Romania Power Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Romanian power market is expected to register a CAGR of more than 4.3% during the forecast period, 2022-2027. The COVID-19 outbreak in 2020 had not witnessed any recordable impact. However, due to lockdown measures, low revenue collection from the industrial and commercial sectors had impacted the power industry negatively. Factors such as the growing demand for renewable energy, upcoming investments in the energy sector, and supportive renewable energy policies drive the market's growth. However, the high initial investment cost, long investment return period on projects, and limited natural resources are expected to restrain the Romanian power market during the forecast period.

Key Highlights

• Hydropower to witness significant growth during the forecast period, owing to the increasing share of electricity generation from hydropower.
• The government of Romania has announced plans to invest over EURO 22.6 billion (USD 26.7 billion) in the power sector between 2020-2030. This is likely to create immense opportunities for Romania's power market in the future.
• Supportive renewable energy policies in the country are likely to drive the Romanian power market in the forecast period.

Key Market Trends

Hydropower to Witness Significant Growth

• Romania's energy mix is dominated by hydrocarbon energy sources such as coal, oil, and natural gas. This scenario is changing fast with the growth of hydropower and solar energy.
• Hydropower is the largest source of renewable energy in Romania. Romania has great potential of more than 9GW, but, as of 2020, only 6% of the total hydropower capacity was utilized. Hence, the country has the option to explore more areas to capture hydroelectric power.
• Currently, Romania is seeking to derive more of its energy needs from renewable sources. Romania is seen as a fast-growing market for hydropower in the Southeast European region.
• According to IRENA's Renewable Energy Statistics 2021, the total capacity of renewable energy sources, as of 2020, was 11,141 megawatts (MW). Hydropower accounted for an installed capacity of 6,684 MW.
• As per National Regulatory Authority for Energy Romania statistics 2021, Romania's hydropower accounts for a 33.9% share of the total energy mix in 2020. This is expected to witness significant growth with upcoming projects like 1000 MW of Tarnita - Lapustesti during the forecast period.

Supportive Renewable Energy Policies to Drive the Market

• Romania has announced numerous policies to support the renewable energy sector. These policies help meet the obligations set by the European Union (EU) in terms of greenhouse gas emissions through its legislative package.
• To replicate the growth during 2012-2016, the government is considering multiple programs to drive solar power installations. In June 2020, the government approved a memorandum to implement support mechanisms such as the Contract for Difference scheme (CfD) for low-carbon electricity.
• Under CfD, the producers enter into a private contract with the nominated counterparty, under which the parties agree on a strike price. The producer sells the electricity at market prices. If the market prices are below the strike price, then the counterparty pays the difference to the producer, and if the market price is above the strike price, the producer pays the difference to the counterparty.
• The CfD ensures a consistent electricity price to power plant owners, protecting them from market risks associated with electricity price volatility. Given the success of the CfD in the UK and existing obstacles presented by uncertain electricity prices for the power market, CfD is expected to be a major market driver.
• Under the Energy Efficient House program announced in May 2020, the government would provide up to EUR 15,000 for households installing new equipment to increase their energy efficiency.
• In 2020, Romania's Ministry of Environment allocated over USD 63.7 million for the Casa Verde Fotovoltaice (green PV home) scheme to support residential solar installations under its net metering regime.
• According to the International Trade Administration 2021 report, in the country's total electricity production, renewable energy production held a significant share, which comprised hydropower by 34%, wind by 15%, and photo-voltaic above 7%.
• Therefore, the above supportive renewable policies are expected to drive the Romanian power market in the forecast period.

Competitive Landscape

The Romanian power market is moderately fragmented. The key players in the market include Romelectro SA, SGS SA, Enel SpA, Siemens Gamesa Renewable Energy SA, and Vestas Wind Systems AS.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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