Romania is on the verge of introducing a much-awaited new support scheme for renewable energy. The Romanian Ministry of Energy has recently launched for public consultations a draft decision approving the legal framework for the implementation and functioning of the Contracts for Difference ("CfD") support scheme for low-carbon technologies ("CfD Scheme").
While the general legal framework for implementing the CfD Scheme has a broader scope, being aimed at supporting various low carbon technologies, the first two rounds of auctions will be exclusively dedicated to eligible onshore wind and solar power generation technologies.
The first two rounds of auctions, each with separate tenders for eligible onshore wind and solar power generation technologies, refer to a total capacity of 5 GW of new renewables. A first round of auctions (1 GW installed capacity for onshore wind projects and 1 GW for solar projects) will be held by the end of 2023 and a second round (1.5 GW for each technology) will be held in the first half of 2025.
A table providing the key milestones and timeline for the 2023 CfD Auction, including the submission, evaluation and selection process, is available on the Ministry's website here.
The auction evaluation process will be carried out in two stages: (1) the first stage involves an evaluation of the Technical Offer (on a pass or fail basis) and (2) the second stage involves an evaluation of the Financial Offer (ascending order of the strike price for qualified bidders).
Who can apply?
The support scheme is open to all legal entities established in Romania and active in the field of electricity generation, subject to the fulfilment of conditions typical for accessing state aid schemes, i.e., good standing, absence of debts to the public budget, etc. as well as the technical and financial capacity to sustain the project development and implementation. Additional technical, financial, environmental and social eligibility criteria may be specified in the CfD Auction Initiation Order, which is expected to be published in the coming weeks (together with the draft Ministry Order and the draft CfD template).
Which projects may be financed?
Proposed projects must also fulfil certain eligibility criteria for the first tender round. The most important of these are:
- Only new onshore wind and solar photovoltaic generation technologies are eligible;
- Projects must be implemented in the territory of Romania, must have secured at least a grid connection permit and have a projected installed capacity of over 5 MW;
- The target commissioning date must not exceed 36 months from the anticipated date of the signing of the CfD (i.e., December 2023). If the project is not commissioned by this deadline, the term of the CfD shall be reduced by the time elapsed until commissioning takes place;
- The longstop date is the latest date that the CfD beneficiary can become eligible for CfD difference payments (and is 24 months after the target commissioning date); if the project is not commissioned by the longstop date, the CfD Counterparty may execute the performance bond and terminate the contract.
The CfD payments shall commence when all the requirements have been satisfied, essentially meaning that:
- The applicant has obtained all necessary permits for operating the plant; and
- The commissioned capacity of the plant is at least 80 % of the capacity awarded.
Click here to read more about key terms of the CfD Scheme and funding in the full version of this article.
The CfD Scheme funds are awarded through competitive tender proceedings. Therefore, submitting an offer does not guarantee automatic selection for the CfD payments. Moreover, a maximum capacity limit per sponsor may be considered in the auction process.
In the context of recent geopolitical evolutions and European Union's plans to fast forward the green transition, this new CfD Scheme (coming in the wake of the state aid measures awarded under the local Recovery and Resilience Plan and of the recent legislative proposal for a CfD scheme targeting 3 GW capacities of offshore wind), strengthens the country's commitment to achieving its ambitious decarbonisation targets for 2030.
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