Wednesday, April 20, 2011

Romania to close half of its power plants by 2035

BUCHAREST, April 20 (Reuters) - Romania needs up to 40 billion euros of investment in new electricity generation, while it is forced to close a third of its outdated power capacity by 2020 and more than half by 2035, the economy ministry said.

A draft of the ministry's energy strategy by 2035 released on Wednesday estimates the European Union state will need 30-40 billion euros ($43.2-$57.6 billion) to create new production capacity of some 14,800 megawatts to replace aging units.

Successive government haves held back energy investment for years, stalling reforms, sell-offs and public-private partnerships, and almost all of the country's coal, gas, nuclear and large hydro-power plants are state-owned.

A government plan to restructure producers into two state-owned energy generators, currently on hold due to legal challenges, has also discouraged foreign investment and has been criticised as lacking transparency.

In the draft energy strategy, investment priorities include upgrades to three large lignite-fired power holdings by 2015 and the addition of two 720 MW units at the country's sole nuclear power plant in Cernavoda by 2020.

It also envisions a new 1,000 MW hydro power plant and a second nuclear power plant of up to 3,200 MW by 2035 and continued support for renewable energy, particularly wind power.

That is the one sector in which Romania has drawn strong interest from the likes of Czech CEZ (CEZPsp.PR: Quote), Italy's Enel (ENEI.MI: Quote) and Energias de Portugal (EDP.LS: Quote).

But the strategy does not outline specific measures to secure funding, and it comes at a time when more and more energy investors are leaving Romania.

Earlier this year, four major foreign firms pulled out of a partnership with the state to build two nuclear power units. [ID:nLDE71M18J]

The strategy also said renewable energy, including hydro power, should account for 38 percent of all electricity by 2020. It sees power consumption growing by just under 3 percent on average each year until then.

(Editing by Jane Baird)

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