The European Commission has approved €3 billion ($3.9 billion) for solar and onshore wind projects in Romania, with two-way contracts-for-difference through competitive bidding procedures.
March 8, 2024 Patrick Jowett
Image: Pixabay
The European Commission has approved a €3 billion aid scheme to support onshore wind and solar installations in Romania.
It will grant the aid through competitive bidding procedures, in the form of two-way contracts-for-difference (CfD). Future projects involving the construction and operation of new PV and onshore wind installations will be eligible.
Under the terms of the CfD, the strike price will be determined through competitive bidding procedures, while the reference price will be calculated as a monthly output-weighted average of the market price of electricity in the day ahead markets.
The European Commission stipulates that when the reference price is below the strike price, the beneficiary will be entitled to receive payments equal to the difference between the two prices. When the reference price is above the strike price, the beneficiary will have to pay the difference to the Romanian authorities.
“The scheme therefore guarantees a minimum level of return to the beneficiaries, while at the same time ensuring that the beneficiaries will not be overcompensated for periods when the reference price is higher than the strike price,” a statement from the Commission explains.
The aid package was approved under the Commission’s State aid Temporary Crisis and Transition Framework, designed to support measures in sectors which are key to accelerating a nations’s green transition while reducing fuel dependencies. A statement from the European Commission says the scheme will foster Portgual’s transition to a net-zero economy.
“The use of contracts-for-difference provides incentives for the swift rollout of renewable energy sources and prevents overcompensation,” said Margrethe Vestager, the European Commission’s executive vice-president in charge of competition policy. “This scheme will also contribute to reduce Romania’s dependence on imported fossil fuels, without unduly distorting competition in the single market.”
Romania held its first CfD renewable energy auction last year. The Romanian government increased its renewables targets towards the end of 2023. Its current plan stands at 36% of the nation’s energy to come from renewables by 2030, with 8.3 GW of solar and 7.6 GW of wind. It plans to phase out coal by 2032.
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