Romanian renewables project developers are looking for offtakers for their production in other European countries due to muted demand from local businesses for green electricity. However, lack of clarity on the possibility to export GOs outside Romania is hindering the signing of virtual power purchase agreements (PPAs).
Romania’s PPA market is yet to take off with only three agreements announced so far. A previous ban on PPA-style contracts was fully lifted only at the end of 2021.
Prior to that, bilaterally negotiated contracts had not been allowed since 2012 when the government banned electricity trading outside exchange OPCOM amidst EU investigations into state-owned hydropower producer Hidroelectrica for anti-competion practices.
Separately, lack of negotiating experience and uncertainty created by electricity price volatility has made potential local buyers reluctant to commit to long-term physical supply contracts. Perceived buyers’ credit risk is another obstacle. Virtual PPAs with buyers abroad are considered a good alternative.
A virtual PPA is a financial contract between an offtaker and renewables producer with no direct electricity delivery via the grid. Instead, a contract-for-difference (CfD) style agreement is signed. The generation and purchase of electricity are based on market prices, while the settlement is done on the agreed PPA strike price. In addition, the related GOs are transferred to the buyer to prove the electricity origin
Status quo The majority of Romania’s wind (3 GW) and solar (1.43 GW) capacities receive incentives under a green certificates scheme which closed for new entrants in 2017. Producers under the scheme tend to transfer their GOs to the suppliers and these ar…
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