Amidst the general joy caused by the economic growth announced by the government, there is the news that Romania is entering the EU infringement procedure because there is a legal provision that limits the export of electricity.

“The European Commission has decided to start the infringement procedure by sending an official notification letter Romania [INFR(2023)2032] for limiting the export of electricity by means of a measure incompatible with Articles 35 and 36 of the TFEU, Directive (EU) 2019/944 and Regulation (EU) 2019/943 on the internal electricity market.”

I never thought there was anyone who would think of such great horrors against national energy.

Technical explanation

Romania has been a net importer of electricity for several years. The reason is that there is no more production capacity to cover consumption. Therefore, Romania is forced to import to cover its consumption. This fact can be seen from the electricity consumption in 2022.

Last year, Romania imported 3.19 TWh. I think it makes sense: when you have a production deficit and you’re importing, you have nothing to export. Romania occasionally exports electricity when there is overproduction. Last year, Romania exported 2.11 TWh.

Question: when and what is exported? We export when there is overproduction because there is no way to store electricity. Overproduction of electricity happens when the wind blows and the sun shines. These powers are quite large, but they are periodic, so we are in the hands of nature. From ANRE data, we learn that we have a large capacity for electricity generation from renewable sources: 6,641 MW (36%) from hydropower, 3,014 MW (16%) from wind and 1,393 MW (8%) from solar.

When there is overproduction from renewables, the demand for consumption is met, then if there is an opportunity to shut down some safety capacity (from coal and natural gas), it is shut down, and the renewables remain, and the rest of the production is exported.

Someone will say that the procedure is good, but everything is not quite so. Gas-fired or coal-fired power plants require long shutdowns and restarts, which means energy is lost in these operations and leads to higher prices for the electricity produced as the technology becomes obsolete and yields decline.

It follows that, from a technical point of view, this decision is an obstacle for Romanian electricity producers: the energy system imports, as renewable capacity depends on the weather. When the weather is favorable, they can produce to be able to sell abroad after domestic demand is met and export opportunities are available.

Financial redemption

It is clear that what we call the internal energy market (in our case OPCOM) is related to the regional price system. Probably, our managers were afraid that a Bulgarian, Ukrainian, Serbian or Hungarian trader would come and raise national prices. But our decision makers, when they look at the prices of the neighbors, notice that they are either lower or at the level of the Romanian market. Romania sold at low prices 2.11 TWh from periods of overproduction because this renewable energy is cheap and you don’t always have a place to sell it because your neighbors might not need it. Romania bought at higher prices 3.19 TWh from production poverty periods because most of the imports came from Hungary, Bulgaria or Ukraine, countries that generate energy from (Russian) gas, energy more expensive than any renewable generation.

The fact that our prices are higher is also evidenced by the fact that last year the manufacturing enterprises had huge profits. Let’s not forget that 80% of electricity production belongs to a few state-owned companies, they collect most of the money from the market, registering historic profits. You should also look at the earnings of companies that own renewable energy sources to compare profitability numbers to see which ones benefit the most from rising energy prices.

The state “confiscated” most of these profits through excessive taxation, and also confiscated most of the dividends of national companies. We know what he did with the money: he paid salaries, pensions, left loopholes in private budgets.

consequences

What really happened? Rising energy prices caused many small firms to close, and those that remained to downsize. Companies, from small to large, were forced to raise prices, so all products and services rose in price, reaching an inflation rate of 16.4%. The most affected were small enterprises, mainly with Romanian capital. You can find the continuation of the article on Contributors.ro