Marian Mândru: Turning homes in Romania into energy prosumers can reduce the negative effects of rising electricity prices

Interview with Greenpeace Romania’s expert on renewable energy and prosumers on current issues related to them

The Bridge of Friendship, 12 April 2023

General developments with prosumers in Romania

What is the current state of play on the issue of prosumers in Romania? How many are there and what are the trends related to their establishment?

At the beginning of 2023, according to the Romanian Energy Market Regulator (ANRE), there were 40 000 prosumers in Romania, i.e. small producers-consumers of energy. This number includes a number of companies, companies that produce their own energy but do not have energy production as the main objective of their economic activity. I would like to clarify that there are also natural and legal persons who produce their own energy.

It is estimated that another 100 000 new consumers will be added this year. There is a financing programme that is quite supportive of this trend, and there is greater appetite against the backdrop of rising energy prices and instability on the energy market. There is also a great deal of interest on the part of citizens to produce their own energy and even invest their own money to become prosumers. At the same time, there are some relatively new tax incentives. VAT on photovoltaic panels has been reduced to 5%. And that, I think, will have an impact on the PV market, we will see how big.

Explanations for the boom of prosumers in Romania

How did this boom come about and what role have energy distributors and media campaigns played in this growth?

It’s a very long story. Theoretically, since 2008, when a renewable energy law was adopted in Romania, it has been possible for citizens to generate their own energy. Unfortunately, for 10 years, not much was done, and the brave people who wanted to produce their own energy faced very, very big obstacles during that decade. It took up to 2 years for a person who built their own PV system to be able to connect to the grid and sell or supply the grid with the extra energy they produced, i.e. the energy they could not consume.

In 2018 there was a major change in the legislation. The term “prosumer” was clearly defined. There was an important adjustment in the regulations and from 2019, the Environmental Fund Administration started a funding programme that promised to provide a rather generous funding of 20,000 lei (which is about 4,000 euros) for a PV system with a minimum capacity of 3 kilowatts. This is a generous grant. Unfortunately, due to bureaucracy and lack of administrative capacity, this programme has stalled several times. There was a big scandal, including in the media, and there were lawsuits between citizens and this institution. It took another 2-3 years to get things back on track. This programme provided funding for tens of thousands of people. On the other hand, the delays of this programme have delayed the development of the market for several years. There were a lot of people who probably had the financial ability to install a PV system, but while they were waiting for that funding, they didn’t want to invest their own money. In other words, this programme brought many benefits, but at the same time, for a while, it did a lot of damage, blocking the PV market in Romania.

What is the position of distributors and suppliers? They were not open from the start. It was a period of adjustment, of accepting that there were new players on the energy market. Consumers were seen as entities that were not necessarily wanted on the grid, but with the changes in the law, with the pressure from citizens, with the pressure from the media, things have changed. And if I tell you that it used to take two years to be able to connect and supply energy to the grid, now things have improved fundamentally. In conclusion, it has been a long process that started with a change of mentality, of legislation, of technological adaptation, and now we are here with more than 40 000 prosumers. That is not as many as it could be, but we hope that this growth will continue and that the regulatory framework will be increasingly favourable to citizens who want to become prosumers.

Electricity distributors’ gain from prosumers’ existance

What do distributors gain from prosumers supplying electricity to the grid?

They benefit. The distributor gets a share of the final price – the distribution tariff. The fact that the prosumers put energy into the grid is visible when the supplier eventually sells the energy to a customer. This is one of the profits. There is another gain, which is a little more difficult to explain and is related to technological losses in the network. Once there are a certain number of prosumers on the grid, these distributor losses decrease, which in effect means that distributors earn more by being more efficient.

State and EU policies that encourage the appearance of prosumers

Let us also look at this phenomenon of prosumers from the point of view of the Romanian state, which, through the legislation you are talking about and through the Green House programme, is encouraging the protection of such entities on the electricity market – prosumers. So what can be said about this Green House programme, in particular, what problems is it encountering or how successful is it and to what extent is the Romanian State doing something that is well conceived, that is to say, in consultation with NGOs or European practices and so on?

Yes, the photovoltaic Green House is a programme managed by the administration of the Environment Fund. As I said, it is about EUR 4 000 in funding for a system with a minimum capacity of 3 kilowatts. It does not take into account the income of the beneficiaries. I mean that anyone can access this programme, anyone who lives in an individual house. Here would be the problem.

As I have already said, it has not been so easy for this programme to gain popularity. There were a lot of organisational problems due to the large number of people who wanted to apply in the first edition of the programme, when 30 000 citizens applied on an IT platform that collapsed. There were suspicions of fraud. Bureaucracy and administrative ineptitude made things take longer than they should have. There is now a lot of funding available for this programme. There is even talk of increasing the amounts invested in this programme. The main problems remain the ability to quickly assess citizens’ requests and the number of installers on the market. The installer market has grown with this programme, there was a need for many more specialists to install these PV systems. As far as the interest of the Romanian State is concerned, it is trying to keep up as much as possible with the requirements of the European Union and is late in transposing European directives in this area. The Romanian State cannot remain aloof from this wave of small-scale energy production and cannot stop its citizens from producing their own energy. This is happening almost everywhere in Western Europe, and Romania should join this trend. Unfortunately, the Romanian state does not yet see this energy decentralisation as a priority, by which I mean the prosumers, the energy communities. It is still thinking about large-scale production capacities, probably based on fossil fuels, and it still does not fully understand the benefits of having more and more small producers and more and more powerful ones.

Is there a tax on prosumers in Romania?

In late 2022, there was a scandal about taxing self-consumption of electricity generated by prosumers. What has been clarified since then? On the one hand, there was talk that there would be taxation. On the other hand, the Energy Minister himself said that there would not be. What has happened subsequently?

What happened was that Romania, because it was late, finally transposed a European directive on renewable energy, and that also meant adapting the legislative framework for prosumers. And I do not know, maybe by mistake, I do not know why there was rather unfortunate wording there and theoretically A.N.R.E. – the energy regulator in Romania – was supposed to apply taxes on the energy produced and consumed by prosumers. The European legislation talks about the possibility of enforcement under certain conditions. In the first draft of this government regulation, there was talk of actual implementation. At the moment, there is no charge on the energy produced and consumed in the home by consumers. It is left in the legislation that such taxes can apply in the future. Unfortunately, this is like an axe hanging over your head. It means that it is ultimately a question of political will to implement such a thing. And I don’t think the time has come yet – there are hardly tens of thousands of prosumers. I don’t think they pose a threat to the stability of the grid right now.

Can there be prosumers living in apartments?

You mentioned that right now these prosumers are more like households which own a house. What about apartment dwellers, who, I guess, could still in the future or should in the future have that opportunity to become prosumers? Is anything being done in that direction so that those living in apartment blocks can also become prosumers?

As far as I know, there are some initiatives of this kind at the moment. Unfortunately, the photovoltaic systems that are installed in these blocks only cover the energy consumption in the common areas, like the staircase, the common rooms, and the rest of the energy is supplied to the grid. In principle, even if a block is covered with PV panels, the citizens themselves will not benefit directly from the energy produced. There must be a regulation that allows this energy produced to be shared, and we believe that there is the possibility of this in the current legislation, but it will be up to the A.N.R.E., the energy market regulator, in the near future. On the other hand, there is also the possibility that these units, these owners’ associations, could take the form of energy communities, and the law also says that these energy communities must have the right to consume the energy that they produce within them. So now there are more options in the legislation, it is a matter of political will and faster issuance of regulations by the A.N.R.E.

Greenpeace Romania and prosumers

Let us conclude the discussion with what Greenpeace Romania is doing to promote consumer empowerment in Romania. What problems do you see at the moment? What solutions do you propose in discussions with decision-makers?

We are pleased with the growth that is being seen in the market. We have been campaigning for renewable energy and prosumers for more than six years now, the situation has really improved significantly. Over the years we have put all the pressure we can on Parliament, the A.F.M. (Environment Fund Administration). and the A.N.R.E.

We have also tried to have a dialogue with the distributors. We are seeing improvements. This is the positive. We believe there can be many producers in the network, so we continue to support that number to increase. Sometimes that means funding, sometimes it means tax exemptions, better regulation, and the important thing is that in the near future we will also see investment in the networks so that we do not technically limit the number of prosumers that are connected to the network.

I also think that it is important to pay more attention to the most vulnerable, that is to say, those who are having difficulty paying their energy bills should be particularly assisted. They are not few. There are many Romanians who are struggling to pay their energy bills or who are struggling to heat their homes sufficiently and who could become prosumers. This is not the only solution, but it could help reduce the pressure on people’s personal budgets.

Marian Mândru is an energy and climate campaigner at Greenpeace Romania and promotes clean and renewable energy.

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