Photo: Oradea City Hall
The Romanian Government has drafted a state aid mechanism for the production and transport of geothermal energy for district heating or cooling systems. The proposed scheme would be worth EUR 300 million, sourced from the European Union’s Modernisation Fund.
In addition to solar and wind energy, hydropower and battery energy storage systems, Romania is increasingly counting on geothermal potential for its energy transition and decarbonization efforts. The government in Bucharest is preparing EUR 300 million in subsidies for geothermal district heating or cooling systems, Profit.ro reported.
It drafted a state aid package that would be covered from the Modernisation Fund. It is a tool for supporting investments in renewables, energy efficiency, storage and networks and a just transition in 13 European Union member states with lower incomes. The funds are from the proceeds of the sales of greenhouse gas emission certificates within the EU Emissions Trading System (EU ETS).
The proposed subsidies are aimed at the production and transport of heat from geothermal energy, including modernization projects, to the points of connection with the district heating network, according to the document.
No need for auction as budget is sufficient for all mature projects
The budget would be divided into EUR 50 million per year through 2030. The funds are intended to cover the net additional costs of the projects – funding gaps. Typically, they are determined as the difference between the net present value of the factual scenario and the counterfactual scenario over the life of the project, the update reveals.
The government estimated that nine projects would split the available funds
There would be nine beneficiary projects, translating to EUR 33.3 million each, the government estimated. Eligible are thermal energy producers and municipal authorities and their units.
There won’t be a competitive bidding process for allocating the state aid, as the Ministry of Energy received too few mature proposals since 2023, within its exploratory public call, the document adds. The government has concluded the budget would cover the potential demand.
Bucharest, Timișoara among potential beneficiaries
State-owned Electrocentrale București (ELCEN), which produces thermal energy for the district heating system in the capital Bucharest, and National Company Bucharest Airports (CNAB), are among the entities interested in the subsidies.
Bucharest’s Sector 1 administrative authority and the Municipality of Timișoara are in the group as well. The latter, Romania’s fifth-largest city, established cooperation last year with OMV Petrom for district geothermal heating.
The article noted that Green Tech International, listed on the Bucharest Stock Exchange (BSE or BVB), is on the list. It operates geothermal wells in Călimănești-Căciulata in the country’s south. The company also supplies heat and sanitary hot water in Nădlac in Arad county in the northwest.
One other company interested in the state aid scheme is Transgex. The city of Oradea, where it is based, inaugurated an 18 MW geothermal district heating plant two months ago.
The government recently launched a EUR 56 million grant program for municipal authorities for geothermal energy projects.
In other relevant news from Southeastern Europe, Slovenia launched a EUR 51.2 million cofunding package for green district heating and cooling ten days ago, for companies and cooperatives.
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