have some pennies from somewhere and we make a purchase of land. Then we want to multiply them quickly, because we are creative. Well, this kind of phenomenon meant the delay of serious investors, because they did not obtain ATRs (ed. - technical approval for connection), given that Transelectrica has the obligation to analyze all requests. It also meant costs for serious investors, because they found themselves in a situation where they were asked to strengthen their networks, and their own projects, which they really intended to implement, became unprofitable or much more difficult to be profitable , when you have, for example, additional costs of 10 million euros. And then the loading of the system by these speculators must be discouraged or eliminated. How can we do this? I think it's a proposal that you put on the agenda: let's collect a guarantee. I am working with the parliamentary committees to come up with a legislative proposal in this regard, in order to succeed together in cleaning up this important market".

Minister Burduja specified that, for the development of energy projects, there is still money in the market, including in the Modernization Fund: "We are discussing there 1.5 billion euros, which will be for self-consumption, but also for production. The first call that will be launched in the coming weeks will target administrative-territorial units, schools, kindergartens and others. (...) There will be another call, similar to Investment 1 of the PNRR (electricity production capacities from renewable wind and solar energy sources), which we will launch as soon as we complete the evaluations and contracts on Investment 1. The allocation will be still half a billion euros, so a substantial amount, and that's why I ask you to participate, be our partners, (...) let's achieve our goals".

The Minister of Energy also said that at the moment there are 740 projects submitted to Investment 1 of the PNRR, which are under evaluation and for which the signing of financing contracts has already begun. Mr. Burduja mentioned that these are very large projects aimed at production capacities even over 1 Megawatt and he gave an example of a project of 800 million lei in Giurgiu county.

• George Niculescu: "A threshold must be imposed for the capabilities of prosumers"

For his part, George Niculescu, the president of ANRE, said that the role of prosumers is energy efficiency and bill reduction in a period of high energy and gas prices, not to earn money from this activity.

George Niculescu showed: "I encouraged and still believe in the role of prosumers as a measure of energy efficiency. I still believe that in order to reduce our utility bills, we need to turn to photovoltaic panels on the roofs of houses, like household consumers. However, I do not believe in oversizing the production facilities so as to excessively monetize this surplus energy that they produce. There are situations where, although the prosumer has a technical approval to connect only 5 kilowatts, he installs 20 kilowatts, because the roof allows it, but in this way he unbalances the distribution network. We thus end up in the situation where the tenth neighbor on the street can no longer connect, and if they connect, we will have problems with the low voltage distribution. That's why, I think, a threshold must be imposed for these capacities, a percentage of what you consume. We don't want to discourage this process, but we want it to be a measure of energy efficiency, not monetization of a situation. The Government's objective is to have more capacity installed and not a large number of megawatts traded on the market, in real estate-style transactions. We will see if there is a need to amend the primary legislative framework in Parliament or if ANRE only needs to amend the secondary legislation".

According to the president of ANRE, at this moment, technical approvals for connection are issued for over 8,000 megawatts in solar and wind projects, according to the data, for a capacity of 7,000 megawatts, the connection contracts being also obtained, a very important step in the realization of a project.

George Niculescu specified: "Looking in perspective and taking into account the fact that the success rate of these projects is 15 - 20%, I estimate that in the next 2 - 3 years approximately 3,000 - 4,000 megawatts from renewables should enter function in Romania, in the context in which Transelectrica received requests for projects of 20,000 megawatts".

Under these conditions, the head of ANRE considers that the storage part becomes extremely important, and the Authority intends to issue in the next period the necessary regulations that will ensure the framework for the storage part.

• Sebastian Burduja: "We need a new energy strategy"

Regarding contracts for difference (CfD), Minister Sebastian Burduja stated that their implementation is a PNRR milestone that must be met by December 31, 2023, but which requires both the involvement of the European Commission as it is a state aid and a financing from the Modernization Fund with the approval of the European Investment Bank. In relation to the CfD, George Niculescu, the president of ANRE, mentioned that these contracts should also apply to the future offshore wind farms in the Black Sea, which will be realized after the bill for offshore wind passes the Parliament.

The Minister of Energy also referred to the Integrated National Plan for Energy and Climate Change (PNIESC), which should be ready by March 2024.

Sebastian Burduja showed: "In the preparation and approval of this plan we depend on other ministries and other state authorities, as well as the National Institute of Statistics, to complete the uploading of updated data on the European platform. Unfortunately, at the moment there is not much data and we need to upload at least a preliminary version of them, by March. However, I believe that we should have, before the PNIESC, an energy strategy. It would be logical to have this strategy until the end of 2023 or at the latest in the first part of next year, until March".

The representatives of producers, suppliers and distributors of energy produced from renewable sources claim, however, that the Ministry of Energy should assume certain objectives in the short, medium and long term.

Dana Dărăban, executive director of the Federation of Associations of Energy Utility Companies (ACUE) said: "I am very reserved about a new energy strategy, although I am convinced that we need it, but I wonder if we should not have a plan concretely with assumed targets, because, unfortunately, there is a lack of responsibility in the public area. Regarding the assumed targets for the year 2030, so far in the last six years energy distribution companies have invested 13 billion lei in projects in the field of natural gas and electricity. According to our calculations, in order to reach the targets programmed for 2030, we will have to triple at least the amount invested so far in the energy distribution sector".

The executive director of ACUE stated that there is a need for a simplification of the connection regulation, which he stated is "a colorful document with "17,000 changes"", and that the false concept of gratuity must be abandoned, "because there is no gratuity".

The ACUE representative requested standards for connecting prosumers and clear, simple rules, as well as encouraging investors to submit projects and attract funds.

Dana Dărăban expressed her displeasure that all calls for projects were delayed, that the applicant's guides appeared late, with many ambiguities, that the evaluations for the submitted projects are difficult and she showed that all this situation leaves its mark on the implementation of the projects, implementation for which the authorities do not want to offer any derogation from the set deadline.

The above situation shows a complicated scoreboard regarding the targets assumed by our country for the year 2030 regarding the energy transition, a picture that can become gloomy, if the fiscal changes that the Government wants to assume in the Parliament will come into force, because they will affect a lot of electricity distribution companies.