The current paper analyzes the sustainability of the renewable energy sector in Romania providing financial information on the companies and analyzing their performance. The sustainable development of the renewable energy sector relies on the existence of suppliers and a demand for their output. The novelty of this studying lies in its linking the switch to renewable energy to the financial performance of the companies operating. In our study, we have compared companies producing renewable energy to the ones producing energy from traditional sources.
Our aim has been to examine whether there is a difference in the financial performance of the companies. A second objective has been to verify whether the companies might be regarded as sustainable, to the extent of completing the switch to renewable energy. Another objective has been to analyze how government support can help this sector, as the investment in production capacities is asset-intensive and would require heavy funding on the part of investors. Our assumption is that the development of the renewable energy production sector is strongly linked to the stability of the companies operating in the sector.
It is not necessary to dispute the need for a switch towards green energy. Several studies have focused their attention on the harmful effects of the classic energy sources [5
]. Most of the studies analyzed do not look at the companies producing, but they look at the end goal of our study, i.e., the possibility to achieve a complete switch to renewable energy sources (RES). Lehmann [6
] has investigated the feasibility of Japan supporting 100% of its energy through RES, Krajačić et al. [7
] have elaborated a study on the island of Mljet in Croatia, Lund and Mathiesen [8
] have investigated the possibility of Denmark switching to 100% RES, and Connolly et al. [9
] have presented the technical and economic impact of a 100% renewable energy scenario for the EU. Their study exhibits a nine-step transition from primary fossil fuels to renewable energy. What is problematic about this study is that even though it takes into account the cost of the investment and the energy cost but it does not look at the financial stability of the companies involved in the process. Mundaca and Markandya [10
] provide an overview of the regional progresses of the switch to green energy, concluding that despite the multitude of policies, the impact remains insufficient.
The switch towards a more environmentally friendly vision can also be observed at the local level with cities like Aspen (Colorado), Burlington (Vermont), and Greensburg (Kansas) already using 100% renewable energy, and others like Copenhagen, Sønderborg, Aalborg, Flensburg, and Seattle switching to 100% RES or with a target of CO2 neutrality in the future.
At the micro level, the attention is particularly focused on companies operating in this sector, whilst at the macro level the main concerns are the trends and prospects of energy supply and demand. However, overall, these models attempt to better capture the interactions taking place within the sector, as well as those between this sector and the other components of the economy, outlining the position of the energy sector.
] focuses her study on the sustainability of the wind power sector in the Baltic States. The investments in the renewable energy sector would not have been possible without the state support programs. The study also shows that the financial stability of the companies is moderate but with time there is some improvement in time. Ming et al. [12
] have analyzed the renewable energy investment and financing in China, focusing their study on the wind farms and the solar energy. Gupta [13
] has studied the effects of economic and societal factors on the financial performance of alternative energy. His results indicate that that an increase in local market return, oil prices, or technology stock prices positively influences the stock returns of alternative energy firms. He also finds that in countries where the technology and innovation are developed, alternative energy firms have higher benefits.
Other studies have focused on the differences between the price of the various types of energy on the stock market [14
]. Other analysis types, such as Bohl’s study [16
], could not be reproduced for the Romanian market as there are few companies that operate in the renewable energy sector and that are listed on the stock exchange.
The Europe Agenda 2020 was set to create a real change for the people living in the EU [17
]. In order to meet the targets established by the Europe Agenda 2020 with regards to energy, the Romanian Government has introduced the Electrical Energy Law [18
], with subsequent amendments [19
] and [20
]. The introduction of this legislation has generated an increase in investments in Romania. A study that focuses on the impact of renewable energy on the economy has been published by Paun and Paun [21
]. The success of the law can be quantified if we look at the share of electricity produced from renewable sources in the gross final consumption of electricity in the country in 2013, which was 41%, above the target of 38% assumed by Romania for 2020, and over the intermediate target of 35% indicated for 2015, according to the Ministry for Energy. Additionally, Romania has negotiated with the European Commission that 24% its of total energy consumption will be from renewable sources by 2020. This target includes both electricity and heat energy and fuels. The National Energy Regulatory Authority (ANRE) announced that this target had already been reached on 1 January 2014. For the electricity segment, the target set for 2020 is 38%, while the intermediate target for 2015 was 35%. However, according to the information provided by authorities, Romania has already exceeded both thresholds. This is mainly due to two factors. Firstly, Romania has a well-developed hydro energy network which constantly provides over 20% of the energy in the grid. Secondly, renewable energy production was promoted through a support program which obliged companies selling energy to have a certain amount of energy purchased from RES. The source of energy could only be proven with the help of green energy certificates, which were sold by the renewable energy producers. Renewable energy producers receive a certain number of green certificates for each MW delivered into the grid [22
]. Thus, besides earning money from the sale of energy, these producers would also earn money from the sale of green certificates. The value of one green certificate has varied in time between 27 and 55 euros. This support program has created an incentive that has attracted around 8 billion euros in investments from 2006 to 2010. With energy expenses for the population increasing (due to the incorporation of the new cost related to green certificates), the government has decided in 2012 to postpone the issuance of green certificates and has lowered the quota of green energy sold. This has stopped one of the sources of revenue for companies producing renewable energy and has led to financial difficulties for such companies, putting a strain on the entire system. One of the objectives of this paper was to see whether the decision has led to major issues.
Furthermore, countries such as Spain, Italy, Greece, Bulgaria, Poland, Germany, and the Czech Republic have assumed targets related to the share of renewable energy in total energy consumption by 2020 that are less than the target of Romania (24%), except Estonia, which has a target of 25%.
The data published by the National Institute of Statistics on energy resources, Table 1
and Table 2
, shows that in 2015 primary energy resources increased by 2.0% and electricity production grew by 7.8%, compared to 2014. Primary energy resources in 2015 totaled 32.8736 million tons of oil equivalent, an increase of 652,400 tons of oil equivalent compared to 2014.
Domestic production totaled 220,426 million tons of oil equivalent, an increase of 163,900 tons of oil equivalent compared to the previous year, while imports were at 1.0831 thousand tons of oil equivalent. Moreover, in 2015 electricity resources were 6.9373 million kWh, recording an increase of 5.0135 billion kWh (+7.8%) compared to 2014.
The output of power plants was 28.2387 billion kWh increasing by 1646.0 million kWh (+6.2%). The output of hydropower plants was 16.6865 billion kWh, decreasing by 2311.0 million kWh (−12.2%) and the output of nuclear power stations was 11.6398 billion kWh, decreasing by 35.8 million kWh (−0.3%).
During the year (2015), the output of wind power stations was 7.0448 billion kWh, reporting an increase of 2.3212 billion kWh compared to 2014, while the photovoltaic solar energy produced in this period was 1.9874 billion kWh, up by 692.1 million kWh compared to 2014.
The final consumption of electricity in this period was 52,565.0 million kWh, with 6.0% higher than in 2014; public lighting increased by 30.6%, while household consumption increased by 3.7%. Exports of electricity stood at 10.5037 billion kWh, marking an increase of 2.3038 billion kWh. Domestic consumption in networks and stations was 6.3043 billion kWh, decreasing by 245.4 million kWh.
The tables below highlight the overall situation of energy resources for 2015, and the changes that occurred in 2015 compared to 2014. In the first table we can see the production/import of main primary energy resources, while the second table displays the electrical power balance.