Horváth: Romania can access 7 billion Euro through the Modernization Fund in the period 2021-2030

Romania has the opportunity to access, in the period 2021-2030, about 6-7 billion Euro of the amount allocated through the Modernization Fund, an instrument designed by the European Union to finance investments to modernize the energy sector in ten European countries. Romania risks missing the first year of this investment program, due to the lack of national mechanisms for implementing energy modernization projects. According to management consulting firm Horváth, one of the solutions to urgently unblock this situation is an access to funds strategy integrated with the National Recovery and Resilience Plan (PNRR), the Just Transition Fund (JTG), and the Integrated National Plan. in the field of Energy and Climate Change (PNIESC), as well as with other European or national strategies, plans and funds. Also, the benefits expected through the Modernization Fund will only materialize if this financial aid is used to stimulate competition in the local energy market.

An important factor in accessing funds is to ensure clear criteria for their allocation, which should primarily aim to increase the competitiveness of the local energy market. Currently, the local energy market is going through one of the most turbulent periods in history, with record electricity trading prices.

According to official data, Romania’s energy infrastructure is underdeveloped, and more than 70% of transmission and distribution networks are older than 45 years. Because of this, Romania is dependent on energy generated from coal, which leads to a high price of energy supplied. The Modernization Fund has been allocated to 10 EU member states, where GDP per capita is less than 60% of the EU average. The budget is calculated by awarding 2% of the carbon certificates tendered in accordance with European rules.

“In the last four years, the barometer for the trading price of electricity in Romania has been the evolution of the cost of the CO2 emissions certificate. In 2021, we noticed an accelerated growth of them, from 30 euro / tCO2 in the first quarter, to 52 euro / tCO2 at present, which, corroborated with the significant share of coal in the energy mix, has a significant negative impact on market competitiveness. energy and, implicitly, affects the performance of the national economy,” explains Vlad Gheorghe, Horváth representative.

The ten countries benefiting from the Modernization Fund are: Latvia, Estonia, Croatia, Lithuania, Bulgaria, Hungary, Slovakia, Poland, the Czech Republic and Romania.

“The EU has set up this Fund to support Eastern European countries whose economies are suffering from the uncompetitive energy sector. Certainly, our country needs this help to modernize its energy value chain. Unfortunately, outdated infrastructure and technologies result in Romania achieving a GDP of 2,330 euros per tonne of greenhouse gases it produces, while in the case of other more developed economies, the situation is clearly different. For example, Sweden reports € 10,125 per tonne of carbon and France € 7,330. This means that we produce little, instead we pollute a lot. The fact that Romania has the largest share of the Modernization Fund, approximately 31%, is a successful negotiation and shows us the support we can benefit from. However, unfortunately, Romania is not among the five beneficiary countries that have already created the necessary frameworks for the implementation of projects that will receive funding from the European Commission and the European Investment Bank, through the Fund. Delaying the modernization of the energy system by another year, if we miss the deadline for submitting projects this summer, will have strong economic consequences, contributing to the continued volatility of the energy market. The Modernization Fund, however, must be allocated on an economic and, implicitly, sustainable basis,” Vlad Gheorghe also points out.