1. Romanian Electricity Sector and National Energy Strategy Romanian Reverse Economic Mission to USA – September 2010 Alexandru Sandulescu General Director – Energy, Oil and Gas Department Romanian Ministry of Economy, Commerce and Business Development

2. Romanian Electricity Sector

3. Romanian electricity sector Overhead transmission lines: 8800 km Transmission substations: 76 Distribution lines: 310127 km Distribution substations: 1296 Consumers: 8,500,000 National consumption: 54.6 TWh (2008), 49.9 TWh (2009)

4. Romanian electricity sector Transmission and system operator Commercial operator Producer with hydro power plants Producers with thermal power plants Producer with nuclear power plant Almost 20 municipal cogen producers Nuclearelectrica Hidroelectrica Transelectrica OPCOM T1T2T3T6 More than 120 independent suppliers 8 distribution companies (DISCOs) E1E2E3 E7E8 Electricity sector structure

5. Romanian electricity sector Electricity generation structure 2009

6. Romanian electricity sector Electricity generation variability

7. Romanian electricity sector Electricity export / import balance Import Export

8. Romanian Electricity Market

9. Romanian electricity market Fully liberalized from July 2007; No administrative barriers for imports and exports of energy or energy resources; Advanced electricity market compared with other countries in the region; Market operator – Opcom operating: Day Ahead Market Forward market; Green Certificates Market CO 2 Allowances market Market settlement. Balancing Market operated by the TSO, Transelectrica

10. Romanian electricity market indep. supplier 1 indep. supplier 2 Supplier producer eligible customer Customer at reg. tariffs eligible customer Customer at reg. tariffs eligible customer centralized markets OPCOM wholesale market retail market Wholesale vs. retail electricity market

11. Romanian electricity market Wholesale electricity market Physical Notifications BILATERAL CONTRACTSDAY AHEADON THE DAY SETTLEMENT TSO Balancing Market MP P Q G G SS Q Day Ahead Market Simple Bids Firm Volumes by Company Simple bids by unit Metered Volumes Meter data Imbalance volumes by BRP Adjustments to Day Ahead schedule BM Volumes Market Operator TSO-market operator G - generators S - suppliers Balancing Responsible Parties

12. Romanian electricity market Wholesale electricity market – monthly traded volumes Balancing market Day ahead market Forward market Negotiated contracts Regulated contracts

13. Romanian electricity market Retail market opening Legal market opening Real market opening

14. Romanian electricity market USD/MWh 20 40 60 30 50 Day ahead market – volumes and prices Day ahead traded volumes Day ahead prices 70

15. Romanian electricity market Day ahead market – comparing to other markets

16. Romanian electricity market Future developments Adjusting market Intra-day markets Both are in testing phase Market coupling discussions with neighboring countries

17. Romanian Energy Strategy

18. Romanian energy strategy 2007 – 2020 Issued in November 2007 through GD 1069/2007 Consultation and agreement of all parliamentary parties In line with EU Policy document in energy (January 2007) Based on a Least Cost Development Study – Necessity of new nuclear units Currently under revision

19. The national fossil fuel reserves Romanian energy sources potential

20. The national renewable energy sources potential Romanian energy sources potential SourceAnnual potentialTo be used for: Solar60 PJ/an 1,2 TWh Heat Electricity Wind23 TWhElectricity Hydro of which under 10 MW 36 TWh 3,6 TWh Electricity Biomass and biogas318 PJHeat Electricity Geothermal7 PJHeat NOTE : these are theoretical potentials, real usable potentials are much lower due to technological, economical and environmental limitations or restrictions.

21.  The environmental impact of using primary energy sources and of energy conversion technologies, especially the CO 2 emissions;  The finite world reserves of fossil fuels;  The increase dependency on imports of primary energy sources;  The increase in energy demand. Challenges facing the energy sector

22. Reducing CO 2 emissions by: promoting renewable energy sources  electricity targets of 33 % in total gross electricity consumption of 2010, 35 % in 2015 and 38 % in 2020 promoting nuclear energy  unit 2 Cernavoda of 600 MW commissioned in 2007  unit 3 and 4 to be completed by a consortium  New NPP to be build Romanian energy strategy 2007 – 2020 Answers to challenges

23. Reducing energy dependency on imported fossil fuels by using a balanced energy mix and by: promoting renewable energy sources; promoting the use of indigenous coal, but using clean coal technologies, preferable with carbon capture and storage facilities; promoting nuclear energy (Romania still have natural uranium resources). Romanian energy strategy 2007 – 2020 Answers to challenges

24. Diversifying energy supply sources and routes by: promoting the Nabucco Project on natural gas; promoting the AGRI project; promoting the PEOP Project on oil; studying the feasibility of a LNG / LPG terminal in Constantza harbor; increasing the interconnection capacity on natural gas with Hungary and Bulgaria; increasing the interconnection capacity on electricity with Moldova, Serbia, Hungary and Turkey (submarine cable). Romanian energy strategy 2007 – 2020 Answers to challenges

25. Increasing energy sources storage capacity by: increasing the gas storage capacity from 2550 mil. CM in 2007 to 3935 mil. CM in 2012; increasing the oil storage capacity to fulfill 67.5 days of consumption in 2011; construction of a 1000 MW pump – storage hydropower plant (mainly for daily, short term security of supply). Romanian energy strategy 2007 – 2020 Answers to challenges

26. Limiting energy consumption increase by energy efficiency measures: energy audits are mandatory for big industrial consumers; National Plan for Energy Efficiency was drafted in 2007; National programme for building insulation; Structural Funds to be used for energy efficiency projects. On an estimated 6 % yearly GDP increase, we expected a 3 % yearly energy consumption increase. Romanian energy strategy 2007 – 2020 Answers to challenges

27. Promoting renewable energy sources

28. Targets – share of renewables Directive 2001/77/EC (amended by 2006/108/EC) : 33 % of gross electricity consumption in 2010 Romanian energy strategy 2007 – 2020: 33 % of gross electricity consumption in 2010 35 % of gross electricity consumption in 2015 38 % of gross electricity consumption in 2020 Directive 2009/28/EC 24 % of gross energy consumption in 2020 (+6.2 % from 2005) Promoting renewable energy sources

29. The national renewable energy sources potential SourceAnnual potentialTo be used for: Solar60 PJ/an 1,2 TWh Heat Electricity Wind23 TWhElectricity Hydro of which under 10 MW 36 TWh 3,6 TWh Electricity Biomass and biogas318 PJHeat Electricity Geothermal7 PJHeat NOTE : these are theoretical potentials, real usable potentials are much lower due to technological, economical and environmental limitations or restrictions. Promoting renewable energy sources

30. Distribution of the renewable energy sources potential I. Donau Delta (solar); II. Dobrogea (solar and wind); III. Moldova (microhydro, wind and biomass); IV. Carpaţi Moutain (IV1 – Carpaţii de Est; IV2 – Carpaţii de Sud; IV3 – Carpaţii de Vest ( biomass, microhydro); V. Transilvania (microhydro); VI. Câmpia de Vest (geothermal); VII. Subcarpaţii(VII1 – Subcarpaţii Getici; VII2 – Subcarpaţii de Curbură; VII3 – Subcarpaţii Moldovei: biomass, microhydro); VIII. Câmpia de Sud (biomass, geothermal and solar). Promoting renewable energy sources

31. Opertional:  hydro – 6440 MW  wind – 14.9 MW  biomass/biogas – 8.1 MW  solar – 0.0088 MW Under construction:  hydro / 131 MW  wind – 1000 MW  biomass/biogas – 27 MW National use of renewables Promoting renewable energy sources

32. Green certificate market Promotion of renewable energy sources - Green certificates market Green certificate market Electricity market Electricity Coal Electricity micro hidro Green certificates micro hidro Electricity Nuclear Producer on hydro Producer using fossil fuels Producer with nuclear units Competition Supplier Producers Label Promoting renewable energy sources

33. Promotion of renewable energy sources - Green certificates market mandatory quotas for suppliers (year / %): minimum and maximum price levels established by the regulator: minimum value 27 Euro / MWh maximum value 55 Euro / MWh 20085.26 20096.28 20108.30 201110.00 201212.00 201314.00 201415.00 201516.00 201617.00 201718.00 201819.00 201919.50 202020.00 Green certificate market Promoting renewable energy sources

34. Promotion of renewable energy sources - Green certificates market Number of certificates per MWh: hydro under 10 MW: 3 certificates (2 for old but refurbished hydro units); wind: 2 certificates till 2017, one starting with 2018; biomass / biogas: 3 certificates + 1 for efficient cogeneration; solar: 6 certificates. Green certificates are issued for: 15 years for new units; 7 years for second hand units if used in isolated systems; 10 years for refurbished hydro units; 3 years for old, un-refurbished hydro units. Green certificate market Promoting renewable energy sources

35. Promotion of renewable energy sources - Green certificates market Investments must be done before 2016 ! Penalties for non compliance of suppliers: 110 Euro per non acquired certificate Revenues from penalties to be used by Environmental Fund ANRE can adjust quotas if it is a high imbalance on the green certificate market Green certificate market Promoting renewable energy sources

36. Organized by Energy Market Operator - OPCOM Green certificate market Promoting renewable energy sources

37. Nuclear electricity production

38. Nuclear sector Cernavoda NPP with: two CANDU 6 units operational two CANDU 6 units under construction A joint-venture, Energonuclear, to build units 3 and 4 in Cernavoda NPP: SN Nuclearelectrica 51% RWE Power România SA 9.15% Enel Investment 9.15% GDF SUEZ 9.15% CEZ 9.15% ArcelorMittal 6.2% Iberdrola 6,2%

39. Nuclear sector New NPP to be build Pre locational study done – 103 possible locations To be established: consortium of investors or other financing mode technology to be used

40. Conclusions

41. Romania has an advanced energy market and an attractive environment for investments in energy sector – in line with EU legislation; Romania has natural energy resources, including unused renewable potential in wind, hydro, solar, biomass and geothermal; Romanian energy strategy basic answers to the new challenges are: Promotion of renewable energy sources; Promotion of nuclear energy; Promotion of indigenous coal with clean technologies; Diversifying the sources and routes of primary energy sources supply; Increase interconnection capacity (electricity, gas) and storage capacity (gas, oil); increase energy efficiency. Conclusions

42. Thank you for your attention ! www.minind.ro sandulescu@minind.ro