Romanian Electricity Sector and National Energy Strategy Romanian Reverse Economic Mission to USA – September 2010 Alexandru Sandulescu General Director.

Romanian Electricity Sector and National Energy Strategy

Romanian Reverse Economic Mission to USA – September 2010

Alexandru Sandulescu

General Director – Energy, Oil and Gas Department

Romanian Ministry of Economy, Commerce and Business Development

Romanian Electricity SectorRomanian Electricity Sector

Romanian electricity sector

Overhead transmission lines: 8800 km Transmission substations: 76Distribution lines: 310127 km Distribution substations: 1296Consumers: 8,500,000 National consumption: 54.6 TWh (2008), 49.9 TWh (2009)


Transmission and system operator

Commercial operator

Producer with hydro power plants

Producers with thermal power plants

Producer with nuclear power plant

Almost 20 municipal cogen producers

Nuclearelectrica

Hidroelectrica

Transelectrica

OPCOM

T1 T2 T3 T6

More than 120 independent suppliers

8 distribution companies (DISCOs)E1 E2 E3 E7 E8

Electricity sector structure


Electricity generation structure 2009


Electricity generation variability


Electricity export / import balance

Import

Exp

ort

Romanian Electricity MarketRomanian Electricity Market

Romanian electricity market

Fully liberalized from July 2007;

No administrative barriers for imports and exports of energy or energy resources;

Advanced electricity market compared with other countries in the region;

Market operator – Opcom operating:

Day Ahead Market

Forward market;

Green Certificates Market

CO2 Allowances market

Market settlement.

Balancing Market operated by the TSO, Transelectrica


indep. supplier 1

indep. supplier 2

Supplier

producer producerproducerproducer

eligible customer

Customer at reg. tariffs

eligible customer

Customer at reg. tariffs

eligible customer

centralized markets OPCOM

wholesale market

retail market

Wholesale vs. retail electricity market


Wholesale electricity market

Physical Notifications

BILATERAL CONTRACTS DAY AHEAD ON THE DAY SETTLEMENT

TSO

Balancing

Market

MP

P

Q

GG GG

SS SS

Q

Day Ahead Market

Simple Bids

Simple Bids

Firm Volumes by Company

Simple bids by unit

Metered Volume

s

Meter

data

Imbalance

volumes by BRP

Adjustments to Day Ahead schedule

BM Volumes

Market Operator

TSO-market operator

G - generators

S - suppliers Balancing Responsible Parties


Wholesale electricity market – monthly traded volumes

Balancing market

Day ahead market

Forward market

Negotiated contracts

Regulated contracts

Balancing market

Day ahead market

Forward market

Negotiated contracts

Regulated contracts


Retail market opening

Legal market opening

Real market opening

Legal market opening

Real market opening


USD/MWh

20

40

60

30

50

Day ahead market – volumes and prices

Day ahead traded volumesDay ahead prices

70


Day ahead market – comparing to other markets


Future developments

Adjusting market

Intra-day markets

Both are in testing phase

Market coupling discussions with neighboring countries

Romanian Energy StrategyRomanian Energy Strategy

Romanian energy strategy 2007 – Romanian energy strategy 2007 – 20202020

Issued in November 2007 through GD 1069/2007

Consultation and agreement of all parliamentary parties

In line with EU Policy document in energy (January 2007)

Based on a Least Cost Development Study – Necessity of new nuclear units

Currently under revision

The national fossil fuel reserves

Romanian energy sources potentialRomanian energy sources potential

Geological reserves

Concessioned areas

New areas

Mil. ton1)

Mil. tep Mil. ton1)

Mil. tep Mil. tep Mil. ton 1) years years years

1 2 3 4 5 6 7 8 9 = 2 / 8 10 = 4 / 8 11 = 6 / 8

Coal

hard coal 755 422 105 38,8 3.3 229 32

lignite 1490 276 445 82,4 1045 133 32 47 14 33

Oil 74 72 5,2 14

Natural gas 185 159 12,5 15

Uranium2)

Forecasted depletionReserves

New areas

1) excluding natural gas expressed in mld. Mc2) data not public

Sou

rce

Geological reserves

Concessioned areas

Estimated annual

production

The national renewable energy sources potential

Romanian energy sources potentialRomanian energy sources potential

Source Annual potential To be used for:

Solar 60 PJ/an1,2 TWh

HeatElectricity

Wind 23 TWh Electricity

Hydro of which under 10 MW

36 TWh

3,6 TWh

Electricity

Biomass and biogas 318 PJ HeatElectricity

Geothermal 7 PJ HeatNOTE : these are theoretical potentials, real usable potentials are much lower due to technological, economical and environmental limitations or restrictions.

The environmental impact of using primary energy sources

and of energy conversion technologies, especially the CO2

emissions;

The finite world reserves of fossil fuels;

The increase dependency on imports of primary energy

sources;

The increase in energy demand.

Challenges facing the energy sectorChallenges facing the energy sector

Reducing CO2 emissions by:

promoting renewable energy sources

electricity targets of 33 % in total gross electricity consumption of 2010, 35 % in 2015 and 38 % in 2020

promoting nuclear energy

unit 2 Cernavoda of 600 MW commissioned in 2007

unit 3 and 4 to be completed by a consortium

New NPP to be build

Romanian energy strategy 2007 – 2020 Romanian energy strategy 2007 – 2020

Answers to challengesAnswers to challenges

Reducing energy dependency on imported fossil fuels by using a balanced energy mix and by:

promoting renewable energy sources;

promoting the use of indigenous coal, but using clean coal technologies, preferable with carbon capture and storage facilities;

promoting nuclear energy (Romania still have natural uranium resources).



Diversifying energy supply sources and routes by:

promoting the Nabucco Project on natural gas;

promoting the AGRI project;

promoting the PEOP Project on oil;

studying the feasibility of a LNG / LPG terminal in Constantza harbor;

increasing the interconnection capacity on natural gas with Hungary and Bulgaria;

increasing the interconnection capacity on electricity with Moldova, Serbia, Hungary and Turkey (submarine cable).



Increasing energy sources storage capacity by:

increasing the gas storage capacity from 2550 mil. CM in 2007 to 3935 mil. CM in 2012;

increasing the oil storage capacity to fulfill 67.5 days of consumption in 2011;

construction of a 1000 MW pump – storage hydropower plant (mainly for daily, short term security of supply).



Limiting energy consumption increase by energy efficiency measures:

energy audits are mandatory for big industrial consumers;

National Plan for Energy Efficiency was drafted in 2007;

National programme for building insulation;

Structural Funds to be used for energy efficiency projects.

On an estimated 6 % yearly GDP increase, we expected a 3 % yearly energy consumption increase.



Promoting renewable energy sourcesPromoting renewable energy sources

Targets – share of renewables

Directive 2001/77/EC (amended by 2006/108/EC) : 33 % of gross electricity consumption in 2010

Romanian energy strategy 2007 – 2020:

33 % of gross electricity consumption in 2010



Directive 2009/28/EC

24 % of gross energy consumption in 2020 (+6.2 % from 2005)

Promoting renewable energy sources

The national renewable energy sources potential

Source Annual potential To be used for:

Solar 60 PJ/an1,2 TWh

HeatElectricity

Wind 23 TWh Electricity

Hydro of which under 10 MW

36 TWh

3,6 TWh

Electricity

Biomass and biogas 318 PJ HeatElectricity

Geothermal 7 PJ HeatNOTE : these are theoretical potentials, real usable potentials are much lower due to technological, economical and environmental limitations or restrictions.


Distribution of the renewable energy sources potential

I. Donau Delta (solar);II. Dobrogea (solar and wind);III. Moldova (microhydro, wind and biomass);IV. Carpaţi Moutain (IV1 – Carpaţii de Est; IV2 – Carpaţii de Sud; IV3 – Carpaţii de Vest ( biomass, microhydro);V. Transilvania (microhydro);VI. Câmpia de Vest (geothermal);VII. Subcarpaţii(VII1 – Subcarpaţii Getici; VII2 – Subcarpaţii de Curbură; VII3 – Subcarpaţii Moldovei: biomass, microhydro);VIII. Câmpia de Sud (biomass, geothermal and solar).


Opertional:

hydro – 6440 MW

wind – 14.9 MW

biomass/biogas – 8.1 MW

solar – 0.0088 MW

Under construction:

hydro / 131 MW

wind – 1000 MW

biomass/biogas – 27 MW

National use of renewables


Green certificate market

Promotion of renewable energy sources - Green certificates market

Gre

en c

erti

fica

te m

arke

tE

lect

rici

ty m

arke

t

Electricity

Coal

Electricity micro hidro

Green certificates micro hidro

Electricity

Nuclear

Producer on hydro

Producer using fossil fuels

Producer with nuclear units

Competition

Competition

SupplierProducers

Label



mandatory quotas for suppliers (year / %):

minimum and maximum price levels established by the regulator: minimum value 27 Euro / MWh maximum value 55 Euro / MWh

2008 5.262009 6.282010 8.302011 10.002012 12.002013 14.002014 15.00

2015 16.002016 17.002017 18.002018 19.002019 19.502020 20.00




Number of certificates per MWh:

hydro under 10 MW: 3 certificates (2 for old but refurbished hydro units);

wind: 2 certificates till 2017, one starting with 2018;

biomass / biogas: 3 certificates + 1 for efficient cogeneration;

solar: 6 certificates.

Green certificates are issued for:

15 years for new units;

7 years for second hand units if used in isolated systems;

10 years for refurbished hydro units;

3 years for old, un-refurbished hydro units.




Investments must be done before 2016 !

Penalties for non compliance of suppliers: 110 Euro per non acquired certificate

Revenues from penalties to be used by Environmental Fund

ANRE can adjust quotas if it is a high imbalance on the green certificate market



Organized by Energy Market Operator - OPCOM



Nuclear electricity productionNuclear electricity production

Nuclear sector

Cernavoda NPP with:

two CANDU 6 units operational

two CANDU 6 units under construction

A joint-venture, Energonuclear, to build units 3 and 4 in Cernavoda NPP:

SN Nuclearelectrica 51%

RWE Power România SA 9.15%

Enel Investment 9.15%

GDF SUEZ 9.15%

CEZ 9.15%

ArcelorMittal 6.2%

Iberdrola 6,2%

Nuclear sector

New NPP to be build

Pre locational study done – 103 possible locations

To be established:

consortium of investors or other financing mode

technology to be used

ConclusionsConclusions

Romania has an advanced energy market and an attractive environment for investments in energy sector – in line with EU legislation;

Romania has natural energy resources, including unused renewable potential in wind, hydro, solar, biomass and geothermal;

Romanian energy strategy basic answers to the new challenges are:

Promotion of renewable energy sources;

Promotion of nuclear energy;

Promotion of indigenous coal with clean technologies;

Diversifying the sources and routes of primary energy sources supply;

Increase interconnection capacity (electricity, gas) and storage capacity (gas, oil);

increase energy efficiency.

ConclusionsConclusions

Thank you for your attention !

www.minind.ro

[email protected]

Romanian Electricity Sector and National Energy Strategy Romanian Reverse Economic Mission to USA – September 2010 Alexandru Sandulescu General Director.

Documents

market volumes

legal market

real market

market intraday markets

romanian energy strategy

region market operator

transelectrica slide

business development