“Accelerating the transition to renewable energy is a necessary economic objective in the context of current CO2 prices, renewable technology prices, European funds, and a sustainable energy mix,” said Mihai Draghici, Senior Manager, Consulting, EY Romania.
Romania reached its 2020 EU target of 24% of final energy consumption coming from renewable sources several years ago. To reach its 2030 target of 30.7%, Romania plans to add around 7 GW of new renewable capacity, of which around 3.7 GW in solar projects.
In 2019 little over of 24% energy consumption originated from renewable energy sources, placing Romania on the 10th place in the EU and above the union’s average level.
In 2020, electricity production in Romania was comprised of 12.4% wind power, 3.4% from photovoltaic solar panels, while 27.6% of the electricity production was coming from hydropower. In total, renewable energy production (wind, photovoltaic and biomass) amounted to 16%.
Romania’s greenhouse gas emissions by more than 50% compared to 1990 levels due to a significant reduction in energy demand and industrial activity, increase in energy efficiency and gradual compliance to more restrictive environmental standards. Energy still represents the main source, accounting for two-thirds of national greenhouse gas emissions, followed by agriculture, industry and waste management
“Romania has a slight advance in terms of the share of renewable energy compared to the European Union average. At the same time we are at the top of the EU countries in terms of dependence on coal for electricity generation at an approximate cost 50% above the average price in the energy market in 2020,” said Draghici.
EY experts add Romania could ease its transition towards renewable energy by updating policies and legislation necessary to stimulate investments. The country should define strategic projects, prioritize them and tackle them in the context of significant financing potential of Recovery and Resilience Facility and other EU funds available.
Developing a resilient and flexible infrastructure will be the centerpiece of renewables integration as a high degree of grid stability can smooth the energy transition.
Other solutions recommended by EY are adopting new technologies for energy storage, improving energy efficiency and increasing decentralized generation, which would increase the share of clean energy to be installed, the development of specific market mechanisms to ensure maximum benefits for participants and harness the full potential of integration. Lastly, EY recommends an agile-based approach for achieving Green Deal targets – assessing current state, setting the objectives, tracking progress, receiving feedback from the sector and adapting on the go.
Climate neutrality has been defined as a 2050 target for the EU, stipulated within the Green Deal framework, a legal commitment which includes a set of initiatives that aims to smooth Europe’s transition towards a clean, circular economy through efficient use of resources, restoration of biodiversity and cutting pollution in all forms.
Carbon trading or carbon offsetting/reduction projects represent short-term solutions to a pressing problem and 75% of the EU’s greenhouse gas emissions come from the production and use of energy across economic sector.
In order to decarbonize the energy sector and achieve the objectives set out in the agreement, several European financing mechanisms have been put in place. Of these, the main beneficiaries of the Just Transition Mechanism are Poland, Germany and Romania, given the high dependence on fossil fuels for energy consumption.
Romania will be able to access up to EUR4.4 billion as part of this mechanism, which promises to support the transition to low-carbon energy and also to improve energy infrastructure and create new jobs in the green economy.