Price Spike Making Hidroelectrica Projects More Expensive

Hidroelectrica has updated the value of investments it plans to make to complete projects started before 1989. This list includes the refurbishment of the Raul Mare Retezat hydropower plant and the completion of the Pascani and Rastolita hydropower developments. The new values approved by the General Meeting of Shareholders represent a substantial increase in the investment needed to complete these projects.

According to Hidroelectrica, it was determined that the General Estimate and technical-economic indicators for the investment objective “Refurbishment of the Raul Mare Retezat hydropower plant” needed to be updated.

The reasons are related to the recent exponential increase in prices for equipment, materials, labour, as well as the unstable nature of the market in the field of investment projects, legislative changes in the field of investments, combined with the cancellation of other procurement procedures carried out in the period 2023-2025 due to estimates exceeding the allocated budget received from potential interested bidders. Under these circumstances, the shareholders approved the new value of the investment at RON 1,257,427,187.66, excluding VAT, equivalent to EUR 252,622,237.60, excluding VAT.

According to the general investment schedule and the main stages of the refurbishment works, the investment objective will be achieved within 72 months (6 years), of which: 12 months (1 year) – preparatory period, i.e. preparation of tender documentation, organization of the tender procedure, analysis of bids, selection of the winning bid and signing of the contract – 60 months (5 years) – actual implementation of the refurbishment works.

 

Raul Mare Retezat hydropower plant in figures

The Raul Mare Retezat Hydropower Plant (HPP) was commissioned between May and December 1986, namely: hydropower unit 1 – May 7, 1986, and hydropower unit 2 – December 22, 1986. The Raul Mare Retezat hydropower development is located along the course of the Raul Mare River, with the power plant located approximately at the entrance to the Tara Hategului depression, Hunedoara County. The Raul Mare Retezat Hydropower Plant is a high-head diversion plant with multi-year storage and an underground powerhouse equipped with two vertical Francis FVM 170.5–526.3 hydraulic turbine hydropower units and a vertical HVS 490/240-12 synchronous generator.

In terms of its parameters, in 1975, when the development project was drawn up, the Francis turbine hydropower unit at the Raul Mare Retezat plant ranked second in Europe in a continental classification of size and performance, fulfilling the following functions in the national energy system: electricity generation, primary control, frequency control, and fast tertiary reserve. The installed power of the plant is 335 MW, with an average annual design energy of 434.3 GWh for a multi-year average inflow of 70.0 m³/s.

 

The reservoir filled below potential for 30 years

The Retezat power plant is the second largest on Romania’s inland rivers, after Lotru. In addition to problems with the hydropower units, the operation of the Raul Mare – Retezat HPP was also affected by the fact that Gura Apelor reservoir, with its rockfill dam, the largest of its kind in Europe, could not be filled to its designed level for over 30 years. The filling of the reservoir, which covers about 360 hectares and accumulates about 220 million cubic meters of water, was only possible in the summer of 2021, after several works. The Gura Apelor reservoir and the hydrographic development of the Raul Mare – Retezat River cost around USD 250 million, of which USD 50 million came from a loan contracted by the Romanian government in the spring of 1976 from the World Bank. The Raul Mare-Retezat hydropower development has an installed capacity of 349 MW and an average multi-annual energy production of 629.5 GWh.

 

2021 tender failed and resumed in 2024

The investment project “Refurbishment of the Raul Mare Retezat hydropower plant” was approved in 2020 by EGMS Decision No. 9/15.06.2020, following the update in 2019 of the feasibility study prepared in 2016. Subsequently, in 2021, a competitive negotiation procedure was carried out to award the contract, but it was cancelled because the only bid submitted exceeded the estimated value of the procurement.

The contract put out to tender in 2021 had an estimated value of RON 378.5 million, plus VAT. The tender relaunched in February 2024 was worth almost double that amount, at RON 679 million plus VAT. By carrying out the refurbishment works provided for in this feasibility study, it is expected that a new operating cycle will be ensured for all equipment, installations, and structures related to the underground power plant, the pressure node, and the Retezat main water intake, under conditions of safety and optimal economic efficiency.

To obtain the most efficient refurbishment solutions, the energy parameters of the hydropower units were reconsidered, drawing on over 30 years of experience in operating the facility. The absolute necessity of refurbishing the Raul Mare Retezat hydropower plant stems from its particular importance for the National Energy System: electricity generation, participation in frequency and power control, and the provision of other system services. It is one of the most important projects in the company’s portfolio.

 

Pascani Hydropower Development has been waiting for 40 years for completion

The investment project “Pascani Hydropower Development” is included in the framework scheme for the complex development of the upper Siret River basin. According to the update approved by Hidroelectrica’s shareholders, the value of the remaining work to be carried out to complete the project was increased from RON 319,941,125 to RON 398,098,309, excluding VAT, in conditions in which the total updated value of the investment as of August 31, 2024, was nearly RON 324 billion, excluding VAT.

The “Pascani Hydropower Development” project, which includes the projects “Pascani Reservoir on the Siret River in Iasi and Suceava Counties” and “Pascani Hydropower Plant on the Siret River”, was initiated in 1985. At the Revolution, the two projects were 90% complete, but since then the completion of the works has been repeatedly postponed. According to the project, the surface area of the reservoir is 1,300 hectares and the maximum volume of the reservoir is 68 million cubic meters of water. The development could provide irrigation for over 45,000 hectares of land and supply industrial water and electricity to part of the municipality of Pascani. The hydropower plant is an above-ground type with a total installed power of 9.4MW and a total installed flow of 100 m³/s. The hydropower plant has three hydropower units equipped with vertical synchronous generators, two of which have a rated apparent power of 3708 kW and one with a rated apparent power of 1998 kW. The hydraulic turbines equipping the hydropower plant are Kaplan type, two of them being KVB 3.84-11.8 type with an installed flow rate of 40 m³/s each and one KVB 2.06-11.8 type with an installed flow rate of 20 m³/s.

According to Hidroelectrica’s documents, the physical status of the works on May 1, 2024, was as follows:

• Reservoir (left embankment and right embankment): 75% complete
• Spillway dam including downstream regulation: 85% complete
• Hydropower plant: 80% complete
• Power Evacuation Substation: 0% complete.

The completion of this important project was included at the end of 2022 in Decision No. 169 of the Supreme Council for National Defence (CSAT) on improving Romania’s energy resilience to ensure security in this area through operational adaptation and the development of new energy production capacities, in the context of the war in Ukraine. The CSAT decision provides for the completion of 11 investment projects from Hidroelectrica’s portfolio through inclusion in the RePower EU program.

 

Works to be executed

The remaining work consists of the following activities:

• Acquisition of the land necessary to complete the construction works by implementing Government Decision No. 1138/2024 approving the site, start of expropriation procedures for all privately owned properties subject to expropriation, approving the list of state-owned properties and approving the list of properties owned by local authorities located on the site of the public utility project of national interest “Pascani Hydropower Development on the River Siret”
• Carrying out construction work on spillway dams and slope reinforcement, cleaning of the reservoir bed etc.
• Procurement and installation of hydromechanical equipment, AMC, bridge over the dam, electrical power supply and safety systems for the spillway dam
• At the hydropower plant: rehabilitation of hydropower units in various stages of assembly, equipping the plant with electrical installations, control and protection installations, lifting installations, auxiliary installations (cooling water, drainage, vacuum drainage, low-pressure compressed air, oil technology installation), fire protection systems, security and data communication systems, and interior/exterior architectural works
• To connect the hydropower plant to the national energy system (SEN), a 20 kV UPL connection must be built from the Pascani hydropower plant to the Vatra 110/20 kV electrical substation, over a length of approximately 8 km.

 

Several options for the completion of the Rastolita Hydropower Development

According to the values resulting from the documentation “Optimization and updating of the technical and economic indicators of the investment objective Rastolita Hydropower Development”, three scenarios for the completion of the works are considered, each involving different investments.

Based on the results obtained in the financial analysis, the documentation recommends continuing the work to complete Phase I – scenario 2 (remaining investment for the execution of works on the Rastolita dam up to a retention level of 720 mdM, with the contribution of natural flow and the secondary adduction branch West with 3 intakes), with the initial commissioning of the Rastolita HPP only with natural flow. The completion of works for Stage II could only become feasible in scenario 3, which involves obtaining non-reimbursable funding or the co-financing of other beneficiaries of the investment functions, to be reviewed after the commissioning of the Rastolita HPP. The estimated VAT-exclusive values of the remaining investment to be executed, at prices as of December 31, 2024, corresponding to the works to be executed at Rastolita hydropower development in Stage I, scenario 2, and Stage II, scenario 3, as recommended by the documentation developer, are as follows:

Stage I scenario 2 – RON 152,554,655 (EUR 30,669,801); Source of financing: own resources

Stage II scenario 3 – RON 1,133,987,448 (EUR 227,978,418); Source of financing: own and external sources.

The physical completion of the components of the Rastolita Hydropower Development investment as of December 31, 2024, was as follows:

• Dam – 85% for stage I and 46.4% for stage II
• Main headrace tunnel – 96%
• Pressure node – 90%
• Power plant – 98%
• 110 kV substation – 96%
• Surge tank – 100%
• Secondary headrace tunnel west branch – 18%
• Secondary headrace tunnel east branch – 7%.

 

What project completion means

The investment project “Rastolita hydropower development” was approved by Decree No. 95/11.04.1989, and by Government Decision No. 332/1996 the investment was declared a public utility project of national interest. Rastolita Hydropower Development provides for the hydropower exploitation of the flows in the Rastolita river basin together with those from other right tributaries of the Mures river in the Ilva Rastolita-Bistra sector.

The investment has been designed to provide the allocated amount of the total general estimate of the works:

• Energy use – 56.3%, through production at the Rastolita hydropower plant (Qi = 25 m³/s and Pi = 50.4 MW) of approx. 123.4 GW/year and, respectively,
• Other water uses – 43.7%.

According to Government Decision No. 489/1996, following the optimization of the initial design solutions, by modifying in particular the main energy parameters of the Rastolita HPP, the amount allocated from the total general estimate of the work for energy use is reduced from 56.3% to 46%, given that the electricity produced at the Rastolita HPP is 117.5 GWh/year, for a Qi= 17 m³/s and Pi= 35.3 MW.

The remaining amount of the total cost estimate, 54%, represents the expenses necessary for the execution of works intended for other uses of water, namely supplementing the flow of the Mures River during dry periods by 6.6 m³/s, supplying drinking and industrial water to the localities located downstream of the development. The optimized solutions of “Rastolita hydropower development” refer to:

• Reduction of the secondary headrace tunnel cross-section from approx. 8 m² to approx. 6 m² and reduction of the corresponding lengths by 1.7 km on the western branch of the secondary headrace tunnel and by 3.4 km on the eastern branch of the secondary headrace tunnel, as well as abandonment of the Donca intake on the western branch
• Reduction of design flows due to the reduction of water supply from the secondary headrace tunnel – east branch and the lowering of the secondary intake quota from the secondary headrace tunnel – west branch
• Reduction of the installed flow rate of the hydropower plant from 25 m³/s to 17 m³/s and reduction of the installed power of each hydropower unit from 25.15 MW to 17.6 MW
• Modification of the solution for the high-water discharge of the Rastolita dam from a side spillway with a coastal channel to a funnel-type discharge with an underground gallery.

To adapt the investment to the new energy and economic conditions, which had changed since the date of its approval, in 2003 the General Designer of the development, ISPH SA Bucharest, prepared the study “AHE Rastolita. Optimization study to improve construction solutions and energy-economic parameters,” approved by CTE Hidroelectrica SA under no. 100/2003.

 

Completion of works approved in 2019

In 2019, EGMS Decision No. 12/07.05.2019 was issued for this investment project, approving the completion of the works necessary for the commissioning of the Rastolita HPP – Stage I. The works of Stage I consist of: completion of the dam at the minimum energy level (NNR – 720 mdM); commissioning of the Rastolita power plant; completion of the secondary intakes Visa, Galaoaia Mica, Galaoaia Mare belonging to the western branch, which are 36% complete. Given the current geopolitical context and the general guidelines of the long-term national energy policy, there is a clear need to exploit the country’s hydrographic potential to promote investment and boost energy projects that are at an advanced stage of implementation. In this context, the Supreme Council for National Defence (CSAT) included the completion of this project in its October 2022 Decision No. 169 on improving Romania’s energy resilience to ensure security in this area through operational adaptation and the development of new energy production capacities, in the context of the war in Ukraine. This decision by CSAT means that the Rastolita Hydropower Development project will be included in the list of projects in the EU REPower program.

 

Investment completion in two stages

According to the study, it is recommended to continue and carry out the works on the Rastolita dam in two stages, as follows:

• In Stage I, work will continue the Rastolita dam up to the NNR = 720 m above sea level, with a useful storage volume of 10 million cubic meters, to ensure the minimum technical and economic energy function and the commissioning of the Rastolita HPP with the two secondary headrace tunnels and intakes – east branch and west branch.
• In Stage II, it is recommended that the Rastolita dam be built at the designed retention level of NNR = 760 m above sea level, depending on subsequent technical and economic conditions.

Stage I of the Rastolita hydropower development at minimum energy level means:

• Construction of the Rastolita dam at NNR = 720 mdM (normal retention level), with a useful storage volume of 10 million cubic meters
• MHC type F090/390 designed to utilize the flow rate drop of the easement with the following design parameters: Pi = 0.1 MW, Em = 1 GWh/year, Qi dam service = 0.2 m³/s
• The main headrace tunnel, built entirely with a length of L = 8.52 km and an internal diameter of Di = 3.5 m
• Pressure node consisting of a surge tank, butterfly valve chamber, and a penstock with a length of L = 685 m
• Rastolita HPP, equipped with two vertical Francis units with an installed capacity of 35.2 MW, an installed flow rate of Q = 17 m³/s and an electricity production of 94.6 GWh/year, consisting of: 45.3 GWh/year – the reservoir capacity of Rastolita and 49.3 GWh/year being the contribution of secondary intakes – eastern and western branches
• The surge chamber, built downstream of the Rastolita HPP with a total volume of 100,000 cubic meters
• Secondary headrace channels and intakes – east branch and west branch.

 

The benefits of the Rastolita hydropower development for Romania

• Contribution to national energy security: Rastolita is part of the chain of new hydropower plants developed by Hidroelectrica, a strategic company of the Romanian state.
• Green energy source: The project uses renewable sources, supporting Romania’s carbon emission reduction targets as set out in the National Energy and Climate Plan and Romania’s Energy Strategy 2025-2035.
• Complex use of water resources: The development will provide both energy production and secondary uses such as water management and flood prevention.

 

Position of environmental activists

Hidroelectrica’s plans to complete the construction of the Rastolita hydropower development suffered a new blow in July after the Cluj Court of Appeal decided to halt the deforestation of 39 hectares of forest in the Calimani National Park.

The Cluj Court of Appeal upheld the request filed by the Declic Association and Bankwatch Romania, Cluj branch, and ordered the suspension of Government Decision No. 327/2025, which allowed the permanent removal of over 30 hectares of forest in the Calimani National Park from the forest fund for the construction of the Rastolita hydropower plant. This is the second decision by the Cluj Court of Appeal against the project, after it suspended the environmental permit underlying the works in June. Deforestation for Rastolita hydropower development is suspended until the courts issue a final ruling, including on appeal to the High Court of Cassation and Justice, on the legality of the government decision.

“The project would involve clearing 39 hectares of forest and drastically reducing the flow of the Rastolita River, seriously affecting the habitat of the huchen, a rare species of Danube salmon. Although officials claim that the damage has already been done, satellite images and field observations show that significant portions of the ecosystem are still alive,” say the two environmental NGOs that filed the lawsuit.

 

Hidroelectrica’s position

Hidroelectrica has a budget of RON 1.7 billion for ongoing investment projects this year, and the planned refurbishment contracts exceed EUR 600 million. Investments will be made in renewable energy capacities of at least 500 MW, which will help compensate for periods of water shortage, and these will be supplemented by strategic projects such as the one in Rastolita. The problem here is a fish, “that huchen that no one can find, but which has a significant impact on court decisions,” Radu Constantin, member of the Management Board of Hidroelectrica, told a recent conference. “On the other hand, we have those strategic projects declared of national importance in 2022, which we have been trying for years to unlock. It was an extraordinary effort by our colleagues at Hidroelectrica, together with specialists from the Ministry of Energy and the Ministry of Environment, and when we managed to obtain all the environmental permits, the court decisions were issued for Rastolita. We also have environmental permits for Cerna-Belareca and Bumbesti-Livezeni. All the public debates have been held, so the company has done its homework, the specialists involved in this field have done all the necessary due diligence,” he said.