The National Programme for Accession of Romania is the instrument for programming the preparations for EU accession. Energy is one of the key areas, with implications for cross-border activity.
The green paper on the security of EU energy supply issued by the European Commission (EC) shows that while the EU economy is energy-intensive, its energy resources are limited. As a result, the EU is dependent on external sources of energy. This situation will not change with the forthcoming enlargement. Consequently, most of the EU’s external relations include an important chapter on energy.
The National Programme for Accession of Romania (NPAR) is the instrument for programming the preparations for accession. This document is updated annually in the light of progress and new priorities in the accession negotiations
The 700 MWe Cernavoda 1 Candu reactor in Romania, which entered commercial operation in December 1996
The strategy with regard to energy is based on three main issues:
The 700 MWe Cernavoda 1 Candu reactor in Romania, which entered commercial operation in December 1996
Improving the financial conditions in the energy sector, releasing it from inefficient activities and creating the institutional frame for market mechanisms.
Strengthening mechanisms on the energy market, monitoring its performances, with a view to introduce the necessary corrections to obtain full compatibility with EU standards.
Ensuring, for the medium-term, a constant development in the energy sector, through new investments, updating and rehabilitating .equipment, improving management performance and improving the economic and technological levels of the sector until full compatibility is achieved with the EU integrated market.
Share of electricity generation in Romania (2001)
A new restructuring programme started in July 1998, when RENEL was split up and reorganized. All nuclear activities were completely separated, and CONEL, the National Electricity Company, was founded as a joint stock company performing the tasks of transmission, system and market operator. It owned 100 per cent of the shares in three affiliates:
- SC Termoelectrica for electricity and heating generation from thermal plants.
- SC Hidroelectrica for hydro-power generation.
- SC Electrica for power distribution and supply.
The state-owned Autonomous Regulation for Nuclear Activities (RAAN) was also created.
The separation of the former Nuclear Power Group and the setting up of the Societatea Nationala Nuclearelectrica had been an explicit commitment assumed by Romania when it ratified the guarantee agreement with the International Bank for Reconstruction and Development (IBRD) and the European Bank for Reconstruction and Development (EBRD). The next stage of this process, which lasted 12 months, started with the Electricity and Heat Law. The major objectives of this law were to:
Unbundle the major activities: electricity and heat generation, transmission, distribution and supply.
- Create competition in generation and supply activities.
- Ensure free access to the transmission and distribution networks.
- Prepare the legal framework to set up the National Electricity and Heat Regulatory Authority (ANRE).
- To prepare the way for privatization and provide guarantees for non-discrimination of ownership.
The national power company CONEL and Nuclearelectrica have been set up as stock companies. The relationship among the basic activities of generation, transmission and distribution are based on commercial contracts. The Electricity Law grants third party access to the grid. The subsequent restructuring stage settled the electricity wholesale market rules.
ANRE is creating and approving the requested issuing prescriptions and rules to set up the electricity power market. The secondary legislation to do this includes grid code, commercial code, distribution code, supply code, metering code, licensing procedures and tariff methodologies. The final restructuring stage will result in exercising the wholesale market functions and, later, in spinning off the thermal power generating subsidiaries and the distribution subsidiaries. A number of independent companies have been set up and will be considered for privatization as soon as possible. Creating such a competitive structure for the Romanian electricity sector will provide enough incentives for private investors to set up independent power producers either by building new generation capacity or by buying existing capacity.
Transelectrica has been set up as the operator of the entire power transmission system of Romania, and administering the market through its subsidiary OPCOM. Transelectrica’s income mainly derives from the transmission fee, which is fully regulated by ANRE, and on the revenue from system services. Transelectrica buys the system services from producers and uses it for the power system needs.
The Romanian electricity market is now mainly based on bilateral contracts. These consist of regulated contracts (67 per cent) of main producers, suppliers and captive consumers, and negotiated contracts (33 per cent).
Negotiated contracts represent the competitive segment and the first pillar of the market, with generators, suppliers and consumers. This level of 33 per cent of market competitiveness will be increased gradually.
Electricity prices in Romania
One of the most conspicuous features of the Romanian wholesale electricity market, an inheritance of the past, is the fact that hydro generation is four times cheaper than thermal generation. This very large difference in prices on the wholesale market is expected to steadily disappear, by increasing the competitive component of the market, and the regulated market will eventually become a competitive market.
The Romanian power sector is prepared for the next natural steps of the restructuring process: distribution privatization in parallel with the privatization of a number of power plants. Romania has officially requested for the integration of its power system to the Union for the Coordination of the Transport of Electricity of Western Power Systems (UCTE). The Romanian power system completed all the activities related to the aim of interconnecting it to the UCTE power systems at the end of 2000. It will be connected through the Hungarian grid, and it is ready to start interconnection tests.
Romania originally intended to build five reactors at Cernavoda. In 1991, it was decided to proceed with work only on Unit 1, and to temporarily stop work on the other units. Project management on Unit 1 was assumed by the AECL-Ansaldo consortium through a management contract concluded in June 1991. Cernavoda 1 was completed in 1996.
Romania is aiming to complete Cernavoda 2 by 2006
The main player in nuclear power in Romania is Societatea Nationala Nuclearelectrica (SNN), a state-owned stock company, with three main branches:
- CNE Prod, operating Cernavoda 1.
- CNE Invest, in charge of completing Cernavoda 2.
- FCN Pitesti, the nuclear fuel plant.
Cernavoda is based on a transfer of technology recognised as safe by Western standards, with designs from Canada, Italy and the USA. Cernavoda supplies about ten per cent of Romania’s electricity needs, removing the need for the import of about 1.4 million t of liquid fuel per year, resulting in annual savings of over $110 million.
In May 2001, SNN, AECL and Ansaldo signed a contract for the completion of Cernavoda 2, with the aim of achieving commercial operation by 2006. When this happens, Cernavoda will provide about 16 per cent of Romania’s electricity needs, assuming that the predicted increase in demand takes place.
Completion of Cernavoda 2 is benefiting from the infrastructure and facilities that were developed for Cernavoda 1. An important industrial support structure for Cernavoda has been developed. This includes the nuclear fuel plant in Pitesti, and the heavy water plant in the southwest of Romania at Drobeta-Turnu Severin. Academic support for the Romanian nuclear programme has been provided by the Nuclear Research Institute. ICN has provided specific R&D activities, and the Centre for Nuclear Projects Engineering and Tech-nologies (CITON) for design engineering activities. There will be an increasing involvement for Romanian organizations in completion of Cernavoda 3-5.
Each unit at Cernavoda can store spent fuel from ten years of operation. In addition, Romania is developing radioactive waste management programmes and adopting concepts recognised globally, such as interim dry storage, and near-surface repository for low- and medium-level waste. A dry spent fuel intermediate storage facility project is in progress; the contract was awarded to AECL. The next step will be the decision related to the final disposal of low- and medium-level waste. It is expected that this waste will be stored at Cernavoda, and commissioning of the storage facilities is scheduled for 2005-2006.
Decommissioning plans for Cernavoda have been based on the experience of decommissioning the older CANDU units Douglas Point (220 MWe) and Gentilly (1250 MWe), both in Canada.
Aside from some hydroelectric plants, most of Romania’s generating capacity consists of obsolete thermal plants close to the end of their design lifetime, with low availability. About 40 per cent of these plants burn coal, with high releases of CO2, SO2, NOx, dust and ash.
The nuclear option represents a good opportunity for Romania to reduce polluting emissions. It is a little known fact that the radiological impact on the population of a nuclear power plant, such as the CANDU station at Cernavoda, is less than that associated with many coal fired plants.
Cernavoda 2 represents the main priority of the Romanian energy strategy, because:
- It represents a least-cost option.
- It is considered to be the most efficient new capacity that will be commissioned before 2005.
- Recent fluctuations in the price of oil on the international market have reinforced the strategy of completion of Cernavoda 2.
- Five years of commercial operation of Cernavoda 1 have demonstrated the economic, technological and environmental benefits of the plant, and that Cernavoda 2 can be expected to generate similar advantages.
The problem of nuclear safety in some candidate countries causes serious concern to the EU, even independent of enlargement, and should be urgently and effectively addressed. Public opinion is likely to be increasingly sensitive to nuclear safety as a consequence of some nuclear power plant problems in acceding countries, and this could affect major EC policy developments in the field. This is taken from Agenda 2000, which called for the implementation of safety programmes based on the original design of reactors, classified by the EC as:
- First generation (VVER 440-230 and RBMK).
- Second generation (VVER 440-213 and VVER 1000-320).
- Western-designed reactors (Cernavoda and Krsko).
WENRA was established to develop a common approach to nuclear safety and regulation, to provide the EU with an independent examination capability of safety and regulation in applicant countries, and to evaluate and achieve a common approach to nuclear safety and regulatory issues which arise.
Advantages for accession process
Construction has already started on Cernavoda 2, and the Romanian government has a strong commitment to complete Cernavoda 2. Any delay in releasing the Euratom credit will result in delays in completion of the full finance of the project, and will increase the pressure over the state budget, leading to a lack of funds allocated to sensitive sectors such as culture, health, education and social programmes. To replace these funds, Romania will request increased non-refundable grants from the EU in order to fulfil the necessary requirements.
Delays in commissioning Cernavoda 2 will affect the security of supply of electricity, which would force Romania into increasing its oil imports by about 1.4 million t/year. In addition, the stability of the Romanian electrical grid, which is in the process of interconnection with UCTE is also at stake.
The “National Strategy for the Development of the Energy Sector in the Medium-Term 2001-2004” concluded that, on a least-cost basis, and considering programmes for improving energy efficiency, it will be necessary to have Cernavoda 2 in operation by 2006.