Thermal Energy Forum - Can Romania stand the heat?
The European Commission presented a package of measures to keep the European Union competitive as the transition to clean energy is changing global energy markets
By Petre Barac
The Commission wants the EU not only to adapt to the clean energy transition, but to lead it. For this reason, the EU has committed to cut CO2 emissions by at least 40 per cent by 2030 while modernising the EU′s economy and delivering on jobs and growth for all European citizens. The proposals have three main goals: putting energy efficiency first, achieving global leadership in renewable energies, and providing a fair deal for consumers.
According to the Commission, in the future consumers across the EU will have a better choice of supply, access to reliable energy price comparison tools and the possibility to produce and sell their own electricity. In this context, The Diplomat - Bucharest organized the third edition of its national forum exclusively dedicated to thermal power - "Thermal Energy Forum" - to discuss the impact of the European proposals on the Romanian energy efficiency services sector, the objectives set for Romania for the horizon between 2030 and 2050, and ways to optimize the future support scheme for promoting high efficiency cogeneration.
The elite event was organized by The Diplomat in partnership with ANRE (National Energy Regulatory Authority), ARPEE (Romanian Association for Promoting Energy Efficiency) and CRE (Romanian Energy Centre), with the support of our partners (EY, Bepco and Veolia) and COGEN Romania, ESCOROM Romania, World Energy Council, CROK (Czech-Romanian Chamber of Commerce), and Champollion. The conference was structured into two sessions, moderated by Valeriu Binig, partner in the Advisory Services practice with EY.
FIRST SESSION - PRODUCERS AND DISTRIBUTORS OF THERMAL ENERGIES: POLICIES AND STRATEGIES
Gerard Verdebout, ARPEE: Public funds should be allocated to investments in energy transition allowing constant production of energy, which is generally the case for heat
In the public's mind, as in those of national and European legislators, heat is often ignored as a major area of energy transition, while in fact it represents more than 40 per cent of EU energy needs, said Gerard Verdebout, president Romanian Association for Promoting Energy Efficiency (ARPEE), at the beginning of the first session.
"Despite the local nature of heat markets, in order to promote renewable heat and the recovery of waste heat resulting from industrial processes such as waste incineration as well to promote the District Heating Networks, specific Europe-wide measures, different from those in place in the electricity sector, are necessary," said Verdebout. "As a matter of priority, public funds should be allocated to investments in energy transition allowing constant production of energy (which is generally the case for heat), whereas until now most schemes prioritize investments in intermittent production (which is generally the case for electricity)."
According to ARPEE, district heating provides nine per cent of the EU′s heating. The main fuel was gas (40 per cent), followed by coal (29 per cent) and biomass (16 per cent).
District heating can integrate renewable electricity (through heat pumps), geothermal and solar thermal energy, waste heat and municipal waste. It can offer flexibility to the energy system by cheaply storing thermal energy, for instance in hot water tanks or underground. District heating can also contribute to air quality objectives, especially if it replaces or avoids solid fuel domestic heating.
Verdebout also said that cogeneration of heat and power (CHP) can produce significant energy and CO2 savings compared with separate generation of heat and power. "It is used in industry and the services sector to save money and ensure a stable and reliable heat and electricity supply. Many CHP technologies can use renewable energy (geothermal, biogas), alternative fuels (e.g. hydrogen) and waste heat. Tri-generation should also be exploited to use heat production for cooling in summer."
In his opinion, District Heating Networks (DHN) are already the main vehicle for energy transition. "Their potential to further increase the share of renewable energy, as well as heat recovery, is considerable," said Verdebout. "They even offer the ability to store, in thermal form, a part of the renewable electricity produced during periods of lower consumption. Contribution of DHN to reducing GHG emissions and atmospheric pollutants justifies the promotion of their development: heating needs will not disappear by 2050 despite the development of energy efficiency actions, particularly in the existing building stock.
"European funds should be made more available to help municipalities and other regional stakeholders, to boost their efforts through integrated plans for development of DHN," added Verdebout. "In addition, state aid rules should be relaxed in the context of historically low fossil energy prices."
Valerie Plainemaison, EFIEES: We are preparing some proposals for the revision of the directives on energy efficiency
The European Federation of Intelligent Energy Efficiency Services (EFIEES) is preparing some proposals for the revision of the directives on energy efficiency, according to Valerie Plainemaison, general secretary of EFIEES. "There are thousands of pages and analyses that we are working on so far," said Plainemaison, who added that the EU needs a general communication on this matter.
EFIEES supports the consistent implementation of the ′Energy Efficiency First' principle across all the elements of the ′Clean Energy for All Europeans' Package and the following guiding principles: more consideration to be paid to energy-efficiency services; equal treatment of renewable energy sources, whether produced on-site or supplied through the energy carrier; and how a territorial/district approach, rather than an individual building's approach, should be introduced.
EFIEES is the EU trade association representing private companies which provide an overall energy management service to end-users such as: analysing the clients' needs and consumption; designing solutions with the best energy performance; maintaining and managing plant and equipment on end-users' sites including industry, commercial offices, collective residential buildings, and public premises.
Corneliu Bodea, CRE: Romanian authorities have a lack of concern for investors
The Romanian Energy Centre (CRE) is involved in several international consortia for smart metering and energy management solutions, according to its president, Corneliu Bodea. He said that CRE represents Romania in a ′16+1′ cooperation format, involving Central and Eastern Europe plus China.
"We are in charge of coordinating the energy sector and by June we will announce a plan with ambitious projects for this segment," added Bodea. He explained that the Romanian state shows a lack of concern for local and foreign investors, stressing the importance of a predictable and stable framework.
The Romanian Energy Centre strongly maintains that the central heating domain is a local strategy issue.
"I think that the central authorities must support the local ones at decisional competencies' level, and with financing support and experts. The local conditions ask for the local authority to design the most suitable local strategy."
"To refer to our Suceava central heating experience, we -- although just investors into the new central -- had to intervene in the distribution and transport systems, as the company that previously supplied the heat went into bankruptcy," reminded Bodea. The bankrupt supplier had a five million Euro debt to the system, and investors saw the beneficiary's money cut. "This shows the interlinked connection between the producer and supplier. Therefore, local authorities must follow this road."
The new thermal energy law must take into account the public authorities' need to create local strategies, Bodea explained.
Radu Burnete, FIC: District heating systems are a permanent improvisation
"We are concerned that Romania′s central heating systems are on the verge of collapse," said Radu Burnete, public affairs expert for the Foreign Investors Council, at the beginning of his speech. "We wonder how long it will take the administration to take measures before some tragedy happens. We do not want to think what would happen to the economy if a city like Bucharest would find itself with no central heating system during winter for a week, just to give you an example."
According to him, there are several reasons why central heating systems are such in a bad shape today. "First, they have been neglected by public policies, intending for care to be taken by local authorities but nobody was paying attention to their state of decay. The subsidy system that we use is another reason for this problem. We agree that there are people who need support, but also people who do not need subsidies. The money that we save could be used in other productive ways. Another reason for this issue is the energy loss and the fact that companies don't get paid."
The FIC representative said that the lack of investment in district heating systems resulted in a permanent state of improvisation and he underlined the importance of a local strategy for central heating systems in Romania.
Emil Calota, ANRE: Liberalization of the gas market is not only about prices, but also functioning on the principles of a free market
Liberalization of the gas market is not linked only to evolution of prices, but should also be seen as a transformation into a market governed by economic principles and competition, said Emil Calota, vice-president of the National Energy Regulatory Authority (ANRE).
"This liberalization of which we speak [gas market] - where there are many comments and much confusion - is not only about how prices evolve but actually the formula to simplify a decision and an extremely complicated process to transform the gas sector, a vital sector for Romania, into a sector based on the economic principles of a free market," he added.
According to Calota, liberalization also means learning about new market mechanisms and which rules that players need to follow and how markets operate in that specific sector, how to ensure certain customer security and creating predictability in terms of economic inputs, which ultimately means prices and tariffs.
SECOND SESSION - DEVELOPMENT OF CENTRALIZED HEAT SUPPLY SYSTEMS IN ROMANIA AND THE FUTURE OF BIOGAS AND ENERGY PRODUCTION FROM MUNICIPAL WASTE
Matthias Vogel, Veolia: Turning bio-waste into energy can be a good solution for Romania in mid-term
Turning bio-waste into energy can be a good solution for Romania in the mid-term, said Matthias Vogel, managing director of Veolia Ukraine. He also mentioned turning refuse derived fuel (RDF) into energy, with some potential advantages: a lot of landfills for waste still in usage: MBTs (mechanical-biological treatment plants for waste) to be constructed; capacities available for incineration: co-incineration in power plants as well as usage in the cement industry; RDF can (partially) replace coal and/or gas.
"When we talk about turning waste into energy, there are solutions for usage of different types of waste for energy production: environmentally friendly, efficient and flexible according to legislation, market situation and financial affordability," said Vogel.
Matthias Vogel previously served as chief executive officer in the Baltic States and Poland at Veolia Environment from 2002 to 2008.
Piotr Hajewski, Fuel Tech: We are interested to enter the Romanian market
Fuel Tech, an integrated technology company providing engineering solutions to enable clean efficient energy, is interested to enter the Romanian market, as Piotr Hajewski, a company representative, said during the conference.
Fuel Tech is specialized in the development and commercialization of advanced technologies designed to enable more efficient and environmentally acceptable combustion of a wide range of solid and liquid fuels, primarily in boilers and furnaces. As Hajewski said, Fuel Tech is experiencing accelerated growth as it benefits from ever-tightening global air pollution control requirements, as well as market-driven shifts to lowered costs and often to more problematic fuel sources, which demand innovative combustion optimization solutions by utility and power generators.
Gheorghe Piperea, Piperea si Asociatii: RADET is a huge bottomless bag of money
RADET, the Autonomous Administration for Thermal Energy Distribution in Bucharest, is the second largest thermal energy system in the world after that of Moscow, representing at the same time, a huge bottomless bag of money, said Gheorghe Piperea, founder of Piperea & Asociatii Law Firm and judicial administrator of RADET, currently in insolvency.
"I do not want to shock the audience, although some figures are truly shocking to hear. When I took over this mandate, I found that the thermal energy system in Bucharest is the second largest in the world, the first being Moscow," said Piperea. "It is so big that it supplies thermal energy for 563,352 apartments, 8,500 housing units and more than 1.2 million people."
According to Piperea, RADET′s problem, like any other public company, is that ′this bag of money has no bottom' and ′several holes everywhere'.
"We are all contributors to the Bucharest budget and every year 15 per cent of this budget is spent on the heating subsidy," said Piperea. He added that the city wants to attract European funds, worth 200 million Euro, to restore part of RADET's distribution network.
With more than 13 years of experience, Gheorghe Piperea is the founder of the "Piperea & Asociatii", and one of the most prestigious personalities of the Romanian legal field.
Daniel Florea, District 5, Bucharest: The administration is trying to reduce costs while economic operators want to make profit
Local authorities are very interested in how they can reduce their costs but also keep their citizens happy, according to Daniel Florea, mayor of District 5, Bucharest.
"As mayor, I′m interested in having a more efficient heating network, to pay as little as possible for it, and to keep the people happy," said Florea. "I agree to use municipal waste as energy, but the question is how we do this. We need to find solutions for people in Bucharest to enjoy all the things that we talk about in these kinds of events. There is no other solution than collaboration, partnership on a real basis. The administration is trying to reduce costs while operators want to make profit, so we must find a balance and have an integrated solution."
Daniel Florea is a Romanian lawyer and politician who currently serves as the mayor of Bucharest′s Sector 5. At the end of 2012 he was elected to the Chamber of Deputies, having won his constituency in the county of Calarasi by a landslide. He became the only representative of the PSD in Calarasi County for the 2012-2016 legislature. He was a member of the Committee for Legal Matters, Discipline, and Immunities of the Romanian Chamber of Deputies, a member of the Joint Parliamentary Committee for the Review of the Romanian Constitution and also a member of the Parliamentary Assembly of the Council of Europe.