E.ON România: right investment in grids and generation could sharply cut power prices

Romania has one of the highest electricity costs in Europe when measured against purchasing power, but investment in infrastructure and generation could change that, according to E.ON România, cited by Forbes Romania.

“Romania, although it currently has the best potential to be the country with the lowest energy price, unfortunately has the highest electricity price in all of Europe,” said Volker Raffel, chief executive officer of E.ON România, speaking at a conference organised by the Romanian-German Chamber of Commerce (AHK România).

Prices measured against purchasing power

The total price paid by households in Romania is approximately 30 cents per kWh, compared with roughly 38-39 cents per kWh in Germany, Raffel said. The E.ON executive stressed that, once purchasing power is taken into account, the Romanian price level is high rather than competitive.

He argued that a reduction is achievable if Romania accelerates investment in the energy sector, and said the company is preparing to publish a study on the subject. “The good news is that we will soon publish a study showing that the price of energy, the price of electricity, will fall significantly, on condition that we make the right investments,” Raffel said.

What E.ON says needs to be built

Among the investments Raffel considers necessary are:

• development of photovoltaic generation;
• storage capacity;
• energy infrastructure;
• energy-efficient buildings.

He also supported bringing into operation the gas-fired power plants currently under construction, given that Romania needs a larger supply of energy. “There is a chance for us to have a larger supply, but everything I have described has to be connected to the grid,” Raffel said.

The network as a bottleneck

Transmission and distribution infrastructure risks becoming a limitation on economic development, against a background of rising consumption linked to data centres, electric mobility, batteries and generation by prosumers. “At present, the grid is starting to become a bottleneck for the development of the Romanian economy,” the E.ON România representative said, calling for faster investment in networks.

He estimated that the current energy crisis could ease during the coming year, but said this is precisely the moment to intensify energy efficiency programmes. “We are currently in a very severe energy crisis, which I believe will diminish over the course of next year, but now is the absolutely right time to promote efficiency programmes,” Raffel said. In his view, reducing consumption is one of the most effective ways of lowering energy costs.

Gas balance and the regulated price

On natural gas, Romania currently produces roughly as much as it consumes, according to the E.ON România chief executive. That could change once the Neptun Deep project enters production, estimated for next year. Raffel said Romanian gas output could then reach approximately double domestic requirements, creating conditions for exports and for a larger share of the resource to be used in the local economy.

He also drew attention to the gap between the European market price of gas and the price at which it is currently delivered to household customers in Romania. According to the executive, gas trades in Europe at around 70 euros per MWh, while supply to households is carried out at about 24 euros per MWh under the regulations in force. The current regulatory scheme is due to end in March next year, and Raffel said he could not anticipate the political decision on its future. He argued that subsidising energy consumption should be gradually reduced and replaced, where possible, with measures that stimulate energy efficiency. The conference, dedicated to energy efficiency, was organised by AHK România and brought together decision-makers and experts from the energy sector.