Sharp plunge in Romania’s energy consumption

KUALA LUMPUR, Malaysia - July 16, 2013 - PRLog -- Romania’s economy continues to expand by 1.5-2% this year and possibly more in the coming years driven by industry, but the negative output gap remains wide. The change in the structure of economy, rather than investments technology, will however push down the energy consumption therefore improving energy efficiency. Energy market liberalisation will particularly result in higher natural gas prices [hence shrinking consumption in sectors like fertilizers production that has capitalised on cheap gas so far] while the renewable energy support mechanism has already pushed up end-user electricity-related cost. Domestic consumption of energy will stabilise at a lower level in response to higher energy prices. Sectors like chemistry and metallurgy are under significant pressure. Hopefully, the less energy-intensive sectors [more value-added] will offset the predictable decline of  energy-intensive sectors and furthermore support further growth.

Romania’s net energy consumption decreased sharply by 11% y/y in Q1 after a more moderate 1/6% y/y decline in 2012. The decline in energy consumption occurred in spite of rising GDP – 0.7% y/y in 2002 [2.1% y/y filtering out the volatile impact of agriculture] and 2.2% y/y in Q1 of 2013. Technically, the energy intensity decreased visibly in 2012 and rather sharply in Q1 of 2013. To be more specific,  the improvement in country’s energy intensity was driven by

a shift in the industry structure that is more curved towards less energy intensive sectors [automobiles, compared to steelmaking, chemical industry or fertilizers production]
warmer weather in Q1 of 2013. The weather plays an important role in energy consumption, particularly in the winter quarters. The impact of renewable energy capacities last year and in 2013 was also visible in the structure of energy inputs. Besides hydropower generation returning to normal levels, more wind power left the coal-fired plants under pressure. The government intervened in order to prevent excessive negative impact of volatile renewable energy production – some 8.7% of the total power generation as of Q1. On  one hand, it extended limited support to coal-fired plants by allowing them better access for a guaranteed part of their capacity and on the other hand the executive trimmed down the support given to renewable energy producers under law 220/2008 [on quota and trading system of green certificates]. In fact, this latter action turned to be the key factor in this first half of the year – besides the visible decrease in energy consumption.

These are only a few of the insights in the new Intellinews Report : Romania Energy Sector. (http://www.emergingmarketsdirect.com/europe/intellinews-r...)  http://www.emergingmarketsdirect.com/europe/intellinews-romania-energy-report-march-2013/