European Commission approves restructuring aid for CE Oltenia up to EUR 2.66 billion

Romania’s plan to grant power company Complexul Energetic Oltenia – CE Oltenia up to EUR 2.66 billion in restructuring aid has been approved by the European Commission. The state-owned coal mine and plant operator is the third-largest producer of electricity in the country.

The approved restructuring aid for the CE Oltenia is in line with Romania’s decarbonization plans to replace lignite-based electricity production with electricity produced from natural gas and renewables, solar, and hydropower.

Romania is committed to phasing out coal by 2032. CE Oltenia, based in Târgu Jiu, is the largest producer of coal-fired electricity in the country.

The European Commission said the country’s government has submitted a revised restructuring plan for the utility for 2021-2026, with significant modifications and improvements. The plan will be supported by restructuring aid of up to EUR 2.66 billion in the form of grants, a state guarantee for a loan, a capital injection, and a loan-to-grant conversion, it added.

Decarbonization of CE Oltenia

CE Oltenia is active in mining, power generation, and local heat supply. The package is expected to help the company improve its environmental footprint and, at the same time, reduce its operating costs. The restructuring plan involves financial assistance for the implementation of the decarbonization program.

The decarbonization plan for CE Oltenia envisages a phased closure of coal-fired units Rovinari 3, Turceni 3 and 7 and Işalniţa 7 and 8 and outsourcing the Craiova II Branch with its two units. The company also vowed to gradually shut down coal mines Husnicioara, Peşteana and Lupoaia and remediate the sites of coal mines Tismana and Jilţ Sud.

Investment of 2 GW in gas, renewables

The plan enables the diversification of the energy mix with investments in renewable and gas-based energy with a cumulative installed capacity of up to 2 GW. It includes the construction of eight solar plants in Turceni, Rovinari, and Işalniţa with a total installed capacity of about 725 MW. CE Oltenia intends to install natural gas units with a total capacity of up to 1.3 GW in Turceni and Işalniţa and refurbish and modernize a hydropower plant in Turceni with an installed capacity of 10 MW.

The decarbonization program will be completed in 2026, according to the restructuring plan. The number of employees is envisaged to drop to 4,500 from the current headcount of nearly 11,000.

Green objectives of decarbonization

The package has been approved under the European Union’s state aid rules, the European Commission said. It will enable the company to restore its long-term viability and finance its restructuring plan, it claims. The commissioners emphasized its importance “for the reasons of safety and adequacy” of the country’s energy system.

Romania’s National Recovery and Resilience Plan supports the green objectives of decarbonization. The commission’s state aid assessment of the restructuring plan for CE Oltenia is separate from tracking the implementation of the NRRP.

The commission concludes the aid will support the decarbonization of electricity production in Romania and, more generally, in Europe. The objectives are structured in the European Green Deal and within EU environmental rules.