Romania to introduce subsidy scheme modeled on CfD for all low-carbon energy producers

Romania’s low-carbon energy producers stand to receive state funding under a mechanism such as contracts for difference (CfD) if the price of electricity on the market slips below a certain level, the Romanian media reported, citing Doru Visan, state secretary at the Ministry of Energy.

“The Ministry of Energy is considering promoting a mechanism such as CfD,” said Visan, noting that this mechanism will cover all investment projects for the production of low-carbon electricity, Agerpress reported.

The mechanism would be modeled on the UK’s Contracts for Difference (CFD) scheme, under which a low-carbon electricity generator is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the ‘reference price’– a measure of the average market price for electricity in the market.

This kind of mechanism is aimed at stabilizing the revenues of electricity generators by reducing their exposure to volatile wholesale prices.

“In Romania, low-carbon energy producers will get state funding if the price of electricity on the market falls below a certain threshold but will have to return the difference if the price goes above this level,” Visan was quoted as saying.