RWEA (Romanian Wind Energy Association) was founded as a result of Law 220/2008 which supported the expansion of renewable energy sources in Romania. At the time RWEA took on the responsibility to promote the corresponding legislation and assist investors in the process. In recent years, the association has broadened its purpose by adding a component that involves active promotion and dissemination of messages that support the transition to clean energy.
RWEA plays an active role in promoting the transition to clean energy in Romania. What needs to happen with priority in order for this transition to take place smoothly?
I think that the first thing that should be improved is the dialogue. Public authorities in Romania are not used to organize effective public debates, which is unfortunate, because there is great value in bringing all parties involved at the same table, and encouraging them to work together to identify the best solutions. Our experience has been that exchanges of opinions are rather limited, and sometimes focused on identification of problems and conflicts and not on developing common goals. In reality, the energy transition is inevitable, coal based production will eventually become obsolete, so it is in everybody’s interest to figure out the best ways to fill the gap that will be left.
Secondly, there is the need to understand the support that EU is able to provide to our country in this process. There are many financing options and the amounts made available very high, and as a country we need to be aware of them and use them to the best of our advantage. It is a chance for us to go through this change without burdening the customers with the costs of the transition. The energy system in Romania is already rather old, both when it comes to production capacities and the infrastructure for transport and distribution. The need for investment is high and the more we postpone it, the more expensive it will become. Not to mention that any delays in addressing these issues will lead to a large gap in terms of services offered, compared to other countries in the world.
To what degree are these EU funds used at present and what is the situation in terms of investor appetite?
There is still a long way to go but I am happy to notice that Transelectrica has started to attract more funding. If they manage to modernize the network then it will be possible to integrate renewables with great ease and with very little costs into the system. Another advantage we have in this circumstance is the fact that EU authorities check whether the money has been spent wisely, which is an added guarantee because we can leverage their experience in this field.
Broadly speaking, if we consider the commercial and the market aspects, it is a good moment for investment because Romania will not afford to not have renewable energy in the coming years. It simply cannot fill in the gaps in other ways and there is no other solution that is faster or simpler than developing renewable energy. But there is also need for a nurturing investment climate, and the reality at present is that the country risk has become rather high and so have the costs of capital. Stability in legislation and protection of investment are essential criteria that investors consider when deciding on their next projects. There is little political openness towards this sector and this is reflected in the current climate, where unfortunately Romania no longer appears on the investments plans of many big companies, even those that are already present here.
How nurturing do you find the current regulatory environment and what kind of changes would the industry like to see going forward?
The most important thing is for the market rules to be adapted to new realities. The models change, all countries that have embraced renewable energy had to adapt their market and network structures. For instance the intra-day trade needs to be encouraged, because of the variable nature of renewable energy. The situation at this time is that we have an intra-day market that does not work and there seems to be little interest to develop it. Batteries are also absolutely necessary, but in Romania we do not have secondary legislation to encourage this technology. Factually, there is only one battery with a capacity of 1 MW in the entire country, and even that had to face significant hurdles.
Commercial mechanisms also need a better set up. Around the world, renewable energy parks are developed on the basis of simple power purchase agreements (PPA). Legislation does not allow this in Romania and there are no other instruments in the market to address this need. There is a project under development at ANRE, which involves the creation of a platform that allows for this type of long term agreements, but whether it will be successful is still to be seen. When it comes to big consumers of renewable energy, the contracts are confidential because the cost of energy is a sensitive topic for certain companies, so it will be interesting to see whether a platform where everything is public will work. We do want to see this idea coming to life successfully, it is a good first step, but meanwhile the market still lacks this important instrument of bilateral contracts and it is yet another factor that hinders investment.
What are some aspects in which the industry itself needs to do better in order to tackle these challenges?
I trust that if the industry is persistent enough, and if its arguments are based on thorough studies, it can stimulate a more effective dialogue. It is also important for the industry to engage openly and often with mass media. The field of energy in Romania is still rather opaque, which generates situations in which some realities are misunderstood from the outside, and this is an area where the business environment can surely do more. Keeping the prices affordable is important, but it should not be the only perspective that is considered because it is a losing strategy. Rather, the focus should be directed towards optimising costs and improving services, which in time creates more competition and better options for end consumers.
There is also significant room for growth when it comes to public education, currently there are very few people that care about the air they breath and the amount of public spending that is associated with diseases caused by pollution. Our goals going forward also include organising events to bridge the gap between the industry and society at large, including a series of events that will allow us to engage more with school students. There are many ideas, for now we are prioritizing the need for dialogue and we look to identify partners that will make it easier to create awareness amongst people regarding the energy transition. What is certain is that this transition will take place, and whether we come out on the other side in a winning position is fully up to us.
