The complex tale of energy performance
Romania's national policies in energy aim to achieve the national objective of improving energy efficiency by 2020, with a national target to reduce energy consumption by 19 per cent
Also, the implementation of energy efficiency policies initiated in January 2014 targets a 1.5 per cent yearly savings within the total energy amount sold to end consumers, all being comprised within the current guidelines of the Energy Efficiency legislation and The National Action Plan for Energy Efficiency in Romania.
In a new event dedicated to the energy sector in Romania, The Diplomat - Bucharest organized the ′Romanian Energy Efficiency Summit 2015′ on June 12 at the Crowne Plaza Hotel in Bucharest. The event's discussion sessions revealed the current practice of Energy Efficiency legislation and the echoes of its policies all along the energy chain: resources, producers, distributors, suppliers, transporters and consumers. The Summit was organized under the auspices of ANRE - The Regulations Committee of the National Authority for Energy Regulation, with strategic partner AMR- Association of Romanian Municipalities, ESCOROM, ARPEE- Romanian Association for the Promotion of Energy Efficiency, gold partners CEZ, Nalco, Tuca Zbarcea & Asociatii, with partner Energy Serv and the support of The World Energy Council.
The objective of the debate, comprised also in the national energy efficiency policies, planned to break down the barriers limiting the promotion of energy efficiency policies and reveal the available mechanisms and financial tools to empower the practice of energy efficiency law. During the two sessions of the Summit, the discussions followed topics regarding financing mechanisms and structures such as the National Fund for Energy Efficiency and other structural funds; Competencies achievement in energy efficiency including implementation of independent energy audits, audit obligations and the creation of energy auditors; Standards and rules in energy efficiency policies including buildings and vehicles; Contract framework in energy efficiency; Implementation of energy efficiency management targeting new technologies, management systems, performance measurements, consumption evaluation and forecasting; labelling scheme and the opportunity of using renewable resources with positive impact in the environment and reduction of pollutants from industrial operations; and general issues of production, transport, supply and consumption. The Diplomat - Bucharest invited to the discussion table all the shareholders in this field, private companies and representatives of regulatory authorities to an open dialogue on the theme of the national energy efficiency strategy.
The event was chaired by Valeriu Binig, Partner, E&Y, in the first session and Sebastian Radocea, Partner, Tuca, Zbarcea & Asociatii, in the second session.
The first session was opened by Iulian Iancu, Committee for Industries and Services - Chairperson, Chamber of Deputies, which welcomed the audience by summarizing the priority role of energy efficiency in public and institutional debates. He stated: "We are now at the third debate in a month dedicated to energy efficiency. At least for the elite category in our country, the energy efficiency topic has moved from the politics agenda to the decisional forum as the number-one priority to identify and implement energy efficiency solutions as the primary fuel resource to secure the energy of the country." Iancu also mentioned an interesting concept regarding the new place of the consumer in the overall energy chain: "The theme assumed at European Union levels - the switch of the consumer concept into prosumer, gets an institutional nuance, meaning that, at the level of European Commission's energy and environment department, the organism plans to transmit, at every two years, the situation and structure of energy pricing policies to each member state and to launch the updated deal for consumers. In this new perspective, the consumer is placed in the very core of energy policies regarding energy efficiency, promotion of renewable resources and reduction of carbon emissions."
CONSUMER - THE CORE APPROACH
In this new perspective where the consumer gets a new role, he also becomes the key in identifying the measures for promoting the energy efficiency solutions. So, what measures have been identified so far? According to Iulian Iancu, there is a range of measures regarding the consumer approach, the financing, creating of a common platform of energy distribution and transport systems among others.
Regarding the consumer, a measure mentioned by Iancu is the necessity of transforming the consumer into a real actor in the energy sector through the smart metering system. "We need to identify the set of mandatory measures in the context of implementing the smart metering systems at the EU level. We talked about smart metering, the European target of reaching 80 per cent through these systems, but, as an observation, the smart metering is primarily a dialogue with the operator and not the consumer. If the consumer becomes a real actor taking its role within the overall energy process, he also needs to adapt to the daily control arch and consumption. This process is still in its aspirational state at this moment because there is still a majority of consumers - two thirds - that are captive in the old metering system; they do not have a clear image regarding their consumption. Even if we reach the 80 per cent target stated at the EU level, what happens with the remaining 140 million consumers trapped in the old metering systems?" Iancu asked.
At the global level, following the data delivered by the International Energy Agency made available in December 2014, 310-360 billion USD have been injected into this market and around 24 billion Euro are assigned to Europe, according to Iancu. In this context, Europe becomes a world leader in reducing energy intensity. The figures show that the energy intensity dropped by 28 per cent since 1990. After four decades of investing in energy efficiency, 11 of the most developed countries in the world, detailed within the agency's study, managed to reduce their energy consumption and achieved energy savings that surpassed the overall European oil and gas consumption.
Hence, step by step, the energy efficiency shapes a new niche for the global energy market. "In Europe, this initiative has been embraced at the level where the European market could become the top exporter of high efficiency technologies for renewable field, energy efficiency and emission reduction. Around 40 per cent of worldwide patents developed for energy efficiency are made in Europe. Therefore, for Romania, the issue of new technologies is no longer a problem but we have to identify the transfer mechanism of these technologies from the countries that are using them to the countries that need it," Iancu mentioned.
Iulian Iancu raised the issue of common markets and systems within a better-functioning joined energy system in Europe. "Another measure implies the creation of a joined platform between the energy distribution system and that of transportation. The two operators still function in parallel, but lack a coherent sync of measures to identify the mandatory investments to reduce losses and deliver a better offer to consumers, in the latter's new role of actor on the energy segment. Today, the barriers confronting the consumers are still strong at the level of sate members. Also, the consumer's option in changing energy providers is low. The leader in this matter is Portugal, where one out of four consumers is actively changing their provider, while in the UK, only 15 per cent of end consumers are acting as such. This is a hard process to undertake, but it is the final target: the freedom of the consumer in changing its supplier with a simple mouse click. And by doing this, a new topic emerges, related to the regulatory institutions. In the EU, there is still a barrier between the regulatory institutions and the consumers, as the regulatory levels are focusing more on operators and less on retail and individual consumers," Iancu explained.
In Romania, according to the Deputy, things look better in the perspective of gross synthetic data. Electricity usage intensity dropped from 2010 to date, as the country managed to reduce the raw energy consumption per capita from 1.65 to 1.56, while the consumer reduced the consumption from 0.399 to 0.386 TEP (tonnes equivalent petrol). But, in fact, the domestic consumer achieves a larger raw energy consumption compared to the industrial consumer. At industry levels, the energy consumption increased in the booming fields, such as agriculture and services - two economic engines registering a first growth in recent years and which currently deliver the highest efficiency potential.
In the EU, there are talks and enacted measures to accomplish a joined energy market in the context of interconnectivity, which puts Romania at an advantage if the country is aligning its energy strategy with EU targets. According to Iancu, Romania has to maintain its program regarding the interconnectivity of the national energy transportation system and expansion on the regional markets, in order to secure an access gate, especially in the field of renewable energy. "We need to complete the National Action Plan for Energy Efficiency in order to be able to identify the financing resources for the measures that need to be undertaken. The funds assigned until 2020 are worth 355 billion Euro in total for the EU states and the Romanian participation is only 15 per cent, compared to some other countries that have to contribute up to 45 per cent. We have the chance to join or even create some macro-regional projects, which allow the transfer of resources produced and exploited in the Dobrogea area to Germany. Also, the projects developed around the Danube deliver a large development potential, given that Romania benefits from a large Danube coverage," Iancu added.
PRIORITY IN THE CITY
The issue of energy resources, distribution, transport and delivery in the cities is Romania's harshest topic. Today, as stated by Iancu, the costs of energy in the cities are very high and deliver a hard burden. "We should start the discussion of energy efficiency with public buildings, governmental buildings, hospitals, schools and other institutions. For instance, in hospitals, the energy captures around 55/67 per cent from the overall operational costs, which is a huge amount."
The concept and development of district heating should be also prioritized, since 40 per cent of overall energy production is consumed by the buildings and 70 per cent of the domestic consumer's entire energy bill is spent on heating and heated water. This represents the most vulnerable area for the domestic consumer, as stated by Iancu. "Today's technology permits the capitalization of other forms of resources, such as organic mass and waste, starting at 100 KW installed power. The newest patent has been developed in Germany and one of the advantages of these new stations is that they deliver new workplaces which are not temporary," Iancu said. At the European level, three measures are part of the energy agenda: transparency in calculating the energy bill, the making of the European guide for the individual consumer and development of a joint platform for transporters and distributors, besides the concept of the new deal for consumers.
In Romania, authorities should focus on three laws until December in order to submit to the European objectives: the new law for thermal energy, the law that enables the renewable resources to be used as a primary source for heating-cooling and identification of a fund for energy efficiency. "Even if the Ministry of Finances is the first beneficiary of each KW, as more than 56 per cent from spending are going to the state budget, the institution is not as involved as it could be in identifying the funds for energy efficiency. This fund is vital especially for the vulnerable consumer category," Iancu added. According to the official, Romania saw several unfortunate measures applied in the past years regarding the heating system. He said that, in the past 25 years, Romania decreased from 241 centralized systems to only 69 in operation today.
QUANTITATIVE TO QUALITATIVE
Valeriu Binig, Partner, E&Y, in continuing the discussion of the first panel of ′Romanian Energy Efficiency Summit′, mentioned the necessity of switching from the quantitative approach to qualitative. The qualitative leap can start, according to the manager, with a better structuring of the available data on the market and a better set of laws, in which case, the role of (energy regulatory institution) ANRE becomes crucial. "We have many available financing resources but we need to decide after a clear analysis, where we spend this money. There is, for instance, a budget of two billion Euro for the operational regional program targeting exclusively the thermal rehabilitation of buildings. Since we do not have a clear inventory of all the resources and objectives, we risk redundancies in spending the money," Binig underlined.
Emil Calota, vice president of ANRE, mentioned that the present conference preceded the Eurofores event which would take place on June 23, joining the European parliament and representatives of the 28 member states. "It is time for Romania to speak more loudly regarding what it expects, as an EU member state, for the two domains of energy efficiency and the renewable industry, as they form the third worldwide industrial revolution. For 2050, Germany, and thus the EU, shape their strategy on five pillars, forming the generic concept of the energy-internet market, that enables the consumer to take part in the energy process and choosing through a single click. The European approach includes the development of the prosumer concept, the efficiency of urban transportation - based on hybrid and electric cars, better energy flow, interconnectivity of markets with the consumer in focus. For instance, Germany currently achieves 27 per cent of its overall energy volumes from renewable resources and plans to achieve 35 per cent by 2020, so that by 2050 the share of green energy could reach 100 per cent," Calota said.
In this context, Romania has three objectives: to reduce carbon emissions, to achieve its expected share of green energy within the overall mix and to accomplish 19 per cent energy savings equalling ten million TEP (tonnes equivalent petrol) by the end of 2020. The law is defining competent authorities for each sector, according to Calota, and even smaller countries such as Slovakia have already put in place a coherent energy strategy and integrated objectives for 2020 aligned with EU legislation and directives. "We try to envision a bottom-up process, using the expertise of professionals with acknowledged competencies in the industry and apply it in Romania. The energy strategy should first comprise qualitative aspects and then the core - an investment program for reaching the objectives. If we look at the consumption structure at this moment, the residential sector is the top consumer since 2010. This happens in the context of an industry that, after the restructuring of the 1990s, decreased its consumption dramatically. Also, we have to mention that, in the current efficiency and cost control approaches, the industrial consumer also significantly reduced its costs for energy at a constant pace since 2011," Calota detailed.
For 2020, Romania's objectives are: the reduction by 20 per cent of carbon emissions compared to the levels of 1990, the increase by 24 per cent of green energy within the overall energy mix, the increase of energy efficiency, calculated through the reduction of raw resources consumption, by nine per cent (10 million TEP). According to Calota, currently, Romania exceeds 44 per cent achieved from renewable resources. In this context, coal is no longer primarily supported and encouraged due to its environmental impact, but it still represents an important energy source. "Have we asked what Germany did in this case? They reduced coal production, it is true, but in the same time, they kept using coal through new technologies such as coal gasification. By doing this, the industry kept an important workplace pool, and despite all else, the EU still sustains coal production. Like Germany, we can also capitalize on this matter," said Calota. According to the representative, ANRE works closely with the World Bank to improve the regulatory frame regarding state aid for high-efficiency cogeneration to better stimulate investments. "We need to better sustain biomass and biogas within the energy mix and I also think that Romania has to reconsider its biomass strategy. Gas consumption is three times larger than electric consumption and occupies the largest share of the final bill. The social poverty in Romania affects 42 per cent of the entire population and the energy poverty is even higher. Access to resources for consumers should be a priority for the Romanian state," Calota added.
The National Action Plan takes into account 11 action segments and describes 26 billion Euro of investments needed to meet the energy savings objectives, representing 10 million TEP in 2020. For renewables, the representative said that Romania has done its homework and the decrease of renewable interest in the past year is natural, because each sector has a booming period and a quiet period. In 2012 or 2013, 1 MWh produced by a photovoltaic unit was paid 350 Euro through the support scheme while, on the wholesale market, the price was no larger than 50 Euro. This bred a speculative interest and maybe that's why we now have 1200 MW installed in photovoltaic parks compared to an objective of 250 MW proposed by the Romanian state for 2020, according to Calota.
In conclusion, the positive aspects in Romania's timeline regarding the energy comprise the achievement of the 2020 target for renewables, the incorporation of the 2012/27/EU directive regarding energy efficiency into the Romanian legislation and the approval of the National Action Plan for Energy Efficiency 2014-2020 and the decrease of electric intensity. On the other hand, the challenges are the lack of information regarding the benefits of energy efficiency, the disorganization in the centralized heating system, the discontinuity of the national energy efficiency programs including the financial issues, such as the thermal rehabilitation of buildings and the ESCO contracts. "Energy efficiency is a concept embraced by everybody, it is mentioned in corporative strategies, in sectoral programs and in individual behaviour. On June 23, Romania has to state its support needs for all resources: coal, reconversion, financing through structural funds. Actually, from the aforementioned 350 billion Euro at the European level, Romania's share is not as high as stated. While some reports put the funds needed for large infrastructure and regional operational program as high as 11 billion, I would agree with the figures stated by Valeriu Binig, that of 1.5 - two billion Euro," Calota said. Valeriu Binig added: "The leaders talk about prosumer, the interface between producer, distributor and consumer. Beyond the delivery of a product - in our case, the energy - we have to identify each actor's role within the process, the investors' expectations regarding the regulators, the legislative frame and of course not least the consumer."
In CEZ's vision, represented in the first discussion panel by Daniel Radut, head of Energy Services in Romania, the company's strategy and values match the authorities' vision regarding the strategic significance of energy efficiency in the development process of the local economy. The CEZ representative considers that, even if Romania ranks last but one regarding energy efficiency, the half-full-glass approach would be that Romania harbours a large potential of improvement in this direction. "Energy efficiency first means the smart usage of energy which, sometimes but not mandatorily, corroborates with energy savings. Energy efficiency is the most efficient way to decrease costs in order to achieve the strategic objectives at the national level regarding the energy sector's security and improvement of economic competitiveness. Moreover, we must pay attention not to overlap multiple targets, and where possible the interaction between them should be carefully considered," Radut stated.
STIMULENTS, MORE EFFICIENT THAN REGULATIONS
In this context, Radut commented that there is a market with a huge potential to be exploited, in terms of technological gaps and the real needs of customers, be they domestic consumers, industrial clients, or public administration. According to CEZ data, energy consumption is 2.5 per cent more to produce the same GDP unit. Demand has to be stimulated through a new approach. "Based on previous experience, we need a systemic approach. Energy efficiency represents a solid economic opportunity and needs to become real business, leading to a strong energy services market. There are active players on the market such as institutions, large end-users, ESCO companies, utility companies, certification organisms and the financial sector. The largest role is played by the institutions, and we see that ANRE has concrete approaches in this matter through clear commitments and action plans." The CEZ official added that there is a need for information programs in order to stimulate investments and encourage demand for energy services. "Also, there is a need for efficient energy products and the decrease of bureaucracy in regulations. Regarding the ESCO companies, they are energy-efficient operators able to offer competencies and resources for validation of potential benefits following an investment. They guarantee implementation of the initiative and deliver the resulting benefits which are shared with the end user," Radut said.
Among the mentioned visible benefits at the national level, the manager counted reduction of carbon emissions, decrease of final energy consumption and its impact in reducing primary resources consumption, the increase of local competitiveness, creation of workplaces, development of technology and innovation. The end users are the ones to choose when it comes to purchasing energy services and they need to pay the honest price for consumed energy. "The regulatory authorities tend to protect the consumer by fixing social prices, in detriment of efficiency increases within the final consumption value," Radut stated.
The offer of energy services has to function within an open and transparent market, accompanied by promotion of high quality services and best practices in the energy management. "The success of energy services can be only achieved through a total commitment to end users, within a market that allows them to be energy-efficient and aware of the possibility of costs reduction. Also, the state should offer the tools to increase the demand, rather than creating obligations that only lead to a false set of rules for energy efficiency. The initiatives for ruling the energy services market have to be coherent, offer added value and make sense cost-wise.
The market mechanisms cannot automatically stimulate, in incipient stages, the entire pool of energy efficiency measures, especially those with large savings potential and a large demand for investments. The financial use of public funds should be done in a complementary way rather than competitive, and should be balanced and coordinated with other financial resources without discrimination, being available for all the market players including the utility companies," Radut stated.
The first session of the ′Romanian Energy Efficiency Summit′ was concluded by Elena Popescu, general director of the Energy and Environment Direction, Ministry of Energy and SMEs, summing up and offering the Ministry response to the stated concerns regarding energy efficiency and involved measures.
According to the official, the integrated approach should be applied both to responding to the energy efficiency issue in Romania in order to achieve the 2020 objectives, and to the assigned obligations accompanying the energy efficiency measures to be undertaken and which are expected to be achieved by 2030. At the European level, energy efficiency is one of the five milestone pillars of the entire European strategy which also includes internal markets, energy security, decarburization, and research and innovation. "One of the conclusions established at the European level is the formation of a national energy and environment plan for 2030, based on individual country case studies recently issued by the EC. In November of this year, the European Commission will list the conclusions from a report on the state of the energy union, based on these national case studies. This plan, among others, will quantify the national effort of each involved nation to meet the 27 per cent target of energy efficiency - with the understanding that this level is expected to reach 30 per cent by the end of negotiations. It will also express how each member state proves its national ambition level to meet the European objective of energy efficiency," Popescu showed.
2030, CLOSER THAN 2020
As the manager stated, everyone's focus is the objective for 2020 but the European Union wants each state to be equally aware of the objectives for 2030. "Energy efficiency is not only part of the Energy Ministry's agenda, as it offers the highest potential in industries governed by other Ministries such as agriculture, transport and buildings. Without the support of the other ministries, it is impossible to meet the objectives. It is an error to think that energy efficiency measures will naturally lead to decreased prices for energy since all these measures are translated in costs. It is more correct to think that the energy efficiency will lead to the consumption decrease, which will more directly impact final costs," Popescu underlined. According to the manager, in order to create a market for energy efficiency it is necessary to have consumers, including industrial consumers and to take into account the affordability of bills for domestic consumers. "It is important for the innovative technologies to be introduced into Romania, following a knowledgeable transfer, which will also create workplaces. We have major responsibilities in this process but we also have to admit that we lack administrative resources, a fact also mentioned in the CE's country case studies. Without engaging people in the administrative sector, we will face insurmountable challenges," the Ministry of Energy's official added as a conclusion of the first debate session.
The second session of the ′Romanian Energy Efficiency Summit′ continued the discussions regarding the topic of energy efficiency measures, best practices, innovation and regulatory and legal mechanisms to achieve the expected targets with the European Union. The session was opened by Sebastian Radocea, partner of Tuca, Zbarcea si Asociatii law offices, mentioning the upcoming workshop detailing the legal barriers to energy efficiency contracts in public service. The lawyer introduced to the audience the next speaker within the second debate panel, Gerard Verdebout, president ARPEE. The manager said: "I would like to summarise my presentation in just a few words with a paradox: Less is more. We need less discourse and more action. I take this opportunity as a call to action in energy efficiency, particularly in the thermal rehabilitation of buildings. I represent an association of 13 members including ABB, Adrem Invest, Alstom, Elcomex, Energobit, Lafarge, GDF Suez, PwC, Tiab, OMV Petrom, Thermaflex, Vimetco, and Veolia, totalling more than 6.7 billion Euro per year worth in turnover - as much as five per cent of Romanian GDP - and delivering more than 30,000 jobs in the industry. We are working on three topics; energy strategy and policy - where the heat energy is a priority, energy efficiency in residential sector, and energy efficiency in industry.
CALL TO ACTION
Regarding the energy efficiency obligations, the manager offered the example of France. "The legal framework in France does not suggest, but rather forces the owners of residential buildings to rehabilitate them. Hence, it is time to say: ‘we have to do.' There is a time for discourse, and a time for action, to put in place the requirements for the objectives through financial mechanisms. Without this legislative framework put in place by municipalities, we will simply have these talks all over again in the future," Verdebout said.
The energy efficiency strategy in Romania should be triggered by two drivers: energy supply security and decarburization of industries as a component of energy efficiency. The heating factor in this strategy is a priority. According to the manager, statistics show that the highest-consuming sector is residential, while in Europe overall, industry is the biggest consumer. A natural conclusion is to increase residential energy efficiency. There are three million apartments distributed in 83,000 blocks of flats, with a large ownership share of 97 per cent, representing 7.8 million residents. 75 per cent of these buildings are 45-50 years-old. The average heat consumption is 250-300 kWh (sqm/year), two times higher than the European average which is 100-150 kWh (sqm/year). Also, another statistics focus shows that the average heat consumption is seven-eight Gcal/family, with the energy bill split into 57 per cent for heating, 25 per cent hot sanitary water, 11 per cent electricity and a remaining seven per cent for other forms of consumption. So, the problem is not the price, but the consumption.
Currently, rehabilitation is a slow process due to insufficient funds, not helped by the inefficient financing schemes implemented to date. As a case study, citied by Verdebout, the thermal rehabilitation for a four-floor block of flats requires 1,257 Euro per one-room apartment of an average 45.8 Euro per sqm, and 2,000-2,500 Euro for two and three room-apartments. The yearly heating savings would be 285.5 to 516.2 Mwh/year, a savings of 45.2 per cent.
The figures can be broken down according to the investment for thermal rehabilitation of buildings, almost five billion Euro throughout 15 years (50 per cent by 2020, 25 per cent by 2025, 25 per cent by 2030). Also, there is a need for new legislation to meet the 2030 energy efficiency with targets based on the revision of the energy efficiency and performance of building's Directives. Also, the need exists to develop a "Smart Financing for Smart Buildings" initiative to make existing buildings more energy-efficient, facilitating access to existing funding instruments, because many of these measures to reduce consumption require a long-term payback.
"The final message is: less energy, less emissions, less costs, more performance, more energy efficiency and more sustainability," Verdebout concluded.
The session continued with the opinions delivered by Ion Dogeanu, executive director of AEEPM, an NGO setup in 2007 and developed in 2011 following a grant from IIE. The company has developed different programs such as Meshartility, developed in March 2015; Netcom, completed in April 2013; EnergyforAction, started in March 2014 and to be completed in March 2016. According to Dogeanu, the availability of consumption data is a major issue for the start of any project. Following the nature of the NGO's activity by working close with municipalities, Dogeanu said "It is very hard to sell an outsider's idea to any political entity unless the latter can first test and verify it. From my experience with different municipalities, a mayor will apply a project only after he previously verified it ‘in his own yard.' The Municipalities Association in Romania (AMR) is the most important dialogue partner with the central authority and the business environment, on the topic of sustainable development."
The manager also mentioned the significance of security in terms of energy supply. "This is a business that should be approached like any other business, in terms of what it offers and where everybody should take their roles. At the European level, regarding energy planning and actual facts, I observed that the states are easily assuming the targets but these objectives should be also communicated and integrated at the level of municipalities, local communities, represented by citizens and business environment. To date, 6,377 municipalities of 53 countries engaged more than expected at the central level in the perspective of 2020 targets. From 113 municipalities that signed the official documents, 29 represent large municipalities. 46 plans have been sent to the EC, out of which 34 plans are already approved and 56 municipalities have not yet concluded these plans. The first district in Bucharest has the largest project in the entire Balkans regarding the number of thermal rehabilitates apartments. We pressed on the legislation to become less bureaucratic and around 50 per cent of the municipalities' demands have been comprised within the legislation. After seven years and 350 million Euro invested in the rehabilitation of 700 blocks from a total of 800, we now start to see the results," Dogeanu said. He also stressed the importance of educating the consumer regarding the energy efficiency process.
Further on during the second discussion panel, Gianpaolo Sortino, regional sales manager at Nalco, an Ecolab company shared his opinions regarding water as utility product and the involved process services.
NO WATER, NO ENERGY
"Huge numbers of projects demonstrate the commitment of Romania to renewable energy. The majority of energy is produced by traditional resources and this is the area where Nalco can contribute to solutions with immediate impact on total cost of operations, improved efficiency and protection of assets. We are present in all industries and overall traditional energy resources, from coal to nuclear, combined energy, through 400 GW generating capacity servicing. Power customers include AES, Alstom, E.ON, EdF, Gazprom, GdF Suez, Intergen, RWE, Siemens. Water has a solid impact in the older industries. For instance, it requires 60 litres of water to operate a 60-watt light bulb for 12 hours. Therefore, we could say: no water, no energy." According to the CDP Water Report, 2013 (survey of 180 Global 500 companies), global companies identify water supply security as a substantive risk to business operations.
Nalco partners with power companies worldwide to improve asset reliability and profitability with advanced solutions. In order to minimize environmental Impact, it requires measures including: reduce CO2 emissions, clean heat exchange surfaces in the furnace and cooling circuit, reduce overall emissions to water and air, better fuel efficiency and minimum site discharge and improved microbiological control, and advanced cost-effective biocides. Also, in order to minimize the total cost of operation, it needs to improve heat rates through less fuel or more MW, reduce water use by minimizing cooling water needs and implementing water recycle options, reduce maintenance costs by minimizing corrosion, scaling, slagging and fouling, and optimizing manpower utilization by monitoring and control technology. The risk matter can be also triggered by improving plant reliability through improving asset integrity and reducing maintenance costs, improving plant availability by meeting market needs for power, and improving plant production by maximizing output.
The discussion panel was completed by Catalin Dragostin, director of Energy Serv and president of ESCOROM. The manager stressed the issue of ineffective heating systems based on wood. "Around 40 per cent of the Romanian population uses wood for heating, with a large component of this energy being inefficiently consumed with low yield. If we were to replace this energy source of 20 per cent yield with an 80 per cent yield energy resource, the conclusion is that either the consumption would decrease four times or the number of consumers would grow four times," said Dragostin.
What happens with the regulators' intention to support the green energy based on biomass? Dragostin calculated that the regulatory authorities decided to offer two green certificates for the energy produced from biomass and if the producer is also doing high-efficiency cogeneration, he will receive an additional certificate. Therefore, for one MWh, up to three certificates can be offered. But, following the calculation and behaviour of investors, they would rather produce electricity without cogeneration because then up to five green certificates may be obtained and, following their operations, the investors can already get to four certificates without cogeneration and the associated complications. "So, does the equation show that it is efficient to make cogeneration? The pragmatic answer is no. From four to five certificates, the investor would grow their revenues only by 20 per cent and there are a lot of disadvantages that unbalance the benefits. The cogeneration station delivers only an 18-22 per cent yield, while a condensation unit delivers up to 33 per cent," Dragostin explains.
Also, the current security of supply is an escalating crisis which lies on the EU's dependency of fossil fuel imports. The EU also recommends that member states should accelerate the switch in the heating sector to renewable fuels and new technology. However, the EU's 27 directive includes some stipulations that are not found in the Romanian 121 law, by stating 50 per cent renewable, 75 per cent cogeneration or energy recovery. In short, the Romanian legislation doesn't include all European rules. EED recommends the EU state the undertaking of adequate measures for efficient district heating and cooling infrastructure and development of policies in relation to local and regional levels.
The second session of the ′Romanian Energy Efficiency Summit′ was completed by Sebastian Radocea- partner at Tuca, Zbarcea & Asociatii, presenting the "Legal barriers in contracting energy efficiency services in the public sector" workshop.
ADAPTING TO REALITY
While the implementation of energy efficiency measures is an obligation undertaken by Romania at the EU level (on the basis of Law No. 121/2014), at this moment the legislative framework appears insufficiently adapted to support the implementation of energy efficiency projects, especially in the public sector. Hence, the presentation detailed the cross-borders solutions supporting the implementation of such projects in the context of the current legal framework and advocated for an official intervention of the Romanian relevant public bodies in promoting a more practice-oriented and consistent legislation in the energy efficiency field. Thus, the workshop focused on topics such as: public procurement aspects in connection with the award of an energy performance contract (EnPC); EnPC's debt and public debt; transfer of ownership rights for assets provided by the contractor (ESCO entity) under the EnPC; and payment mechanisms under the EnPC.
Within the workshop, Sebastian Radocea stated that, a marker in the field of energy efficiency which also offers the legal practitioner's perspective in the matter of energy efficiency in public sector is the rehabilitation of public buildings. There are law-based treatments of the performance of energy efficiency in the segment of public buildings and of public lighting infrastructure. The questions that are opened have been underlined within the pilot projects that have been already initiated at Craiova and Galati, in coordination with BERD and a consortium of consultants that offered their legal consultancy services free of charge to the municipalities. The main elements of these contracts are that the contractual payments are performed in direct proportion with the energy efficiency performance, they don't affect the budget of public authority and are being secured from the achieved energy savings. The costs with investments are undertaken by the ESCO companies. The energy performance contract has two distinct stages: the construction state and the exploitation stage. Construction is represented by the execution of measures, such as the obtaining of construction permits and other permits necessary for implementing the measures, and obtaining financing. Based on these measures, the energy efficiency services are to be implemented, which practically means the long-term benefit of the entire project, not only within the contract's length, because the services comprise also the maintenance operations among other types of services. The 121 law implicitly states that the nature of an energy performance contract is a servicing one, but it doesn't state this fact very clearly.
"For the two mentioned municipalities, not ordinary for these type of contracts and apart from the two structure types of construction and execution, we added another stage of the technical-economic documentation: the feasibility study. According to current legislation 500/2002 regarding public works, any public works project has to be associated with a feasibility study. But we observed that it is possible that the public beneficiary doesn't know about the concrete measures to be applied in order to achieve the targeted energy performance objectives, in the context of multiple options of energy efficiency solutions, equipments and technologies. Therefore, the feasibility study cannot be completed by the public beneficiary before the selection process of the contractual winner. Therefore, we forced - through the performance energy contract assigned to the ESCO company that won the auction - to formulate this study by aligning its documents (which led to winning the selection process) to the concrete measures to be undertaken in order to meet the assumed energy performance objectives. Hence, for this type of contract regarding public buildings, we considered the technical documentation be formulated at the end of the selection process," Radocea concluded on the first aspects that have been discussed within a distinct workshop chaired by Tuca Zbarcea and Asociatii senior consultants.
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