Gitenstein: A Black Sea – Europe gas pipeline makes more sense than nuclear reactors 3, 4 at Cernavoda

0 103

The energy sector is critical for Romania’s further development, with impact on a wide range of stakeholders: households, industry, power generation companies, and investors. Starting up the reactors 3 and 4 at Cernavoda, a EUR 6 billion project, will remove lignite units from market, according to ‘Romania Strategic Energy Market Outlook 2014 – 2025’ A.T. Kearney analysis, made at Fondul Proprietatea (FP) request and launched in a press conference on Thursday. However, the study cautions that according to current data, the investment in 3 and 4 units needs a major support scheme, which will be borne ultimately by the final consumer.

In his turn, Mark Gitenstein, member in the Committee of Representatives of Fondul Proprietatea and former US ambassador in Bucharest, said that the construction of nuclear reactors 3 and 4 at Cernavoda has less sense than a pipeline to transport gas from the Black Sea to the rest of Europe.

Also, the analysis indicates that without a proactive approach from the Government side, electricity demand in Romania is expected to stay flat until 2025 (less than 1 percent growth per year). To increase demand, successful economies are building the energy landscape on a competitive industry development master plan, but this is missing in Romania.

Romania has sufficient capacity to meet forecasted demand by 2025, but operates at inefficient costs. Currently, the electricity price is distorted by subsidies and inefficiencies of the electricity production sector. These are subsidies and inefficiencies (cost of lignite, overcompensation of renewable sources) are estimated to increase energy costs for the economy with ~24 percent.

On the one hand, Romania will be challenged to phase out its inefficient units, generating sunk costs. On the other hand it can take the opportunity to reshape its generation park and evolve as a competitive net exporter.” explained Michael Weiss, Partner at the consulting company A.T. Kearney.

Renewables, most attractive sources for investors

Based on the forecasted cost of entry by energy source, renewables are expected to be the most attractive sources from an investor perspective by 2025 if the current level of subsidies is maintained. Additionally, small scale energy solutions with locally integrated supply and demand (solar panels, biomass for self-consumption) are better fit than large units (coal, nuclear) to meet investor criteria and energy system needs due to higher flexibility and lower network costs/ losses.

To meet 2025 investment needs, the Energy Regulator and Romanian government should ensure a market framework focused on transparency, predictability, consistency and competitiveness. “An integrated nation-wide energy strategy, matching the economic strategy, is essential for the growth of the energy sector and should address issues such as the current low investor confidence and uncompetitive taxes. Moreover privatizations are key to attract further funding and investments and reducing burden on state budget,” Greg Konieczny, Fund Manager of FP added.

- Advertisement -

Leave A Reply

Your email address will not be published.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More