The Energy Markets in Romania Discussion With Sever Silaghi

Sever Silaghi is discussing the Romanian energy market sector crisis, the causes of these crises are numerous, ranging from the energy sector’s fundamental structure to the severe imbalance between supply and demand, which is exacerbated by new development constraints imposed by the European Union’s ambitious targets. Imperfections result in price signals that have become intolerable for the average consumer, and even more so for the vulnerable consumer. As a result, it is clear that the time has come for a thorough examination of the current situation and the establishment of appropriate measures. 

Addressing issues such as the electricity market’s current problems and the need to adapt to the conditions imposed by rising electricity demand, the electricity generation sector’s decarbonisation targets, and the need to promote renewable energy sources through electricity systems. energy storage, distribution system issues, and the emergence of virtual power plants. 

Three significant challenges were identified: a) lowering the CPT, b) measuring electricity, and c) integrating energy producers and consumers into the electricity grid (prosumers). We require transparent studies that demonstrate how we can navigate a period of energy transition under duress, what assumptions we can make, and which projects should be supported. All energy specialists are obligated to submit detailed studies outlining a portfolio of strategic projects that we can support through a legislative amendment that will enable them to be accelerated. 

Concentrating electricity generation in a single area (for example, in Romania’s Dobrogea region) results in a roughly threefold increase in CPT, based on very specific technical conditions studied. Transelectrica, the Transmission and System Operator, has a program in place to replace transformation units, which results in a reduction in its own technological consumption.  Energy storage projects can be developed in three ways: as an independent storage, as “back-up” storage – as an internal business of a renewable energy producer (volatile), or as customer storage. On the market in accordance with EU Regulation No. 943/2019. 

The electricity market model implemented in 2012 was rigid, a model with numerous restrictions, a market model in which direct trading was prohibited, a market model in which PPAs could not be concluded, a market model in which only standardized products could be traded, a market model in which hedging and modern profiling products, futures derivatives, were not available. The electricity market operator was granted a single license, effectively eliminating competition in this segment. And what happened to all of this? They stifled investment, dissuaded investors, and pushed trading to the spot market. 

Solving the electricity deficit and lowering prices does not require a new market model; rather, it requires finding ways to stimulate investment. Three points are emphasized: 

1) The electricity network’s flexibility must be increased in accordance with the capacity of the National Energy System;

2) The Romanian electric power system must be connected to the electric power systems of Ukraine and the Republic of Moldova; and

3) The transmission system operator’s (TSO) and distribution system operator’s (DSO) collaboration must be improved.

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