ROMANIA: Romania will have a completely decarbonized and risk-free energy system if it installs fewer gas power plants and more renewables and batteries than it plans – EPG study
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Romania can have a completely decarbonized energy mix in 2040, without risks regarding energy security, if it proposes lower installed capacities based on natural gas, i.e. 3.5 GW in 2030 compared to the 5.5 GW objective of the integrated plan proposal energy-environment (PNIESC), increasing wind energy capacity and storage technologies., shows a study by the Energy Policy Group (EPG).
“The investments currently assumed, in the PNIESC proposal, do not ensure a decarbonized energy sector at the level of 2040. Moreover, the replacement of natural gas with hydrogen in 2035 in all power plants (as mentioned in STL – long-term strategy, n. ed.) is not profitable from an economic point of view. Therefore, there is a major risk that Romania will not meet its emission reduction target if the investments assumed in natural gas capacities, prepared to take over renewable hydrogen, will continue to operate on the basis of fossil fuels for economic reasons”, the study shows .
Here’s what the EPG says:
Increasing the wind energy targets to 17.7 GW onshore and 7.3 GW offshore in 2040, compared to 13.1 GW in total under the PNIESC proposal, can contribute to the complete decarbonisation of the energy sector by 2040. Romania seems to have a competitive advantage in the production of wind energy at a regional level, investments in this technology in Hungary and Bulgaria having limited premises. Also, the market value of wind energy is higher than that of solar energy for all years in the modelling.
Existing hydropower plants are essential for balancing an energy sector dominated by renewable sources. However, the proposed new investments in hydro capacity (300 MW in small capacity and 1 GW in a pumped hydro plant due to become operational in 2032) would have only a limited effect on electricity prices and security energy, in the scenario where the aforementioned investments in storage (batteries) are realized.
The elimination of coal from the energy mix at the same time as lower than planned investments in new natural gas capacities does not cause risks from the perspective of energy security. Modeling results show that coal-fired generation will rarely be profitable after 2025 (expected capacity factor of less than 1%), according to market prices.
New nuclear power capacities can contribute to a decarbonised energy sector, even if planned investments suffer delays. Modeling results show that potential delays in the construction of new nuclear capacities (two conventional CANDU reactors and 460 MW small modular reactors) do not pose risks from an energy security perspective, even in the context of the scenario with a reduced level of natural gas-based capacities (3 .5 GW). Romania would continue to be a net exporter of electricity after 2030, despite potential delays in nuclear power capacity as a result of increased renewable capacity, yet electricity prices will be slightly higher. In addition, the refurbishment of Unit 1 at Cernavodă, scheduled for 2027-2029, i.e. the removal of 700 MW from the system, will not present risks for energy security, even in a scenario with a lower level of natural gas. This is due to the increase in renewable energy (RES) capacity, storage and a (lower) increase in natural gas capacity.
Here are the EPG recommendations:
Re-evaluating investments in new natural gas capacities according to the real needs of the energy sector and based on well-founded cost-benefit analyses. The installation of groups with lower power and implicitly lower capacities of natural gas can balance an electricity mix dominated by renewable sources before 2040.
Reconsidering the plans regarding the transition of the new natural gas capacities to renewable hydrogen, as this process is not economically profitable.
Supporting the development of additional renewable capacity, with an increasing focus on wind power and storage. Investment in offshore wind energy should become a priority for the next decade, along with an expansion of large-scale storage technologies.
Accelerating investments in transmission and distribution networks to be able to take over the energy produced by new renewable capacities and to increase the level of interconnection.
Abandoning the subsidization of coal-based capacities, as they quickly become unprofitable and do not involve risks from the perspective of energy security. These funds should be earmarked for new renewable and storage capacity.
Prioritizing investments in the modernization of existing hydropower plants over those in new hydro capacities that have a limited impact on energy security and grid balancing.
The Energy Policy Group (EPG) is an independent and non-profit think-tank specializing in energy and climate policy, market analysis and energy strategy, founded in 2014. EPG contributes to the realization of a technologically advanced energy system , sustainable and socially acceptable. EPG also promotes long-term decarbonisation policies and measures in all economic areas: energy, buildings, transport, industry, agriculture.
