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Romania's transition to green energy, a €20 billion financing opportunity for banks
Romania’s transition to green energy represents for the banks and opportunity for financing of 20 billion euro, according to an analysis made by a management consultancy company.
The consultancy company McKinskey & Company Romania estimates the potential of the green energy market (solar panels, heat pumps, insulation) to over 30 billion euro until 2040.
At present, the Romanian state is committed to offer subsidies worth over 300 million euro through the programme Green House, exploring supplementary financing options of over 250 million euro through the European programme RePowerEU.
According to the research, these subsidies are dedicated, for the moment, to the acquisition and installation of photovoltaic panels. Out of the rest of the sum to 30 billion euro it is estimated that approximately 20 billion euro could be covered by the banks through loan offers, which could accelerate the transition to the products of green energy.
‘The costs for the installation with photovoltaic panels are on average 1,200 – 1,400 euro/kW and can get to 15,000 euro for big installations, a significant financial commitment for many Romanian consumers in a context of financial instability and lack of predictability which could help them to estimate and justify this investment. It could be an extremely profitable one, as the majority of those who use this solution recover their investment in approximately three years (with the support of the Green House) and six years (without the support of the Green House), the analysis shows.
The expenses of the Romanians who want complete green energy solutions do not stop here – adding a heat pump to replace gas heating and a battery to stock the excess of electricity production can bring a supplementary cost of over 20,000 euro.
At the same time, the banks in Romania have the possibility to cover the deficit of financing, helping the clients with special lending offers managing at the same time to meet their own objectives for sustainability and growth.
In addition, there are currently few successful examples of players brokering the consumer process, from choosing the right solutions to financing and installing them.
According to the source quoted, to fill this financing gap, banks have the opportunity to come to market with new flexible financing solutions that allow customers to use their green energy savings to repay their loans.
In addition, bank partnerships with energy suppliers can simplify the process for consumers to connect to the grid and become prosumers, as some offer support in brokering the process with distribution companies.
In order to meet the EU objective to become energy neutral by 2050, all Member States, including Romania will have to phase out all greenhouse gas emitting energy systems and adopt environmentally friendly solutions.
In the National Integrated Plan in the domain of energy and climatic changes, Romania included measures for the reduction of carbon emissions, growth of energy efficiency and growth of the share of renewable energy sources in the total energy production.
Among these there are: electricity with zero carbon missions. ‘The consumers must be encouraged to give up polluting energy sources, such as coal and natural gas, and to adopt renewable sources, such as solar energy or wind energy’ the material says.
As regards the electrification of the energy system, it is necessary to make the transition to electricity as the main source of energy, including as regards the method for residences heating.
In order to encourage the transition to green energy, the Romanian government introduced a series of subsidies which allow the consumers to adopt more ecological measures and solutions: VAT of 5% instead of 19% for heat pumps and photovoltaic panels as well as grants for up to 4,000 euro for the installation of photovoltaic panels.
The budget for 2023 includes a little over 80,000 such subsidies. They could be associated with a supplementary budget of approximately 250 million euro through the programme RePowerEU which would offer subsidies of up to 5,000 euro – but the confirmation is still underway.
Fiscal measures (such as local tax reductions) could also be considered to further stimulate the adoption of such energy solutions.
On a growing market, where approximately 45% of the Romanians state their interest in the installation of solar panels in the year to come (according to a study of an electricity company, made at the end of 2022) the financing plans of the government reach the current capacity for installation for next year, but they remain insufficient to meet the requirements of the consumers, consider the authors of the analysis.
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