Renewables

Romania’s Oltenia to switch from coal to solar power using proceeds from CO2 permits

Romania Oltenia switch coal solar power proceeds CO2 permits

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Published

September 16, 2021

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Published:

September 16, 2021

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Romania counts on EUR 10 billion from the EU’s Modernization Fund in the current decade. The facility redirects money paid for CO2 emission certificates to ten member countries. The government has projects worth EUR 671 million for the construction of solar power plants in coal complex CE Oltenia, which is set to close by 2032.

The Ministry of Energy in Bucharest said it submitted the first applications for financing from the Modernization Fund to the European Investment Bank (EIB). The projects are for photovoltaic units intended to replace coal-fired thermal power plants run by Romanian state-owned Complexul Energetic Oltenia – CE Oltenia and for an overhead power line.

The European Union is striving to become carbon neutral by 2050 to help limit global warming. It is making environmental standards stricter and supporting the transition from fossil fuels to renewable energy.

The two biggest photovoltaic projects for CE Oltenia are worth EUR 115 million and EUR 114 million

Ten countries, including Bulgaria and Croatia, are eligible to tap on the EU’s Modernization Fund. The grants are funded by revenues from the auctioning of 2% of the total allowances under the Emissions Trading System (EU ETS) and additional carbon dioxide certificates transferred by beneficiary member states.

EIB classifies projects submitted by governments as priority and nonpriority investments and the European Commission decides whether the bank would disburse the required funds.

Landfills in Oltenia coal land to get new life

The eight solar power plants will be installed on the locations of CE Oltenia’s dumps for mining waste and ash and slag. Total capital expenditure is estimated at EUR 671 million, of which Romania intends to cover EUR 470 million from the Modernization Fund.

The two biggest projects are worth EUR 115 million and EUR 114 million. CE Oltenia is supposed to slash coal power plant capacity by 82% to 660 MW by 2027 and Romania plans to phase out the fossil fuel entirely by 2032.

Transelectrica may cover its entire overhead line project with a EUR 23 million grant from the EU’s Modernization Fund

EIB has a major role within the European Green Deal and it is responsible for loans from the EU’s EUR 750 billion recovery mechanism Next Generation EU (NGEU).

Romania’s transmission system operator (TSO) Transelectrica expects a planned new 400 kV line in the country’s southeast to enable the installation of 685 MW of renewable energy capacity. The Constanţa Nord – Medgidia Sud project is worth EUR 23 million and the government seeks to cover it entirely from the Modernization Fund.

Grants from Modernization Fund to be directed to cogeneration, storage, hydrogen

Secretary of State in the Ministry of Energy Dan Drăgan said last week that the government expects EUR 10 billion from the fund during the current decade. The ministry estimated the sum at EUR 6.7 billion less than a year ago. Prices of greenhouse gas emission permits climbed more than 80% this year and recently closed at an all-time high of almost EUR 63 per ton of CO2 equivalent.

Romania plans to also use the funds for combined heat and power units, energy storage and hydrogen production, Drăgan noted. He highlighted the opportunity to finance combined cycle gas power plants with a 30% share of hydrogen. The government is preparing state aid for a smart gas distribution network in the Oltenia area that will become able by 2030 to transfer only hydrogen, according to the state secretary.

The implementation of the first projects should start by early next year, Drăgan said.

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