Written By:  Delia Vasiliu, Esq.

Pachiu & Associates

Bucharest, Romania

The current international situation related to the energy production, with a focus on the incident in Fukushima, reveals once again the need to make some changes in the energy sector. International studies evidence that nuclear energy is still the main source of energy in the member countries of the European Union, but new perspectives have to be set. Despite the risk involved by the nuclear energy, the leading energy producers in most of the EU member states, continue to see the nuclear energy as an alternative to the dependence to Russia, related to the necessary import of natural gas, or at least as an acceptable alternative for the avoidance of the high costs implied by the renewable sources of energy (renewables) such as hydro, wind, solar and biomass, as financing generally remains a major challenge for the renewable sector.

Reffering to the Romanian energy market, even if the nuclear sector is still of high importance, representing about 20% of the total national production, we have to notice that the renewables sector becomes more important and the efforts in this regard are considerable. In this context, the Romanian Transmission and System Operator (TSO), which plays a key role in the Romanian electricity market, suggested at the last meeting with the investors in wind energy projects, held during this month, that by the installment of 2400 MW in wind power generation units (expected to take place during the next period of time), Romania shall cover the mandatory quota of renewables, but investors should consider the impact of such situation and the financial consequences, mainly from the perspective of the limited capacity of the national grid infrastructure.

In the same context, the Romanian TSO suggested a closer relationship with the Romanian Energy Regulatory Authority (ANRE) for the development of a stronger secondary legislation, in order to promote a more favorable economical environment for the investors and to support the investments based on public-private partnerships for the development of projects in the energy sector, especially the investments required for the rehabilitation and development of the national grid infrastructure.

As we may observe, the Romanian authorities are willing to support the investors and to promote the production of energy from renewables, but facing the critical condition of the national grid infrastructure. Moreover, the growing use of renewables in the energy mix, poses new challenges in terms of security of supply, considering that such may often generate intermittent power, such aspect being one of the most challenging issues in the implementation of the renewables policy.

As a result, balancing demand and supply on the grid becomes more complex, which has driven interest in the “smart grid” concept, a solution that is currently under discussion in Romanian as well, and that has yet to see widespread adoption at European level, with cost being a major hurdle, amongst others.

Nevertheless, we may observe that not only Romania is facing issues related to the grid infrastructure, but the European legislation on the promotion of renewable energies, revealed that one of the biggest challenges the industry in the region now faces, is exactly that of how to integrate the increasing amounts of intermittent power sources like wind and solar into the electricity grid. Therefore, experts consider that major development of the European grid infrastructure is thus critical to maintaining reliable power supplies and bringing renewable energy from production sites to consumers and in this context, a European ‘supergrid’ is increasingly seen as a fundamental component to enabling the region to achieve its renewable energy policy goals.

With a view to the situation at European level, we may further observe that national incentive schemes to accelerate the grid integration of renewable, have already been put in place across many European countries. Therefore, smart grids are expected to transform today’s power distribution systems, into “flexible, interactive, bidirectional systems that distribute electricity more efficiently”, according to energy experts.

Considering all these issues, we may conclude that both at national level, as well as at European level, the policy on renewables has to be strongly sustained by the activity of the grid operators, in order for the existing transmission capacity to be used more effectively in maximizing the energy production and integrating more renewable energy projects. Therefore, in the longer term, both the industry and regulators at national and European level will need to work closely together to match the specific needs of the countries, so they can attract much needed capital to the sector to underpin the large amount of investment needed to build out Europe’s and national’s proposed supergrid.

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