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Most people, let’s face it, don’t really like change. They want to keep doing things how they used to. But apply the right amount of pressure, and they will be forced to try different ways. This is why crises always act as very effective agents of change.

Take Romania. For years, decarbonising the economy, most of all the energy sector, was a nice thing to put in strategy papers, a feature of Brussels’ progressive newspeak. Experts were calling on the authorities to draw up a favourable framework for the replacement of old coal plants with wind farms or solar parks. Their pleas fell on deaf ears. The private sector was also reluctant to participate in this trend, possibly waiting on more generous state subsidy schemes, like the ones that had been made available more than a decade ago, but then scrapped.

Lately though, because of the effects of the war in neighbouring Ukraine on the energy market, a new can-do attitude has taken over in government and companies. Renewables are sexy.

They are so fashionable that by December 2024 the energy company Monsson wants to invest some 800 million euros in the Western part of Romania, where they are building what they claim to be the largest photovoltaic park in Europe with a power of more than 1 GW. In total, Monsson has around 2 GW in the pipeline for Arad county, with two more solar parks to be built from 2024 at the latest. These two parks should be completed in 2026, with investments of around 600 million euros, which brings the total investments to 1.4 billion euros.

Other companies are not aiming at producing electricity mainly to sell it, but to use it for their own purpose. For instance, some leading operators from the telecom industry plan to power several of their installations and data centers with solar energy. And news stories like this one break almost daily in the business press.

Romanian politicians also acted swiftly. Power plants that generate electricity from hard coal and lignite are to be gradually taken off the grid, according to a bill recently adopted by the Romanian Senate as the deciding chamber. Lignite plants with a capacity of 660 MW are to be closed by the end of 2022 and the remaining lignite units with 1425 MW are to be shut down by the end of 2025. The final blow for hard coal is coming no later than the end of 2032, when generation of an additional 1140 MW will cease. Coal mines will also be closed and mining will be phased out. Until the end of 2030, the Paroșeni power plant, with an installed capacity of 150 MW, will ensure the neutralization of hard coal, coming from the safeguarding works of the coal deposits.

And to have at least the same power available in the national energy system, these closed down coal-fired power plants must of course be replaced. The project indeed lists several new production capacities. Two gas and steam turbine power plants with a total capacity of 1,325 MW are to be built, for example: one in Ișalnița with a capacity of 850 MW will be commissioned in 2026, a second in Turceni with a capacity of 475 MW is planned for the same year. Both are also suitable for the later conversion from natural gas to hydrogen. In addition, eight photovoltaic parks with a total capacity of 735 MW will be built by 2024. These investments have already been approved by the European Commission and are also financed by the Modernization Fund in the amount of almost 900 million euros.

Surely enough, the upper chamber of Parliament did not push the envelope out of sheer love for the environment. Voices from the coalition majority pointed to the PNRR, the National Reconstruction and Resilience Plan. The law mentioning the decommissioning of polluting coal plants was needed for Romania to be able to draw some 2.8 billion euros from Brussels, the politicians indicated.

However commendable, not all political action is uncontroversial. The Government and its majority in Parliament wanted to quickly restart construction at two small hydro power plants on the rivers Jiu and Răstolița, where works had been halted due to the respective river sectors having been declared protected natural areas in a national park. But with a total power benefit of only 100 MW weighed against the environmental risks, the law steamrolled against opposition seems to have gone too far in protecting the financial interests represented by the money already spent on the plants, namely about 300 million euros. The law has been rejected by the Constitutional Court due to technicalities and the majority will most likely pursue it further.

Apropos the PNRR negotiated with the European Union, it is not just money from Brussels the Romanians are gazing at. The United States also intends to be an important actor of the energy transition in Romania. The Americans can bring key expertise to the table in nuclear power, an energy source that after a fierce debate by the European Union has been green lighted – pun intended – as clean.

While international experts were haggling over climate targets at COP 27 in the Egyptian holiday resort of Sharm El-Sheikh, Romania and the USA used this background to announce an important deal. The American Exim Bank is giving Romania a loan of over three billion US dollars for the completion of the 3rd and 4th reactors at the Cernavodă nuclear power plant, Romania’s Energy Minister Virgil Popescu and Exim Bank CEO Reta Jo Lewis told the media at a meeting also attended by Romania’s President Klaus Iohannis and U.S. Special Climate Envoy John Kerry.

Currently, the two operating units at the Cernavodă plant, each with a capacity of 700 MW, account for about 20 percent of the electricity mix in Romania. However, Reactor 1 is scheduled to be shut down in 2027 and refurbished over the next two years to extend its life by another 30 years. Reactor 2 was commissioned in 2007 and its service life is 30 years as well, so it won’t be scheduled for more ample works in the next future.

In 2015, a memorandum was initially signed with China General Nuclear Power Group (CGN) for the construction of the 3rd and 4th reactor. However, Romania stepped away from further negotiation with the Chinese group in 2020 and entered into an agreement with the U.S. in the same year for a seven-billion-dollar investment in the refurbishment of reactor 1 and the construction of reactors 3 and 4. According to Romanian Prime Minister Nicolae Ciucă, both should be ready by 2030 and each generate around 700 MW of electricity.

It is not the only nuclear energy cooperation the two countries are involved in. In June, in the context of the G7 summit at Schloss Elmau in Bavaria, the U.S. government has pledged to work with the American company NuScale Power to provide 14 million dollars to support the construction of a first-of-its-kind small modular reactor (SMR) plant in Romania. The site for this first small-scale plant has already been agreed by NuScale and the Romanian project partner Nuclearelectrica, which also operates the conventional nuclear power plant in Cernavodă: the SMR is to be built near Doicești in the county of Dâmbovița on the site of a former cogeneration plant.

At the signing of the loan agreement in Sharm El-Sheikh Romanian President Klaus Iohannis said that Romania has set itself the ambitious goal of becoming energy self-sufficient, and generate enough energy for the people and companies in the country.

But this perspective on things may already be outdated and lacking ambition.

Yes, the Romanian economy needs more power. For example, there is a spectacular growth in the sales of electric cars, supported by lavish subsidies for new EVs and hybrids. Sales tripled compared to 2021 and there is still potential. But to tap into it, a better infrastructure is needed. With a budget of 500 million lei for recharging stations, the Environmental Fund Administration is stimulating the infrastructure improvement – but more recharging stations also means more electricity demand.

And meanwhile, regardless of domestic demand, two brand new electricity markets might also open up for Romanian energy producers and suppliers: Moldova and Ukraine.

Repeated Russian missile attacks on Ukrainian energy infrastructure plunged not only Ukraine into darkness, but caused massive power outages in Moldova as well, because some 30% of Moldovan power is imported from Ukraine.

It became clear that in order to get access to alternative sources both countries should be more heavily connected to electricity grids to their West. Once this connection is established, power may better flow to them – also from Romania.

To compensate for the loss of Ukrainian energy imports, Moldova already heavily relied on power from Romania. In October, Hidroelectrica, one of the biggest Romanian producers, signed a 100 MW supply contract with Moldova’s Energocom. And Ukrainian power company EKU used the existing grid connection to Romania and imported small amounts of electricity for testing purposes.

So at this point, and in the future even more so, the electricity market can absorb everything it can get its hand on.

Alex Gröblacher

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