{"id":7472,"date":"2018-11-27T07:21:44","date_gmt":"2018-11-27T05:21:44","guid":{"rendered":"https:\/\/www.fpe.ro\/?p=7472"},"modified":"2024-11-21T11:32:42","modified_gmt":"2024-11-21T09:32:42","slug":"oportunitatea-gazelor-naturale-in-sectorul-rezidential-din-romania","status":"publish","type":"post","link":"https:\/\/www.fpe.ro\/en\/oportunitatea-gazelor-naturale-in-sectorul-rezidential-din-romania\/","title":{"rendered":"Natural gas opportunity in the residential sector in Romania"},"content":{"rendered":"
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I started this research with a few questions in mind.<\/p>\n

\nWhat can natural gas bring to Romanian consumers, especially in the light of the much-discussed discoveries in the Black Sea? Can natural gas be a transition fuel in Romania? What role will natural gas play in the energy mix of the future, in terms of consumer affordability and environmental impact?\n<\/p><\/blockquote>\n

We conducted the most comprehensive research on energy poverty in Romania for a year, realizing that this complex economic and social issue is not getting anywhere near the attention it deserves.<\/p>\n

The authorities have failed to adopt any solid measures more than six years after they were obliged to adopt a National Action Plan on Energy Poverty, while almost 20% of Romanians live in energy poverty and only 5% receive heating subsidies, averaging 23 lei per month. More than half of the country's population heats under primitive conditions: wood-burning stoves, whose prices are both prohibitively expensive and volatile. Can natural gas be an alternative for rural areas? But what about for urban areas, where many localities are still not connected to the gas grid and where SACET-type centralized heating systems are in decline?<\/p>\n

Our research draws on both literature and extensive databases on natural gas supply and construction economics, as well as panels of international and national experts to answer our questions. We read with a critical eye the draft national energy strategy (2016 version) and the subsequent 2018 additions as well as the various European legislative and policy documents to figure out where natural gas in Romania may be heading and what impact the various energy policy decisions have on the consumer.<\/p>\n

Based on the PRIMES estimates, a significant decrease in household energy consumption is anticipated, with a time horizon of 2030 both the 2016 and the 2018 energy strategies foresee a decrease in the importance of gas in the national energy mix. We believe that such a scenario is unlikely in the absence of massive and costly interventions in the energy efficiency of housing, investments that we do not see being carried out on the scale needed to ensure a real decrease in consumption in the near future.<\/p>\n

Although a natural transition towards natural gas heating will take place in urban areas (11% of urban dwellings still heat with wood), proactive policies are needed for a similar scenario to take place in rural areas. Here, almost 801TPTP7T of inhabitants heat with wood, in outdated and inefficient stoves, with low combustion and low energy performance and generating polluting emissions into the atmosphere with harmful effects on human health and the environment.<\/p>\n

According to the calculations developed below in the heat demand simulation, the annual costs of heating an average home, regardless of temperature zone, are less than 10% higher for natural gas than for wood, with the comfort, health, safety and environmental benefits being much higher.<\/p>\n

The process of assessing the economic profitability of investments for the extension of the natural gas distribution network based on Law 123 of July 10, 2012 on electricity and natural gas and ANRE Order 104\/2015 approving the procedure for the elaboration of the technical-economic study for the realization of the objectives in the natural gas sector is particularly complex, as there is no national average range for the cost of connection at household level to serve as a benchmark.<\/p>\n

In the context of the need to develop a national strategy for the utilization of the natural gas resources expected from the Black Sea, the question of the opportunity to expand the natural gas network should be treated much more seriously, in the sense of reducing energy poverty by increasing residential comfort, energy costs on the bill and access to the most diversified resources in a competitive market. Both national energy strategy proposals anticipate a significant increase in electricity consumption.<\/p>\n

In this context the composition of the energy mix for electricity generation becomes a matter of real importance for the consumer, both in terms of his budget and in terms of the carbon impact on himself and future generations. The cost of replacing old natural gas-fired power plants with modern ones is low, less than 1000 EUR\/kW installed capacity, with the strategy proposals noting that \"financing can be secured even in conditions of high cost of capital\".<\/strong><\/p>\n

However, in Optimal Scenario<\/strong> The 2018 strategy proposal foreshadows that net gas-fired electricity generation would grow at a lower rate than nuclear, while the 2016 proposal even anticipates a halving of it.<\/p>\n

In this report, we question these predictions and point to a number of exogenously induced variables designed to lead to a dramatic reduction of natural gas in the electricity generation mix. These include the introduction in the modeling of a new coal-fired unit, without any economic or other justification, and the net preference, without sufficient justification, for the expansion of the Cernavod\u0103 nuclear unit, despite the need for a long-term support scheme with immediate and noticeable effects on the consumer's pocket.<\/p>\n

Thus, we tend to believe that the alternative sensitivity scenario, which foresees an increase in net gas-fired electricity generation to 14.3 TWh in 2030 from 8.9 TWh in 2015, and a decrease in the share of coal, accompanied by a maintenance of the share of nuclear power, is more plausible.<\/p>\n

From a price point of view, coal still appears to be superior to natural gas for power generation at the current carbon price. Looking ahead, as we will elaborate below in the dedicated price analysis component, coal generation prices are expected to increase progressively through the ETS reform package.<\/p>\n

It remains to be seen to what extent this policy will contribute to reducing coal production on the market. On the other hand, as the energy strategy proposals point out, the net price of natural gas compared to electricity makes the former much more competitive in terms of heating homes, even with full price liberalization for end consumers.<\/p>\n

The survey of the current natural gas distribution networks as well as the economic profile of the administrative-territorial units in Romania indicates real opportunities for network extension. 72% of the administrative-territorial units in Romania are not connected to gas. According to INS data, 66% of the population (approximately 14.7 million inhabitants) have access to gas, but according to the EPG report only 44.2% are actually connected to gas (EPG, 2018), which points to a problem related to energy poverty in the broader sense of the concept. Namely, too high connection costs.<\/p>\n

The localities connected to gas are mainly clustered in the center of the country, on an axis connecting the north-west of the country, the Transylvanian Plateau (eastern Cluj and Alba counties, Mure\u0219 county and almost all of Sibiu and Brasov counties), then descending towards D\u00e2mbovi\u021ba, Prahova, Ilfov and Bucharest.<\/p>\n

The country's extra-Carpathian territory is the least covered by the network. In some areas in the north of Moldova, but also in Buz\u0103u and around the capital, despite a high population density and the proximity of the natural gas network, many localities are not connected.<\/p>\n

There are certainly significant costs involved in extending the grid, but these can be justified from the perspective of energy poverty and addressing issues of access to modern forms of energy. The opinions of the experts consulted in the panel used for this research are mixed on the appropriateness of socializing these costs, our argument being that the authorities have other possibilities for financing such works, which have not been explored sufficiently so far. In fact, the vast majority of the experts consulted are of the opinion that natural gas is an ideal fuel to ensure the energy transition, but there are also voices that point to the need for a faster transition to renewable energy exclusively.<\/p>\n

In conclusion, the analysis shows a significantly more relevant role for natural gas in the energy mix of the future than energy strategy projects seem to anticipate. We welcome however that the 2018 version of the National Energy Strategy<\/strong> refers to a National Gas Program,<\/strong> which would support the extension of the gas network in rural areas, including as a response to energy poverty.<\/p>\n

Calculations made on the basis of statistical data on energy costs for final consumers, as well as data on the coverage of the natural gas network, point to many opportunities for gas to be not only a transition fuel, but also a tool to combat energy poverty in the complex sense of the term.<\/p>\n

However, a mix of instruments and actions is needed to ensure that any additional natural gas resources will have a positive impact on end-consumers, as also shown by the reservations expressed by the expert panel we consulted for this study.<\/p>\n\t<\/div>\n<\/div>\n\n\n\n\n\t\t\t<\/div> \n\t\t<\/div>\n\t<\/div> \n\n\t

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