Power policy

Romania achieved its 2020 target of 43% renewable electricity consumption early in 2015 but has made little progress since. The renewables target under the 2030 energy and climate plan target is set at 49%.

The government established a green certificate (GC) scheme in 2008 to help achieve its 2020 target of 43% renewable electricity consumption. Poor design and an unexpected drop in power demand caused the scheme to become oversubscribed. To limit upward pressure on retail electricity prices, the government imposed quota reductions. Successive reforms have failed to resolve the GC oversupply.

New policies have been established to support the 2030 renewable electricity target of 49.4%. In June 2018, Romania’s parliament approved the introduction of a net-metering scheme for small-scale renewables up to 100kW, which allows individuals to deduct the power they produce from their electricity bill. Residential solar is also supported through the “Casa Verde” grant program that finally kicked off in September 2020 following administrative delays. For utility-scale projects, Romania adopted regulations allowing corporate power purchase agreements for projects built after June 2020. An auction scheme starting in 2022 or 2023 is under discussion.

Romania has announced a coal phase-out target for 2032. The declining economics of Romanian coal plants was likely a deciding factor when setting the target. The carbon price under the European Emissions Trading Scheme has become a heavy financial burden for Romania’s main lignite power producer, CE Oltenia. In 2020, the company was unable to pay for its emissions allowances and was granted a rescue loan by the Romanian state. The EU set conditions for this loan, requiring CE Oltenia to present a plan to move away from lignite generation.

Power prices and costs

Romania's power prices have historically been lower than those of neighboring Hungary and Bulgaria, although they have been steadily rising at 1-2% per year due to higher carbon prices and an aging coal and nuclear fleet. Retail power prices in Romania soared in 2019, whereas demand grew modestly. Prices temporarily dipped in 2020 during the Covid-19 pandemic but rose quickly again in 2021. Global gas prices influence Romanian power prices, as around 20% of the country’s electricity is generated from gas

Power market

Romania has gradually shifted toward a liberalized energy sector. Consumers have been eligible to switch electricity suppliers since 2007, and price liberalization was finalized for non-household consumers in 2014 and household consumers in 2018. The distribution and retail divisions have transitioned to being predominantly privately owned. Major European utility companies CEZ, Energias de Portugal (EDP) and Enel have been present in Romania since the early 2000’s. However, CEZ has since divested all of its Romania assets. Enel, which in 2015 also considered exiting the Romanian market, has since announced that it will instead sell off minority stakes in its Romanian subsidiaries.

Doing business and barriers

Limited grid capacity, which has historically slowed renewables project delivery, has exacerbated the country’s green certificate oversupply, by not allowing for exports to neighboring countries. In addition, renewables developers have faced problems relating to land and planning due to a lack of transparency, uncertainty around ownership and red tape. Romania’s program for residential solar grants was officially launched in February 2019, but it took until September 2020 before a single installation was completed through the program. The administrative issues of the grant scheme has led to financial difficulties for several small-scale solar installers.

EV market

Electric vehicles, including plug-in hybrids, made up 3% of new sales in 2020, compared to just 1% the year before. The fleet of plug-in hybrid and battery electric passenger vehicles amounted to less than 10,000 cars in 2020.

EV policy

Romania targets 14% renewable energy in the transport sector’s final energy consumption in 2030, in line with EU-wide renewables targets. That is to be achieved mainly through electrification and some biofuel blending, according to the country’s energy and climate plan. The plan estimates that up to 700,000 plug-in hybrid and battery electric vehicles might be needed by 2030 to achieve the target, together with a total of 600,000 electric vehicle chargers.

Romania has a very generous grant scheme for battery-electric and plug-in hybrid vehicles of up to 10,000 euros. The scheme spans from 2020 to 2025. The relatively high price of electric vehicles versus Romanian purchasing power is a barrier to wide EV adoption, but the generous purchase grant helps. Electric vehicles are exempt from annual ownership tax and charger installations are subsidized.

Romania applies EU fuel economy standards. These limit average emissions across a manufacturer's entire vehicle production. For passenger vehicles, these are 130 gCO2/km between 2012 and 2019, and 95 gCO2/km in 2020 and 2021. Both targets will be introduced gradually. In 2020, a manufacturer’s 5% most polluting cars are excluded, while in 2021 all vehicles sold are taken into account.

Buildings market

Some 35% of residential buildings are heated with natural gas, while another third of homes are heated with biomass. Around 15% of residential heat demand is provided by district heating in Romania. In the capital, Bucharest, district heat supplies two-thirds of the residents.

Buildings policy

Romania targets 33% renewable energy in heating/cooling final energy consumption in 2030. The country’s 2020 renewable energy target for the heating sector was 22%, in line with EU requirements. However, renewables already supplied 26% of heat in 2009 when the target was set and there has been no progress since. Romania adopted the EU directive on the energy performance of buildings in 2020, which sets minimum energy performance standards on new buildings and buildings undergoing major renovations.

Romania subsidizes energy efficiency improvements in buildings through its “Casa Verde” green homes scheme. Under the scheme, grants are available for residential heat pump installations as well as insulation improvements. The grant scheme has been running in various forms since 2010. The latest application round opened in September 2020 and will run until the budget of about $97 million runs out. The grant is for up to $16,000(RON70k), or 60% of the cost for installing a heat pump, together with other related efficiency upgrades, solar panel and EV charging installations. The subsidy available specifically for covering the cost of a heat pump is a maximum of RON8000 ($1900), but the grant does not cover air-sourced heat pumps (reversible air conditioners).