Framework for CfD Mechanism Established by Romanian Government
The Romanian Government Decision, adopted on April 4, establishes the general framework for the operation of the two-way Contracts for Difference mechanism. It provides financial operating support for low-carbon electricity generation capacity.
Eligible technologies
Eligible electricity generation technologies are those using:
- a) onshore wind resources;
- b) offshore wind resources;
- c) solar photovoltaic resources;
- d) hydro resources;
- e) nuclear resources;
- f) hydrogen;
- g) energy storage.
Under the Contract for Difference mechanism, aid is granted for the operation of electricity generation capacities.
The provision of this type of operating aid is either on the basis of State aid schemes or on the basis of ad-hoc State aid notified to and approved by DG Competition.
The operating aid is granted by means of difference payments for the energy produced, measured and delivered into the National Power System, which is the subject of the CfD contract, by the CfD Counterparty (OPCOM) to the CfD beneficiary, in cases where the reference price is lower than the auctioned strike price, or by the beneficiary to the CfD Counterparty, in cases where the reference price is higher than the strike price.
In the case of CfD schemes, the strike price for a contract is determined by auction and in the case of ad–hoc CfD State aid, the strike price is determined by negotiation.
Any CfD scheme or ad-hoc CfD State aid and any related CfD contract is subject to authorisation and to a state aid clearance decision by the European Commission.
“Today’s Government Decision is the result of more than two years of work, including extremely complex negotiations and calculations, involving the EBRD, EIB, European Commission, Transelectrica, OPCOM, ANRE and the Ministry of Energy’s team of experts. I thank them all for their efforts. Romania will today have the framework for a key instrument to support investment in the energy sector. Contracts for Difference are used successfully in all advanced economies because they provide a predictable, transparent, and competitive investment framework. Moreover, through the joint effort of the teams involved, Romania becomes the first EU country to succeed in accessing money from the Modernisation Fund to support the Contracts for Difference scheme, a record EUR 3 billion. We want a successful first auction for the first contracts for difference: 1000 MW solar power generation capacity and 1000 MW wind power capacity. All procedures will take place between May and August this year, with the signing of the contracts – a milestone in the NRRP – scheduled for September 2024. Together with the relevant institutions, the Ministry of Energy will ensure fully transparent and competitive procedures, in order to achieve the best price, sound projects and an accelerated green transition for Romania,” Energy Minister Sebastian Burduja noted.
As a reminder, the total estimated budget of the scheme is EUR 3 billion and is provided from the Modernisation Fund. In the event of projected or actual consumption of financial resources allocated from the Modernisation Fund, the Ministry of Energy will identify ways to cover the CfD shortfall and notify the Commission of any changes to existing aid.
