This story is part of an ongoing Forum on Energy series on nuclear energy in emerging markets across the globe. See more entries here.
Romania, a large country in south-eastern central Europe and member of the European Union, has found that securing financing to add two reactors to its single nuclear power plant in Cernavodă has been difficult. After a decades-old joint venture between major European groups collapsed, Romania has turned to China to construct its two new reactors, CANDU reactors 3 and 4.
Like many countries in the region, Romania is rich in natural energy resources, including uranium and coal. Despite this abundance, the country is dependent on imported Russian natural gas and oil. Its interest in expanded nuclear energy can be seen as a move to increase energy independence, to improve living circumstances and to lower carbon emissions. Its nuclear power plant — which currently operates two reactors — provides a fifth of the country’s energy at a lower cost to all other energy sources except for hydro.
The Romanian electricity sector is managed by Trans Electrica, a government-sponsored transmission and system operator, and Op-Com, the commercial operator. It manages eight distribution companies that are supplied by hydro, thermal, nuclear and co-generation producers, in addition to more than 120 independent suppliers. The electricity market became fully liberalized in 2007, at which point barriers to import and export were removed.
Between 2015 and 2035, Romania hopes to revamp its electricity sector by investing $123 billion in — among other projects — power lines and interconnections as well as energy production, including completing construction on two planned nuclear reactors. But Reuters reports that government policy toward investors has historically been unstable, including changes to issuance of “green certificates” and the introduction in 2014 of an unexpected tax on facilities such as oil wells, dams and electric poles, which the government then said it would cut by a third in 2015.
Romania plans to reduce its carbon emissions by incorporating more renewable energies, nuclear power and energy efficiency. According to the New York Times, as of 2013 the country has some of the highest polluting coal-fired power plants in the European Union, and the state-owned Hidroelectrica — the major hydro power generator — was in insolvency. But Romania hoped to reduce its reliance on imported fossil fuel energy by expanding use of renewables to 24 percent of its total energy mix by 2020. Investors, buoyed by a “green certificate” program, invested heavily, particularly in wind projects. The plan stipulates that energy distributers are required to purchase government-issued “green certificates” from renewable energy suppliers for every megawatt of power sold. This cost is passed on to consumers. With more than 2000 MW now installed and a similar amount in construction, the country is near its goal its 24 percent energy goal. But in 2013, the government called for a steep cut in the number of certificates and a suspension on the issuance of half the certificates, starting in June 2014. The sudden shifts in the support scheme for renewable energy projects has panicked investors and caused them to seek opportunities elsewhere.
History of Nuclear
Romania first considered nuclear energy in the early 1970s, when it decided to build a five-unit power plant at Cernavodă. After considering both Russian and Canadian technology, Romania decided on the CANDU-6 type reactors. Construction began on all five units, but in the late 1991 it was decided to focus on completion of the first reactor. This was completed in 1996. To date it runs at 86 percent capacity and in 2006 it supplied 176 terajoules (TJ). In 2000, the government prioritized construction of unit 2, which was completed in 2007. The state nuclear power corporation Societatea Nationala Nuclearelectrica (SNN), established in 1998, operates Cernavoda. In 2013, the state sold 10 percent of SNN in an IPO in line with its commitments to the IFC and EU.
In 2007, Romania decided to move ahead on construction of units 3 and 4 simultaneously, and to set up a joint venture with SNN called Nuclear Electrica. Initially it had six collaborating investors, but they pulled out one after another by 2013. Shortly thereafter China General Nuclear Power Group (CGN) expressed an interest in investing in the project. By September 2014, CGN had agreed to be the selected investor in the project with SNN building the two reactors, which will be updated versions of CANDU-6 . Plans to build a fifth reactor have been postponed due to plans to build power plants in other areas of Romania.
CGN’s construction of the CANDU-6 reactors is scheduled to start in the beginning of 2015.