Renewable Energy in Romania: PPA available, CfD in the Pipeline, Implementation to Follow

In the context of multiannual EU and government funding plans, Romania has committed to further achieving ambitious targets in developing renewable energy production. The current support scheme based on green certificates has stabilised after significant fluctuations and is currently viable. However, it only applies to renewable energy sources (RES) electricity capacities accredited by 31 December 2016.

Due to the significant decrease in the cost of technology, major clients of ECOVIS CIURTIN & Associates are forecasting investment models with the view that these projects could be profitable even without a state-sponsored support scheme (based only on CapEx, Capital Expenditure, and electricity revenues).

Moreover, the Romanian Government recently approved a memorandum on the “general principles for the implementation of a support mechanism through contracts for difference (CfD) production of electricity with low carbon emissions.” The complex process for the implementation of the CfD mechanism will be financed by the European Bank for Reconstruction and Development (EBRD). The preparation process for such a new support scheme is expected to last 1-2 years.

Romania is transitioning from green certificates to a sustainable, market-based investment model adjusted, if necessary, with contracts for difference (CfD) and secured with greenfield power purchase agreements (PPA). A good chance for companies to invest in renewable energy in Romania.

Adrian Ciurtin, Managing Partner, ECOVIS CIURTIN & Associates, Bucharest, Romania

According to Order 129/2020 from the National Energy Regulatory Authority, the possibility of closing bilateral power purchase agreements (PPAs) from greenfield on a centralised market will be available starting September 2020. The centralised market for long-term PPAs is fully functional. The Energy Market Operator (OPCOM) has put all the tools (procedures, methodology, samples) in place and participants’ registrations are now expected.

Key features of the PPAs are:

• Future producers could also be participants in PCTL (power plant under development / construction / commissioning)
• Tenure minimum 1 year
• The stages of the transaction are:
  • Standard offer
  • Preselection
  • Competitive dialog (final decision based on pricing)
  • Tender in a limited sense – assessment of final offers and announcing the contract partner

The accelerated technological development entails a CapEx decrease for RES projects, while the availability of PPAs from the early stages of a renewable project represents a major bankability factor. The planned CfD support mechanism should also provide investors with stability and price security, explain the Ecovis experts.

For further information please contact:

Adrian Ciurtin, Managing Partner, ECOVIS CIURTIN & Associates, Bucharest, Romania
Email: adrian.ciurtin@ecovis.com