Renewables

Romania to roll out renewable energy auction scheme by end-2022

Romania renewable energy auction 2022

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Published

May 25, 2021

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Published:

May 25, 2021

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A year after the government published the guidelines, the Ministry of Energy of Romania revealed plans to complete the legal framework for the introduction of a support scheme for renewable energy in the fourth quarter of next year.

Secretary of State at the Ministry of Energy George Niculescu said the legislative package that would enable investors in green electricity in Romania to obtain contracts for difference (CfDs) could be prepared in 16 to 18 months. The government published general principles for such a support mechanism for low-carbon electricity last June and said the subsidies would be granted through auctions.

“We need to learn from the lessons of the past and it is important to make sure that we come up with a stable and predictable legislative framework for investors active in the field of renewable energy,” Niculescu asserted and acknowledged that a realistic period for completing the framework would be 24 months but that the ministry is accelerating its efforts.

CfD system is being developed with EBRD

CfDs determine a striking price of electricity that the producer is entitled to. Electricity is sold in the market and the producer receives the difference between the selling price and the striking price. If it sells power at a higher price, then it returns the amount exceeding the striking price.

According to guidelines from last year, the support system for electricity from renewable sources will be worth EUR 125 million

In the guidelines, the ministry suggested EUR 125 million would be earmarked per year for renewable energy projects in Romania. CfDs for nuclear energy valued at EUR 215 million will be included in the framework, according to the document. There is a possibility to achieve the deals through direct negotiations, like in the case of the planned units 3 and 4 of the Cernavodă nuclear power plant.

The European Bank for Reconstruction and Development is participating in the development of the system. Last year Romania enabled power purchase agreements (PPAs), which are directly negotiated bilateral contracts between producers and consumers, for new power plants. PPAs were effectively banned almost a decade ago.

Renewable energy developers seek clarity

“Investors active in the field of renewable energy need predictability and long-term stability. It is essential to restore investor confidence in Romania’s ability to ensure a clear, predictable and stable legislative framework. The introduction of a support scheme and the possibility to conclude PPAs are some of the key elements,” said Vice President of the Employers Organization of the Producers of Energy from Renewable Sources in Romania (PATRES) Martin Moise.

Solar and wind can add 10 GW to Romania’s power production capacity in the next ten years, BloombergNEF estimated

Dan Drăgan, another state secretary, earlier said the country would add 6.9 GW in green power capacity by 2030 to meet its 30.7% share goal from its national energy and climate plan (NECP), called Integrated National Energy and Climate Plan (PNIESC) in Romania. According to a recent report, wind and solar projects of almost 5 GW are in the pipeline.

BloombergNEF estimates the potential over the next ten years at 10 GW in total for the two technologies. Romania recently became a net importer of electricity as coal capacities are shutting down due to high costs of carbon dioxide emissions. The government said no other power plant using the fuel would be built.

Investors in renewable energy have been complaining about the restrictions on the sale of agricultural land.

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