“If we’ve started suffocating, I do not even want to think of what others are doing,” says Daniela Lulache, referring to energy producers with higher costs than Nuclearelectrica’s that are trying to edge in on a market where prices continue to fall.
Nuclearelectrica is trying to sell 29 energy packages totally worth over EUR42 million on OPCOM energy bourse, on the platform of long-term bilateral contracts. The starting price is 165.5 lei (EUR37.4)/MWh. Nuclearelectrica is thus trying to sell around 10% of its annual output.
The asking price is quite low considering energy on bilateral contracts sold for almost EUR50 in 2008. “It’s a bad signal for 2015. A low percentage of sales offers has been contracted in the past two months. The scary part is no long-term contracts are being sealed”.
Long-term contracts are vital for Nuclearelectrica as the spot market is virtually inaccessible for it. After the first 9 months of the year, the average price on bilateral contracts stood at EUR37.2/MWh, down 13% from the year-earlier period. On the spot market, the average price of the first 9 months stood at EUR32, down 6% from the same period of 2013.
“I expect prices to be below the 2014 average in 2015 as there are no signals allowing for growth estimates. The impact of renewable energy is still the primary hindrance.
As spot market prices are lower than those of bilateral contracts, deals also moved on this market. “The spot market must turn back to what it is by definition, a marginal market, a balancing market, not accounting for 40% of deals. These markets need to function normally,” said Lulache.
Amid the current market context, Lulache says she’s considering several possibilities, including contracts on smaller periods, as well as exports. “We’re fighting. We’re acting on all channels, but I believe legislation needs to be revised. We also mull setting up a trading company, but this is not our priority for the time being”.
Nuclearelectrica could enrich its structure, as the company is interested in taking over some electricity distribution companies of the ones put up for sale by Enel.
Also, the company’s structure is likely to change as the reshuffling of the entire nuclear sector is targeted. Another major project Nuclearelectrica is involved in is the one related to reactors 3 and 4 of Cernavoda platform, a EUR6.5 billion investment set to be carried out together with China’s CGN.
The problem now is whether Romania needs another two nuclear reactors considering consumption is still falling. Romania already consumes less energy than in 2009. “I can’t imagine still having a consumption decline in 10 years’ time. This would mean we’ve become a country of unemployed people. What are we doing in this country” We cannot imagine a thriving country without energy consumption”, said Nuclearelectrica manager.
Nuclearelectrica posted revenue worth RON853.9 million (EUR191.27 million) in the first six months, 13% below the level reached in the same period of 2013. Its net profit went down by 69% due to the falling energy prices and the special construction tax.
(English version by Catalina Apostoiu)