Romania: The impact of electricity and gas liberalization on national economy

10. July 2014. / SEE Energy News

Companies are especially affected by increasing gas prices, which is a much too quickly. Free market price of electricity fell, which caused the bills to be more affordable for companies. Basically, the industry was caught off guard in a process of accelerated liberalization of markets. But we can not say that the industry had far less concern for refurbishment, efficiency and reducing consumption.

Professor Leca is one of the authors of a study of the impact of market liberalization on the economy, commissioned by European Institute of Romania (EIR). According to this study, the industry has 13% potential energy savings as a percentage of consumption.

Aurelius Leca said: “This percentage seems small, but do not forget that we have left some energy-intensive industry. After the Revolution, the industry was accustomed to cheap energy and efficient pace was rather slow.

Romania urgently need an economic development model

Main conclusions and recommendations of the study on measures to be considered for energy market liberalization are defining a model of economic development, establishing priority sectors, request exemptions for priority sectors for them to benefit from state aid, avoiding as far as possible, the risk of relocation of companies with many employees.Without this, Romania is likely to develop chaotically, resources are allocated inefficiently, and those who most need funding to not receive attention authors. Professor Leca Aurelius said: “Our country does not never had an economic model of development., we only have sustainable development strategy for 20 years, approved by 2007 but was never implemented. Governments have succeeded in the leadership of the country after the Revolution had various economic programs, but were partially applied.

Now more than ever we need such a program, given that Europe has not escaped the crisis. Economic development model determines which industries deserve help and support through various support schemes, to regain competitiveness. This should be approved by Parliament and assumed by all governments will succeed. ”
According to the study EIR, in 2011, the largest share in the economy after industrial output value it was manufacturing (76%), followed by production and supply of electricity, gas, steam and air conditioning (17.1%), mining (3.5%) and water supply, sanitation, waste management and remediation activities (3.4%). Exploitation of mineral resources, energy, transport, agriculture, should be used to build a system capable of attracting investment in industries of the future and contribute to the development of a knowledge-based economy and to increase export value-added products. For this, we have disseminated information on best practices in resource efficiency, the newest available technologies that can streamline consumption about business models that have successfully tested the use of raw material substitution, the cited source.

Government should stimulate research and development of business models “green” and support research and industrial innovation, which can lead to widespread implementation of resource efficiency measures in the long term, including the substitution of raw materials where possible. To mitigate the impact of the liberalization of electricity prices in the industry, it should be encouraged to take the necessary measures to increase immunity to energy costs, the study also indicates EIR. This can be achieved through innovation, the use of alternative energy sources and energy efficiency, the authors conclude the document.

Commission Communication of June 11, 2013 recommended the introduction of a mechanism to monitor the impact of higher energy prices on domestic consumers and the competitiveness of enterprises and industries intensive. Consumers SMEs have supported measures to support SMEs, the main drivers of economic growth.Residential and non-residential consumers have an incentive to adopt the new measures and technologies available on the market for efficient consumption and vulnerable consumers through social protection measures.

Regional Exchange we could expensive energy

Romania has one of the lowest prices for gas and electricity in the European Union, but trading on regional exchanges, which is scheduled to be set up in November this year, will cause prices to rise, there are chances of recovery of the sector energy, but the economic effects on household and industrial contrary, the study also notes quoted. Between 2012 and 2013, Romania had one of the largest decreases in consumption of electricity and natural gas (about 6-8%), double the EU average. At the end of 2013, electricity was cheaper by 30% than the EU average and the gas by about 150%, the cited source stating: “the gradual liberalization of the electricity market and gas in Romania is made in the context of the energy sector unsustainable facing difficulties, including high energy losses. medium term, the energy market liberalization leads to an appreciable increase in electricity prices, gas and heat, a process that takes place very late and that will put high pressure on the capacity of all energy consumers (industrial and residential) to pay energy bills. obvious solution, but not convenient, is to reduce energy consumption by increasing energy efficiency, reducing energy losses, respectively. ”

In our country the past 20 years, electricity consumption has halved since disappeared-intensive industry, the liberalization of electricity prices in a market oversupply (the excess electricity) may potentially cause an initial increase significant (moderate ), followed by a fall in prices, the authors expected. “Despite expectations of rising prices, we have seen a decline in energy prices from 230-240 euro / MWh in 2012 to 140-150 lei / MWh 2013, highlighting opportunities to export electricity Romania the region. In January 2013, the industry received the lowest average price (233 euro / MWh) purchased exclusively from competitive suppliers, while small industrial consumers paid an average price almost double (454 lei / MWh). Consumers medium with a need between 2,000 and 20,000 MWh annually, purchased electricity almost equally competitive providers and the people ultimately paying an average price of 363 lei / MWh.

Our country is a net importer primary energy resources of the order of 20-40%, which makes energy efficiency should be considered as “primary energy resource” directly contributing to increased energy security, concludes the study cited.

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