The Romanian energy market, particularly in natural gas and electricity, has experienced significant transformations in recent years due to both internal developments and broader European Union policies. Romania has managed to maintain a balanced energy mix, with substantial contributions from oil, natural gas, nuclear, and renewables. However, there has been a decline in thermoelectric and hydroelectric capacities, while renewables, especially wind and solar, have seen only modest growth.
Energy consumption is dominated by the residential, transport, and industrial sectors, but there has been a noticeable reduction in industrial energy use, particularly in chemicals and petrochemicals, iron and steel, and paper and pulp. Meanwhile, the transport sector's energy use has increased, highlighting areas for potential energy efficiency improvements.
Energy prices, especially for electricity, have surged dramatically, placing Romania’s among the EU's highest, largely due to supply constraints and geopolitical factors. The high level of taxation in the gas sector impedes investment. Significant investments are urgently needed to modernise Romania’s ageing energy infrastructure, improve interconnectivity, and expand electricity storage capacities to support the anticipated growth in renewables. Romania’s energy transition is closely tied to EU regulations, which necessitates a focus on sustainable energy production and efficiency. Key challenges for Romania include its continued dependence on fossil fuels, ensuring energy security amidst geopolitical tensions, and overcoming regulatory barriers that hinder market competition and innovation.
In our view, there are important and strategic requirements for Romania’s energy sector. In terms of the decision-making process, the Romanian authorities should ensure a transparent consultation process involving all interested parties and establish appropriate measures related to intervention on the energy markets. The unpredictability of policy interventions deters potential investments in the energy sector. Investors are typically cautious about entering markets where policy and regulatory frameworks are unstable and a dysfunctional policy-making process obstructs the country’s ability to modernise its energy infrastructure and transition to renewable energy sources, in which significant investments are needed to meet EU climate targets.
The ageing infrastructure requires modernisation to support the energy transition, and rising energy prices present significant social and economic challenges, but also an opportunity to increase investment in energy efficiency. This involves promoting heat pumps, improving building energy performance, and creating a stable and favourable regulatory environment for the energy sector to encourage private initiatives. On the other hand, a proper and targeted protection scheme for vulnerable consumers will need to answer the social challenges in an innovative and proactive way. Other areas of investment are oriented to the integration of renewable energy sources into the national system to reduce the dependency on fossil fuels, including upgrading grids for better interconnectivity. Moreover, expansion of energy storage capacities for both electricity and natural gas are critical for the sector’s sustainability, alongside contingency planning for future geopolitical crises that could affect the energy supply.