Electricity demand in Romania is expected to grow by less than 1% per year until 2025, unless the government takes a proactive approach to encourage consumption, a study by global consultancy A.T. Kearney has indicated.
Under these conditions, small-scale energy solutions with locally integrated supply and demand, like solar panels and biomass for self-consumption, are better fit than large units to meet investor criteria and energy system needs due to higher flexibility and lower network costs and losses, according to the Romania Strategic Energy Market Outlook 2014-2025 study prepared by A.T. Kearney at the request of Romanian investment fund Fondul Proprietatea.
"To increase demand, successful economies are building the energy landscape on a competitive industry development master plan, but this is missing in Romania," the two companies said in a joint press release on Thursday.
Romania has sufficient capacity to meet expected demand by 2025, but operates at inefficient costs and the electricity price is distorted by subsidies and inefficiencies of the electricity production sector.
The recent integration of Romania’s electricity market with that of Hungary, Czech Republic and Slovakia poses both challenges and opportunities.
“On the one hand, Romania will be challenged to phase out its inefficient units, generating sunk costs. On the other hand it can take the opportunity to reshape its generation park and evolve as a competitive net exporter,” Michael Weiss, Partner at A.T. Kearney, was quoted as saying in the statement.
Renewables are expected to be the most attractive sources from an investor perspective by 2025 if the current level of subsidies is maintained.
To meet 2025 investment needs, Romania's energy regulator and the government should ensure a market framework focused on transparency, predictability, consistency and competitiveness, the statement added.
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