Large industrial electricity consumers such as aluminium producer ALRO face significant challenges in securing long-term contracts with renewable energy producers, particularly because of their energy consumption profile, Alina Rușanu, Director Energy Resources at Vimetco ALRO, said at the Green Energy Conference, organized by The Diplomat-Bucharest.
“The challenges are very significant and come in several categories. The main challenge is long-term contracts, where a consumer the size of ALRO, for example, with a 24/7 baseload consumption of several hundred megawatts, finds it very difficult to have one or several contracts with solar or wind producers. It is very difficult to integrate this energy,” Rușanu said.
She said that, beyond the technical and contractual challenge of matching renewable generation with ALRO’s continuous consumption profile, long-term power purchase agreements also create significant financial requirements.
“Apart from this aspect, there are also financial issues. A long-term contract with a relatively predetermined price requires certain balance-sheet provisions and financial guarantees, and all of these, added together for each contract, to cover 10-20% of our consumption, reach enormous values,” Rușanu said.
“You cannot even imagine what guarantees we would need for 10-15% of our electricity consumption,” she added.
ALRO is nevertheless continuing discussions with renewable energy producers as it seeks to increase the share of renewable electricity in its supply mix. “It is true that we are continuing to try. We have tried before and we are in continuous discussions with all renewable energy producers, but it is quite complicated,” Rușanu said.
Rușanu said the company has proposed a mechanism to the authorities that could help industrial consumers access electricity at a more predictable price while also facilitating medium-term PPAs with renewable producers.
“We have found what we believe is a solution, which we have also proposed to the authorities. We have been proposing it for more than a year,” she said.
According to Rușanu, the proposal builds on an existing mechanism through which industrial consumers can benefit from electricity at a certain price under specific obligations.
“We went further than the current provisions and somehow linked this regulation to the possibility of concluding medium-term PPAs,” she said.
Discussions with the authorities are continuing, with ALRO also seeking to bring renewable energy producers into the discussions.
“We are still in discussions with the authorities. We are trying to bring the producers to the table as well, because we genuinely believe that there is a solution using this mechanism,” Rușanu said.
Rușanu said energy independence has remained a long-standing objective for ALRO, which has pursued several significant investment projects over the years.
“As you know very well, our concern has always been how to achieve at least a small degree of energy independence. Over time, we have had some quite significant investment projects,” she said.
One of the company’s major projects is an 800-MWh battery energy storage system, which ALRO plans to implement in 2028-2029.
“At the moment, we have an 800-MWh battery project, which we will implement in 2028-2029. We also have a solar panel project,” Rușanu said.
The company has also investigated the potential for installing solar panels on its own facilities, but the scale of the project illustrates the challenge faced by a large industrial consumer.
Rușanu said the rooftop solar project is currently on hold because of the high costs associated with grid reinforcement, although ALRO intends to resume it.
“Unfortunately, the costs for grid reinforcement are quite high. The project is currently on standby, but we will continue it,” she said.