The Impact of Renewable Energy and Environmental Measures on Tariff Ioan ROTARU

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The Impact of Renewable Energy and
Environmental Measures on TariffIoan ROTARU
World Energy Council ROMANIAN NATIONAL COMMITTEE
Conference Towards an Energy Community of South
Eastern Europe Bucharest, 11-12 October 2004
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1. INTRODUCTIONThe World Energy Council - WEC
defined 3 main objectives in the development of
the energy sector r

Affordability - means the
possibility of access to the energy use, for all
the population, including the poor categories,
in order to ensure a decent life it can be
reached through competition, on a
liberalized energy market. Availability means
to provide reliable energy, of good quality, to
ensure the long-term security of the energy
supply the contribution of renewable energy
sources (RES) to this objective could be
significant. Acceptability means
compatibility of the energy development with the
environment protection and with the public
attitude RES are clean sources and almost
unanimously accepted.
World Energy Council ROMANIAN NATIONAL COMMITTEE
Conference Towards an Energy Community of South
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Different approaches on the use of RES?EU
Commission, in the Green Paper Towards a
European strategy for the security of energy
supply defines the development of RES as
a political priority.? WEC deems all the
energy sources should be used and an
exaggerated support for RES should be avoided,
because it could lead to the growth of the
energy tariffs, with negative impact on
consumers (especially in the countries where
the payment capability of consumers is
low).Romania is determined to follow the EU
strategies, but it is concerned to assess all the
aspects of the different options and mainly those
which have impact on tariffs.
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Conference Towards an Energy Community of South
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2. WEC ABOUT ADVANTAGES AND RISKS OF RESRES
are permanently regenerated and will not be
exhausted.RES can be used as local sources, for
distributed generation.RES could improve the
energy availability through diversification of
sources and are acceptable for public
and political leaders. butRES are less
affordable, for economic reasons.RES could be
competitive with large power stations only if
receive subsidies. The range of necessary
subsidies is evaluated at 3 US cent/kWh,
or 1000 US D/ kW installed (increase of
investment costs) The competitive market shall
not promote by itself the development of RES. The
Governmental support is required (subsidies,
special laws etc.), even if some market
distortion will occur.
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WEC recommends, especially to the
developing countries where the payment capability
of the population is low, to prevent the increase
of the energy tariffs in connection with the use
of RES.According to WEC, such countries -
should select for development only proven
technologies, with a good level of
competitiveness, which are used without
too large subsidies in the countries of
origin - should assess very carefully the
offers of suppliers of RES technologies from
developed countries, because they want to promote
their business and often they incorrectly
advocate the abandon of classical power
stations and the exclusive development of RES.
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Conference Towards an Energy Community of South
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For each country, it is very important to
clearly understand the main aim targeted through
RES implementation and to develop other
energy policies, which allow to reach that aim in
a less costly manner. - If the reduction of
Green House Gases (GHG) is required the country
should consider also the energy efficiency
improvement in generation, transport and
final use of energy, as well as the
clean technologies based on fossil fuels - If
the main problem is to ensure the security
of supply and easy access to energy the
country should assess the feasibility and real
costs in local conditions, the long-term policy
of taxes and tariffs. - If the competitive
energy market has to be developed while
supporting RES through subsidies, the country
should take care not to annihilate the market
incentives for the progress of RES, or not to
prevent the development of other technologies
which could be more sustainable on long-term.
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All WEC documents point-out that the RES will
be developed for specific uses and on certain
segments of the energy market.The concerns
about RES are related to the necessity of
subsidies and various financial supports,
which represent , finally, a burden for
consumers and population.WEC believes the
allocation of the available funds for the
development of the power generation sector
should consider, together with RES , other
options as - nuclear power plants - large
capacity hydro-power complexesThese options
represent GHG- free and competitive sources of
energy.
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RES ON THE ROMANIAN ENERGY MARKETWe have to
admit that, for the time being, RES are not fully
competitive with classical power sources and
their penetration on the energy market requires
Governmental support.The intensity of this
support depends on the local conditions natural
(availability of RES) and economic (wealth of the
country and population)Conditions in Romania
Financial capability of Romania to support
RES (mainly solar and wind) is limited. Germany
gives to RES direct subsidies of 2.5 bill. EUR
per year and collect from consumers for the
same purpose other 5 bill EUR (for comparison
the average price for household consumer is 152
USD/MWH in Germany, while in Romania is 79
USD/MWh)
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The energy efficiency in all sectors
(household, industry, transport) is still very
low in Romania. Before promoting RES, is
reasonable to improve the efficiency, as it was
done in EU countries. In Romania, the heat
losses from buildings are 4 times higher than in
EU countries. The efficiency improvement could
have a more predictable result and is less
costly for the same energy effect than the
implementation of RES. The use of biomass in
the rural areas for the need of population could
be upgraded, with positive consequences on
efficiency and environment protection (although
the countrys energy balance will not
significantly change). The energy supply from
RES, as local sources, could be advantageous for
houses, farms, etc., situated in isolated
places, far from the electricity grid.
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The medium - term strategy (2001-2004)
issued by the Romanian Government was aimed
to the creation of an energy market, based on
sustainable development complying with EU
standards on efficient use of energy and
environment protection. For this strategy, the
promotion of RES was not among the priorities
(excepting the construction of large hydropower
stations). However, on long term, the support
of RES is an essential decision of the Romanian
authorities.The position document of the
Romanian Government, presented at the
negotiations on Chapter 14 Energy for
accession to EU, underlines that Romania intends
to develop several projects for the
implementation of various RES, like biomass,
micro hydro stations, geothermal, solar and wind.
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Conference Towards an Energy Community of South
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ROAD MAP FOR ENERGY FIELD IN ROMANIAHaving in
view the necessity to ensure the security of the
energy supply, limiting as much as possible the
share of imported energy sources, the Strategy of
Romania should be based on making efforts in two
key areas-Reduction in specific energy
intensity per GDP unit in economy
and-Utilization of local renewable energy
sources.Renewable energy sources represent a
local source that can help reduce reliance on
import and improves the security of energy
supply, meeting the environment protection
criteria. The renewable energy sources
(biomass, small hydropower plants, geothermal
energy, etc.) represents an important resource
even if their share in global energy consumption
is small. But the high cost of initial
investments represents a limiting factor in
their expansion, so that in order to overcome
this obstacle a special incentive program should
be enforced, including a financing.
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The recent Government Decision (443 /
2003) for promoting the electricity generation
from renewable sources establishes that, by the
year 2010, 30 of the electricity production in
Romania will be obtained from renewable
sources.The forecast of energy demand for 2010
is 64.9TWh from this amount, about 26.1 will
be covered by energy produced in large hydro
power stations and about 3.9 (corresponding to
2,6TWh) will come from renewable energy sources
solar, wind, micro hydro stations - with
capacity less than 10MW .To support RES
production, a mixed system will be used, with
Feed-in tariff and mandatory allocations. This
system will rise the price at the final consumer
with 0.8- 3.3 , which is deemed fully acceptable.
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4. ENVIRONMENTAL MEASURES FOR THERMAL POWER
STATIONS Romania has ratified the UN Framework
Convention on Climate Changes. In accordance with
the signed Kyoto Protocol, Romania made the
commitment to reduce anthropogenic emissions of
greenhouse gases by 8,compared to the emissions
of 1989 emissions level. For the implementation
of EU Directive 2001/80/Ec, a new regulation is
being implemented for the limitation of the
emissions in the atmosphere coming from big power
units (i.e. over 50 MW), at the level of the EU
Directives (for solid, SO2 and NOX
emissions). These limits are compulsory for
any new unit to be built.
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For the existing units in operation it is
foreseen to achieve the required level of
emission in a gradual program so that by the year
2012 to cope with the level of emission
provided in the new regulation, by
implementing a very important investment
program. For the power plants in the
structure of Termoelectrica, the total investment
effort for the period 2003 -2015 is
estimated 3,484 billion from this overall
effort, the funds required for environment
protection will reach a level of 1,026 billion
, out of which 28,9 should be spend till the
year 2007. The investment for upgrading
of the boilers and electro precipitator (solid
emission) represents 8 of the total amount,
for upgrading of the burners represents 6, and
for desulphurization represents 86 of the total
amount.
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Conference Towards an Energy Community of South
Eastern Europe Bucharest, 11-12 October 2004
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World Energy Council ROMANIAN NATIONAL COMMITTEE
The evolution of the costs at end-users
(tariffs) reflects the implementation of the
environment protection measures, as
well. Assumptions of the forecast -Straight line
depreciation on the life time, without
financial costs -EU DG 6 trend forecast for
fuel prices evolution -Increasing of efficiency
by rehabilitation and new units -Investment for
environment are included -Without profit
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5. CONCLUSIONS The promotion of RES is a
priority for Romania, in accordance with the
energy policy in EU. The Romanian Government
issued several programs and strategies, for
different terms, enhancing this direction. The
strategies are aimed to the improvement of the
energy supply to the consumers without
significant rise in energy tariffs. The
limitation in the emissions from big thermal
power units will be gradually implemented, in
order to comply with the EU regulation.
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Conference Towards an Energy Community of South
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5. CONCLUSIONS Special attention will be
given to the further use of hydro resources
and the extended use of biomass (these sources
are already competitive on the Romanian
market). Financial support will be provided
for sustaining RES, but its influence on the
energy price will be minor.
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Conference Towards an Energy Community of South
Eastern Europe Bucharest, 11-12 October 2004
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Thank you for your kind attention!
World Energy Council ROMANIAN NATIONAL COMMITTEE
Conference Towards an Energy Community of South
Eastern Europe Bucharest, 11-12 October 2004