Romania: Subventions and inefficiency lead to cost increase in the energy sector

, SEE Energy News

Subventions and inefficiency in electricity production distort the price of electricity in Romania.

Subventions and low level of efficiency, including the high price of coal that is used in power plants and high fees for renewable energy sources, are together increasing the energy costs for the economy by 24 percent, according to a report on energy sector in Romania. The study was undertaken by consultancy firm A.T. Kearney.

The real price of electricity is 35.5 euros per megawatt-hour, instead of 43.9 euros which is the price that Romanian consumers pay on average.

The report states that the demand for electricity will remain at the same level until 2025, when it is expected to grow by less than one percent annually. “In order to increase the demand, successful economies predict the development of the energy sector in the competitive development plan, but Romania lacks that plan,” the report said.

Romania has sufficient capacity to meet the expected demand by 2025, but if it wishes to remain a significant actor in the region, it must solve the problem of inefficiency in the energy sector. The recent integration of electricity markets of Romania, Hungary, the Czech Republic and Slovakia, represents a challenge but opens new possibilities as well.