The Romanian energy sector is in need of massive investments. The latest draft of Romania’s energy strategy puts the investment requirement for the period 2018-2030 between 15 and 30 Billion EUR. Both Transelectrica and Transgaz have ambitious investment projects planned, about to begin or under development. Transelectrica is a member of European Network of Transmission System Operators for Electricity (ENTSO-E) and Transgaz – a member of European Network of Transmission System Operators for Gas (ENTSO-G). Both sectors are in the process of implementing the Network Codes. Development of hard infrastructure, as well as the implementation of network codes seems more advanced in electricity than in natural gas.
2. Institutional cooperation
- Top – down: EU initiatives regarding regional cooperation (CESEC)
- Horizontal: Cooperation within specialized entities and associations (ENTSO-E, ENTSO-G)
- Bottom-up: Other forms of institutionalized cooperation (3SI)
Integration of regional markets is seen as a precursor to an EU-wide energy market. However, the South East European (SEE) region has been slow to organize itself. Romania in particular seems to respond better to top-down (CESEC) and horizontal initiatives (ENTSO-E, ENTSO-G) than to bottom-up ones (which require leadership and initiative). The Three Seas Initiative (3SI) could be considered as one such bottom-up institutionalized cooperation. All three (ENTSO-E, ENTSO-G and ACER) are the “children” of the 2009 Third Energy Package and were established to facilitate regional cooperation, increase cross-border flows and assist with European energy market integration.
In ENTSO-E, regional cooperation takes place within six Regional Security Coordinators (RSCs), see map below. Romania participates in two regional groups: Continental Central East and Continental South East.
Until about 3 years ago, Romania was not in any of these, with its TSO (Transelectrica) buying services from TSC (the oldest of the RSCs) which included TSOs from: Germany, Austria, Czech Republic, Slovenia, Denmark, Croatia, Hungary, Switzerland, and Netherlands. ENTSO-E’s target design for RSCs by the end of 2017 looked like this:
Expected structure of the 6 electricity RSCs by end of 2017
An exploratory study by Berlin-based Ecological Institute mapping the existent (at the time, early 2015) institutional landscape for regional cooperation in electricity, identified the regional groups within ENTSO-E and ACER as key platforms for regional cooperation. ACER has been invited to monitor and coordinate the work of the seven electricity regional initiatives (RI) that were set up under its precursor – European Regulators’ Group for Electricity and Gas (ERGEG) – active between 2006 and 2010. The RIs provided “an ‘umbrella framework’ for the coordination of regional projects towards a single market (…), the strongest progress has been seen in those regions where political support for integration is strongest. The Central-West and Northern regions in particular have served as pioneers, testing new solutions for the first time”. (p. 14). Scandinavia and the NW European region has seen more intense cooperation, especially with government involvement, while countries such as France, Germany and Poland being simultaneously part of several cooperation formats. “By contrast, Bulgaria and Rumania are not formally members of any initiative [EG emphasis] although they participate in the Visegrad group ad-hoc [on energy as part of the Visegrad Plus format – EG]”, revealed the study at the time.
Geographical boundaries of regional political fora identified in the study:
Source: Ecological Institute (January 2015)
Since then, things have evolved considerably. At the initiative of the European Union, the Central and South Eastern Europe Energy Connectivity (CESEC) High Level Group was organized in February 2015 by the European Commission. In energy, there are currently 4 such High Level Groups, which are set up in regions were cooperation is deemed to be of high priority:
- Central and South Eastern Europe Energy Connectivity (CESEC);
- North Seas Energy Cooperation;
- South-West Europe;
- Baltic Energy Market Interconnection Plan (BEMIP).
Romania is among the CESEC group founders. Initially, CESEC was created to accelerate the integration of the regional gas market, but has extended cooperation to include electricity, energy efficiency and RES development (MoU signed at the 4th CESEC ministerial meeting in Bucharest, in September 2017).
The Three Seas Initiative (3SI), still in its infancy (launched in 2016), aims to bring more interconnectivity between 12 states located between the Adriatic, the Baltic and the Black Seas with a special focus on infrastructure, energy, and digital interconnectivity. In terms of energy projects, the key project supported and financed by the European Commission in Romania is the BRUA gas pipeline. On the 3SI list of priority infrastructure prepared for the 2018 Bucharest Summit there are 48 projects in total (energy, digital and transport sectors). Of these, 14 are energy projects: 8 multilateral and 6 bilateral and national projects with international potential. Of all these 14 hard-infrastructure energy projects, Romania has (as country proposing the project, i.e.: project promoter) only one: BRUA. It is, however, involved in two other: Eastring and Romanian-Hungarian-Slovak gas transmission corridor (the first promoted by Slovakia, the second by Hungary).
3. Internal energy market
Cross border integration is more advanced in the electricity market than in the gas market.
Electricity: Romania currently has an interconnection capacity of 7% and aims to reach 10% by 2020. As regards the 15% EU target for 2030, Romania plans to make use mainly of EU funds to construct its PCIs. Romania intends to connect not only with Bulgaria, Hungary and Serbia (e.g.: Romania announced as one of its four priority projects the construction of the Turnu-Magurele-Nicopole HPP), but also with Moldova and Ukraine. Since 2014, Romania is part of the 4M MC coupled market (Romania, Hungary, Slovakia and the Czech Republic). Romania is in the process of implementing the new Network Codes (NC) in electricity.
Pan European Codes in Electricity
|Regulation number and year||Content|
|EU Regulation no. 631/2016 (RfG)||Network code (NC) on requirements for grid connection of generators|
|EU Regulation no. 1447/2016 (HVDC)||Network code on requirements for grid connection of high voltage direct current systems and direct current-connected power park modules|
|EU Regulation no. 1388/2016 (DCC)||Network Code on Demand Connection|
|EU Regulation no. 1719/2016||Guideline on forward capacity allocation|
|EU Regulation no. 1222/2015||Guideline on capacity allocation and congestion management|
|EU Regulation no. 2196/2017||Network code on electricity emergency and restoration|
|EU Regulation no. 2195/2017||Guideline on electricity balancing|
|EU Regulation no. 1485/2017||Guideline on electricity transmission system operation|
In terms of participation in European projects, Transelectrica is very active, being involved in:
- TERRE – Trans European Replacement Reserve Exchange (implementing an information platform (LIBRA) dedicated to trading offers for the replacement reserve of the participating electric power systems);
- MARI – Manually Activated Reserves Initiative (implementing the European balancing platform for trading manual Frequency Restoration Reserves (mFRR));
- PICASSO – Platform for the International Coordination of Automated Frequency Restoration and Stable System Operation (implementing a European balancing platform for exchanges between Transmission and System Operators of automatic frequency restoration reserves);
- IGCC – International Grid Control Cooperation (Imbalance Netting) creating a unique European platform for real-time imbalance netting, in order to reduce costs with balancing).
Natural gas: As in electricity, in natural gas too, ENTSO-G has developed a number of Pan-European Codes:
|Regulation number and year||Network Code on:|
|CMP GL was published as Annex I to Regulation (EU) No 715 / 2009||Congestion Management Procedures Guidelines (CMP GL). Most CMP-rules were implemented by October 2013 at EU level.|
|EU Regulation no 984 / 2013 (CAM NC)||Capacity Allocation Mechanism (CAM NC) – ENTSO-G’s first NC – was implemented by November 2015|
|EU Regulation no 312/2014 (BAL NC)||Gas Balancing of Transmission Networks (BAL NC) was ENTSOG’s second NC and was implemented by October 2016|
|EC Regulation no 459/2017 (CAM NC)||Capacity Allocation Mechanism (CAM NC); Amendment for Incremental capacity – the first amendment of the NC, entered in force on 6 April 2017. The first incremental capacity process commenced in April 2017.|
|EU Regulation No 703 /2015 (INT NC)||Network Code on Interoperability and Data Exchange Rules, was implemented by May 2016|
|EU Regulation 460/2017 (Tariffs NC)||Harmonized Transmission Tariffs Structures for Gas (Tariffs NC) – ENTSOG’s latest NC. ENTSO-G expects full implementation by end of May 2019.|
According to the implementation speed (2015, 2016 or 2019), EU member states were grouped into 3 implementation clusters: the 2015 cluster (UK, France, Denmark) successfully enabled the short-term market, the 2016 cluster (Italy, Spain, Portugal) with valid progress and the 2019 cluster (Romania, Greece, Bulgaria) with little progress. In early 2017, the situation did not look so good. “Unfortunately, Romania lags behind in the implementation of almost all NCs, either due to the lack of resources or necessary infrastructure” was how Romania’s situation was described by a Romanian analyst in January 2017. The same analyst said that Romania will apply CAM auctions as of 2017 on all Interconnection Points (IP) on its territory while still experiencing “‘contractual congestion’ at its IP with Bulgaria.” Until 2019, for balancing, Romania has “chosen to use Interim Measures, to ensure o smooth transition to a balanced transmission network. Basically, nowadays, Romania does not have a Virtual Trading Point in place, which is one of the most fundamental enablers of the short-term wholesale market.” (Lavinia Tănase, 2017).
During the last couple of years, Romanian gas experts (such as Dumitru Chisăliṭă) have identified key issues that prevent a functional gas market in Romania. Among them, the current physical configuration of the national gas network was identified as one of the main obstacles to implementing the Gas Target Model in Romania. Many EU countries have on their territory a gas network that has developed reflecting the status of a transit country. Unlike them, most of Romania’s Gas Transport System (GTS) system has developed not for transit purposes, but for distribution of domestically produced gas to Romanian customers. Therefore, significant parts of the natural gas transmission system, although labeled as “transmission network”, are in fact a “distribution network”. This will make the application of the EU rules (designed for transmission networks) to distribution networks difficult in practice.
In June of 2017, a joint workshop between the European Commission and the Romanian side was conducted in Bucharest to try to identify the issues blocking the implementation of the entry-exit system in Romania. It was a multi-stakeholder engagement that involved all interested parties (regulator, ministry, parliament, TSO, market participants, analysts). Following that workshop, the TSO has proposed a new set of revisions to the network code. Over the summer of 2018, the Romanian regulator (ANRE) has conducted further consultations on this new version of the Code and, finally the new Network Code for natural gas transport was published and entered in force on October 1, 2018.
Hailed as a step forward towards a functioning market, it details commercial rules for entry/exit processes and for the functioning of the VTP. However, there still remains some reluctance as to whether this code will be entirely enforceable. The lack of flexible market mechanisms on the gas market (for instance, unavailability of commercial gas storage, i.e.: storage is used in Romania for seasonality, not for demand-supply variations) and other market tools will add to the gap between what is demanded by the EU (and required on paper) and what is possible on the ground from a system engineering point of view. This gross incompatibility between the design of the Romanian GTS and the EU entry-exit system will continue to create problems in the implementation of the Gas Target Model in Romania. According to Chisăliṭă, due to inconsistencies in the previous version of the Code, Romanian consumers were prejudiced by an estimated 50 million EUR in the last 10 years alone.
4. Infrastructure development
Electricity: For 2020, the EU has defined 12 priority infrastructure corridors (Regulation #347/2013). Romania is part of the priority corridor #3: ‘North-south electricity interconnections in Central Eastern and South Eastern Europe’ (NSI). Part of this priority electricity corridor, Transelectrica has six Projects of Common Interest (PCIs) worth cca. RON 1 billion within the ‘Black Sea Corridor’ and ‘Mid Continental East Corridor’ clusters:
|Project name||Cluster of which it is part of||Corridor|
|400 kV overhead line (OHL) Cernavodă – Stâlpu||Bulgaria–Romania capacity increase||Black Sea Corridor|
|400 kV overhead line (OHL) Gutinaş – Smârdan||Bulgaria–Romania capacity increase||Black Sea Corridor|
|400 kV overhead line (OHL) Suceava – Gădălin||Bulgaria–Romania capacity increase||Black Sea Corridor|
|Interconnection between Reşiṭa (RO) and Pancevo (RS)||Cluster Romania – Serbia between Reşiṭa and Pancevo||Mid Continental East Corridor|
|Internal line between Porṭile de Fier and Reşiṭa (RO)||Cluster Romania – Serbia between Reşiṭa and Pancevo||Mid Continental East Corridor|
|Internal line between Reşiṭa and Timişoara/Săcălaz (RO)||Cluster Romania – Serbia between Reşiṭa and Pancevo||Mid Continental East Corridor|
Transelectrica already obtained co-funding of EUR 27mln for building the 400 kV OHL Cernavodă – Stâlpu, of which the first instalment (EUR 2.2mln) was received in May 2018. According to Transelectrica’s new CEO Adrian Constantin Rusu, “The Cernavodă – Stâlpu line will contribute to increasing the interconnection capacity between Romania and Bulgaria and to integrating wind energy from Dobrogea area (…) The new 400 kV line will have a length of around 160 km, and for its commissioning it is necessary to build the Substation 400 kV Stâlpu and extend the Cernavodă and Gura Ialomiṭei substations.”
Funding for OHL Gutinaş – Smârdan is yet to be obtained. As of September, the application for financing with European structural funds was under preparation. The 400 kV OHL Gădălin – Suceava is in the design and permitting phase. The 400 kV OHL interconnecting Reşiṭa (Romania) – Pancevo (Serbia) was completed in Q1 of 2018 achieving interconnection with Serbia. An investment of over RON 98mln, the line will increase the transfer capacity between Romania and Serbia and in the entire Central and South-Eastern Europe. Work on the switch to 400 kV of the Banat Axis (especially the Anina-Reşiṭa section) is in progress and scheduled for completion by 2021. According to Transelectrica, Porṭile de Fier – Anina –Reşiṭa section is essential for closing Romania’s 400-kV ring.
In addition to these 6 PCIs at European level, Romania has major projects of domestic infrastructure focus:
- closing Romania’s 400-kV ring (currently at 64% rate of completion);
- retrofitting and upgrade of substations (e.g.: the 400/220/110/20 kV Suceava substation completed this year, ensures electricity supply to northern part of Romanian Moldavia, allows the closure of the 400-kV ring, enables the future connection of Moldavia and Transylvania and the future interconnection of Romania and Republic of Moldova power systems);
- completing the 400 kV OHL Oradea–Bekescsaba (RO-HU interconnector) – a project which was blocked in the last 10 years – and re-started this year;
- interconnection with the Republic of Moldova (a project dubbed as ‘strategic” by Transelectrica).
Natural gas: Four years ago, the Romanian gas TSO identified 5 infrastructure priority projects, of which the BG-RO-HU-AT gas corridor (commonly known as the BRUA pipeline) is considered the most important one. The FID on BRUA (stage 1+2) has been taken, construction is underway and expected to be completed by 2020-2022. The BRUA project secured financing of €100 million from the European Investment Bank (EIB), backed by the European Fund for Strategic Investments under the Investment Plan for Europe (Juncker Plan) and was awarded €179 million grant under the Connecting Europe Facility (CEF). Under the Commission’s Initiative on Central and South-Eastern European Energy Connectivity, Romania features with “reinforcement of the Romanian transmission system (part of the ‘BRUA’ corridor)” as ongoing priority gas project.
Transgaz’s Ten Year Network Development Plan (TYNDP) for 2014-2023 outlined 5 priority infrastructure projects:
Bulgaria-Romania-Hungary-Austria pipeline (BRUA) – Stage 1 of this project has to do with completing the regional infrastructure interconnectivity between Bulgaria, Romania and Hungary: Podişor-Recaş pipeline (479 km, 63 bar) and 3 compressor stations at Jupa, Bibeşti and Podişor). BRUA stage 1 is a strategic regional priority (on the CESEC list of priority projects) and has received financial support of the European Commission: EUR 179 million (40%) of the total EUR 478 million. Work on BRUA stage 1 (pipeline and compressor stations) has started in spring 2018. This stage has to do with putting in place the missing infrastructure: the compressor stations that enable reverse gas flow from Romania to Bulgaria (1.5 Bcm/year) and to Hungary (1.75 Bcm) – all things that should have been operational a long time ago. For instance, the short Romanian-Bulgarian interconnector (only 25 km) on which work started in 2009 should have been completed by the end of 2013, not in 2016. The Hungarian-Romanian interconnector, although finalized in 2010, has no reverse flow capacity (it is unidirectional, meaning that currently it allows gas imports from Hungary to Romania, but not the other way around, i.e.: gas exports) despite the commitment made by the Romanian government to have bi-directional flow in place by the end of 2012 (back then in the context of the Nabucco project). Re-packaged as part of BRUA, construction work on the Romanian-Hungarian interconnector reverse flow (part of BRUA stage 1) is under way with ENTSO-G considering it “on-time” and “advanced” (should be ready by end of 2019).
BRUA stage 2 (EUR 69 million) is seen as a commercial stage since it is about the injection of the Black Sea gas in the national gas transport system (Tuzla – Podişor pipeline) and about scale up of gas export capacity (from 1.75 to 4.4 Bcm/year of the Romanian-Hungarian interconnector).
Tuzla – Podişor pipeline (part of BRUA stage 2) is the 285 km long pipeline that will feed the Black Sea gas into the national transport system;
Connecting International transit to National Gas Transport System (NGTS) relates to reverse flow implementation between line I and NGTS;
Strengthening NGTS in the North-East (Moldova) to enable gas exports to Republic of Moldova;
Central Transportation Corridor for Black Sea gas: seen as a long term project (planned to be commissioned the earliest in 2023, and the latest in 2028) and a second route for the Black Sea gas, if necessary. It is related to Romania’s interest to participate in Eastring project which aims to “bring gas from new sources from Caspian/eastern Mediterranean/Middle East region”. In fact, the Eastring project is planned for commissioning in 2023-2028 in all 4 countries, but ENTSO-G considers it “less advanced” in Bulgaria, Hungary, and Romania and “advanced” only in Slovakia.
Romanian gas infrastructure in regional context
Source: ENTSO-G map, July 2017
5. Security of supply
Regional cooperation in gas: According to the Security of Supply Regulation #1938/2017 of Oct 25, 2017 (Annex I), Romania belongs to 3 regional cooperation groups:
1. Eastern gas supply risk group: (a) Ukraine
1. Eastern gas supply risk group: (e) Trans-Balkan
4. South-East gas supply risk group: (a) Southern Gas Corridor- Caspian
At the moment of writing (early October 2018), Romania’s Preventive action plan had been drafted and awaits approval through a Government Decree (GD).
Regional cooperation in electricity: Romania has joined the ownership of RSCC and is in the process of joining JAO. In particular, in June 2018, Transelectrica became affiliated to the Regional Security Coordination Centre (RSCC) TSCNET Service GmbH, ending the situation in which Romania was the only country in the CORE region not part of it. Similarly, Romania (through Transelectrica) is currently preparing its affiliation to the European Centre for Cross-border Transmission Capacity – Joint Allocation Office (JAO).
6. Lessons learned and recommendations
Of the two state-owned Romanian TSOs (Transgaz and Transelectrica), the latter can be considered more of a success story.
Transelectrica has major projects in progress: closing the 400kV ring, projects of common interest (PCIs) at European level, as well as projects of domestic focus such as retrofitting and upgrade of substations. In addition, the company wants to focus on strengthening the Bucharest metropolitan power network (where the increase in electricity consumption is higher than the average per country), which means new 400/110 kV stations and a 400-kV ring of the Capital. The company targets to raise the interconnection capacity from 7% of the production capacity currently installed, to 10% in 2020 and 15% in 2030.
Transgaz, on the other hand, seems to have moved much slower than Transelectrica, although lately the speed has picked up due to the EU driven and financed BRUA project (Romania’s flagship gas infrastructure investment). Transgaz’s swift action will remain the key factor to determine the pace of regional gas market integration, i.e. acting either as a brake or as an accelerator. Due to EU pressure, Romania will connect to its Western neighbors first, leaving cooperation with Ukraine, its largest neighbor to be addressed at a later date.
In both cases (electricity and natural gas), Romania’s engagement on a regional level will depend on its ability to carry out planned domestic infrastructure investments on time. The ability to interconnect and export depends in many cases on completing the missing export infrastructure and consolidation of the domestic network to enable the potential exports and increased cross-border flows.
Recommendation on how to improve future regional cooperation: start at home. Only when Romania puts its own house in order will it be able to contribute in a meaningful way to regional energy security and regional market integration.
- http://annualreport2016.entsoe.eu/regions/ ↑
- Katharina Umpfenbach, Andreas Graf, Camilla Bausch, “Regional cooperation in the context of the new 2030 energy governance”, Ecologic Institute, January 30, 2015. ↑
- https://ec.europa.eu/energy/en/topics/infrastructure/high-level-groups ↑
- http://three-seas.eu/wp-content/uploads/2018/09/LIST-OF-PRIORITY-INTERCONNECTION-PROJECTS-2018.pdf ↑
- Lavinia Iancu, interview with Transelectrica CEO: Adrian Constantin Rusu: 3 Keys to Transelectrica evolution – Investment-Innovation-Progress, in Energy Industry Review, September 2018 issue. ↑
- Lavinia Tănase, Romania and the network codes for the European Gas Transmission System, in Energy Industry Review, January 22, 2017: https://energyindustryreview.com/opinion/romania-and-the-network-codes-for-the-european-gas-transmission-system/ ↑
- Dumitru Chisăliṭă, Noul Cod al Reţelei de transport gaze, un pas mare spre funcţionalitate, Adevărul, September 30, 2018:https://adevarul.ro/economie/stiri-economice/noul-cod-retelei-transport-gaze-pas-mare-functionalitate-1_5bb11595df52022f7504b803/index.html ↑
- The new gas Network Code is ready, but not quite! Public consultation until July 31 and other debates at ANRE, July 11, 2018, InvestEnergy, http://www.investenergy.ro/noul-cod-al-retelei-de-gaze-este-gata-si-nu-prea-consultare-publica-pana-la-31-iulie-si-alte-dezbateri-la-anre/ ↑
- Lavinia Iancu, interview with Transelectrica CEO, in Energy Industry Review, September 2018 issue, available at: https://energyindustryreview.com/interview/adrian-rusu-3-keys-to-transelectrica-evolution-investment-innovation-progress/ ↑
- European Commission, The Three Seas Initiative Summit: European Commission Investments in Connectivity Projects, Bucharest, Romania, 17-18 September 2018: https://ec.europa.eu/commission/sites/beta-political/files/the_three_seas_initiative_summit_en.pdf ↑
- This section draws heavily on the article Tracking Romania’s cross-border cooperation in gas, written by Eugenia Guşilov, September 28, 2018. ↑
- Eastring Booklet 2018, pg. 2. ↑
Lavinia Iancu, interview with Transelectrica CEO, Adrian Constantin Rusu: 3 Keys to Transelectrica evolution – Investment-Innovation-Progress, Energy Industry Review, September 2018 issue, available at: https://energyindustryreview.com/interview/adrian-rusu-3-keys-to-transelectrica-evolution-investment-innovation-progress/ ↑
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