Over EUR 10bn investment needed for Romania’s electricity and gas distribution networks

The electricity and gas distribution networks need investments over EUR 10 billion in the long term in order to replace the old infrastructure, according to the estimation of the members of the Federation of Associations of Energy Utility Companies (ACUE). It is necessary to continue the investments in reducing technological losses, reducing the operational costs (OPEX) and further improving the quality indicators so that the networks performance can reach Western European level, to the benefit of the electricity consumers.

The total value of the investments realized by ACUE’s members in the last 10 years (2008-2017), for the extension, rehabilitation and modernization of the electricity distribution networks is about EUR 3 billion. In the gas distribution network, over EUR 1 billion of investments were dedicated to the modernization and extension of the network.

There is a strong correlation between the realized investments and the performance of the networks, according to a recent study of an international consultant.

For electricity distribution, the average duration of interruptions decreased by 60% and their frequency dropped with 50% in 2016 compared to 2008, according to the latest data published by ANRE.

The increased efficiency due to investment is also reflected in the evolution of the technological consumption (CPT) of the network, which has diminished in the recent years. According to the latest data published by ANRE, in 2016, the losses in the electricity distribution network were on average 11%, compared to the level of 12.5% – the national average registered in 2007.

Also, the operational costs of the network operators are highly efficient, being around 72% below the average of Central and Eastern Europe (CEE), according to the consultant’s analysis.

Compared to the other EU countries, the final electricity price for households in Romania was among the lowest in the first semester of 2017, being about 13% below CEE average and 48% below the Western Europe average. For industrial consumers, the price was on CEE average and 26% below Western Europe’s average.

The analysis shows that the final electricity prices for households and industrial consumers increased by a third between 2008 and 2016, close to the cumulated inflation for this period (36%).

The network tariffs for households decreased by 18% in 2017 compared to 2014 and by 34% for industrial customers compared to 2015.

The yield per km of network for the distribution companies in Romania is among the lowest in Central and Eastern Europe; this is due to the fact that Romania has one of the lowest consumption densities in Europe; a higher consumption density typically allows for lower tariffs per customer due to increased specific use of the network.

Gas prices for households were also significantly lower, as at the middle of last year, compared to other European countries: about 21% below the average for Central and Eastern Europe (CEE) and 49% less than Western Europe. For non-household consumers, gas prices were similar to CEE average and 8% lower than Western Europe, the study mentioned.

Final prices for households are among the lowest in Europe, but household income is also among the lowest of all EU member countries (with 62% below the European average in 2016), energy costs corrected with purchasing power being 8% above the European average for electricity and 7% below the European average for natural gas.

Therefore, adequate measures to cope with energy poverty, i.e. the development and introduction of measures to protect vulnerable customers, are mandatory and long-time overdue.

The continuation of sustained investments in the modernization of electricity and gas distribution networks is the most important challenge faced by the state authorities and the energy companies in the future, and there is an urgent requirement to harmonize the need for electricity and gas prices affordability and for security of energy supply. ACUE considers that it is essential to have a regulatory framework that further stimulates investments and innovation in the electricity and gas distribution.

The ACUE Federation continues to express its willingness to cooperate in order to identify the optimal solutions to ensure energy security and the competitiveness of the Romanian economy, as well as to actively participate in the debates organized by the authorities on the future regulatory framework.

 

ACUE, partner in EC’s energy efficiency information campaign

According to ACUE, partner of the European Commission (EC) in the energy efficiency information campaign, Romanians could decrease their utility bills in several simple steps. The EC launched on 26 April, in Romania, a campaign aiming to inform citizens on how they can reduce energy consumption and bills, without affecting their personal comfort.

An important part of the campaign was the Exhibition Pavilion ‘Energy savings’, which travelled the route Bucharest (25 April – 1 May), Mioveni (3-6 May) and Craiova (9-13 May), bringing interactive activities for visitors.

According to EC’s press release, the cost of utilities is lower in Romania compared to other European states, but Romanians are among the citizens that pay the largest utility bills in Europe in relation to their income. While in Europe the average value of costs does not exceed 6% of a family’s income, in Romania it can reach 9% and for part of the population this percentage can be significantly higher. Eurostat statistics show that approximately 14% of Romanians cannot afford to maintain their homes heated in the cold season, compared to a European average that does not exceed the threshold of 9%.

Thus, the European Commission (Directorate-General for Justice and Consumers) has launched a campaign to promote energy savings in housing and lowering bills by small behavioural changes or minor investments in housing. The main message of the campaign is that, by saving money on invoices, it can be used for other purposes.

“Even small changes in daily behaviour can help families make savings. From advices that do not involve any cost or that involve low costs up to investments in improving housing leading to energy efficiency, there is a way for everyone to reduce utility costs and contribute to energy conservation and environmental protection,” European Commissioner for Justice, Consumers and Gender Equality, Věra Jourová, stated.

“We want to cooperate with the European Commission to provide solutions for reducing citizens’ bills, because we are concerned about the risk of energy poverty. One of our priorities is the move towards a more energy-efficient economy, which is beneficial for both the environment and our pockets. We are aware that we need to have with us not only industrial consumers, but also households. As long as measures do not affect the comfort level, it is good to be known and finally be put into practice by everyone. After all, the cheapest and cleanest energy is the one we don’t use,” Robert Tudorache, State Secretary within the Ministry of Energy, affirmed.

The European Commission’s initiative benefits from the valuable contribution of national and local partners, such as the Ministry of Energy, the Ministry of Regional Development and Public Administration, the National Regulatory Authority for Energy (ANRE), Craiova Municipality, Mioveni Municipality, the Federation of the Associations of Energy Utility Companies (ACUE), the Association of Electricity Suppliers in Romania (AFEER), the Energy Cities Romania Association (OER) and Terra Mileniul III Foundation, as well as from the support of Enel Energie, CEZ Romania and E.ON Energie Romania.

In parallel, the European Commission has recently launched the EU Energy Poverty Observatory, which aims to become a resource for everyone, promoting civic engagement in the theme of energy poverty, disseminating information and offering examples of good practice.

 

Energy consumption in Romania

Romania has a significant potential to improve its energy efficiency, especially in residential buildings, with impact on the quality of housing, thus increasing the energy security and reducing the burden of energy expenses for citizens with low income.

Romania ranks third in the EU in terms of energy independence.

Reducing energy consumption has a significant effect on energy security at national level.

More than two thirds of the Romanian homes were built before 1989. Their energy performance can be significantly improved in order to reduce energy consumption. Energy efficiency policies could bring an additional reduction of energy consumption, especially for heating, while maintaining the comfort level at home.

Reducing energy waste and, thus the bills is the main way to fight against energy poverty for families for which utility bills represent a large part of their income.

 

About ACUE

Established in May 2012, ACUE Federation has 30 members, among which many important groups from the energy sector such as E.ON Romania, ENGIE Romania, ENEL Romania, CEZ Romania, C.N.T.E.E. Transelectrica SA, Societatea Energetica Electrica SA, WIEE, WIROM GAS, GAZ EST, with a total of about 27,000 employees and an annual turnover of over EUR 5.5 billion.

The total value of investments made by ACUE’s members in the period 2005-2017 exceeds EUR 10 billion.

The impact of member companies’ activity on the economy is significant, indirectly supporting several tens of thousands of jobs.