After the EU Commission approved on 6 March 2024 the CfD Scheme proposed by Romania for onshore wind and PV, the Ministry of Energy launched on 14 March 2024 under public consultation the draft for the Government Decision and the CfD template agreement (the “Draft”).

The Draft is under public consultation until 25 March 2024 and it is available here.

Investors are looking at the CfD mechanism as it will enable them to exhibit steady income (over a period of 15 years), hence paving the way to obtaining the so-much needed financing.

Key stakeholders

• The Ministry of Energy will be the administrator of the CfD scheme (main responsibility is to ensure available funding)
• Translectrica will be the scheme’s operator (in charge with organizing the auctions and, among others, enforcing guarantees in case of default)
• OPCOM will be the CfD Counterparty (concluding the CfD Contract, supervising the energy evacuated into the NTS, performing the all CfD computations/ payments/statistics etc., managing the CfD Liquidity Fund, maintaining the CfD Register etc.)
• ANRE will provide and emplace the necessary secondary legislation for enabling the CfD Scheme to become operational.

Eligibility criteria

The full set of eligibility criteria will be established by the order of the Ministry of Energy initiating a (specific) auction. However, several criteria applicable to all such auctions will be:

• the producer is a Romanian registered company;
• the producer has Romanian fiscal residency;
• the facility has not benefitted from another state aid (CAPEX or OPEX related)

Auction Procedure. Award

A participation guarantee will be required.

Transelectrica will be in charge with the entire process of organizing the auction, evaluating and selecting the winning offer.

Following the award decision, the strike price will be determined, which will be reflected in the CfD Agreement as a foundation of all subsequent computations and payments between the parties.

CfD Agreement

• the Agreement will be valid for 15 years as of the Date of Putting into Function (PIF) the facility. The Producer will estimate a PIF date. If the PIF Date is delayed (by maximum up to 2 years), the payment period will be shortened correspondingly.
• the capacity final installed must be of at least 90% of the awarded capacity;
• producers must sell the whole energy produced only through organized markets (breach of such obligation will lead to the termination of the agreement).
• payments are made for the energy delivered into the NTS (except for such used for own technological consumption).
• a good performance guarantee must be provided within 15 days as of the signing date of the agreement; its value will be linked to the awarded capacity and must be maintained until the first payment date.
• ANRE will compute and publish every month the Reference Price.
• the contractual Strike Price will be adjusted every three years (as per the Eurostat Index Price).
• special compensation rules are set for the energy sold via bilateral contracts (i.e. outside the Day-Ahead Market); basically, if the producer obtains under a bilateral contract a higher price (than the strike price/ reference price, as the case may be), the surplus is split 50%-50% by the producer with the CfD Counterparty.

Other relevant aspects

• It is still not decided whether a connection permit (“ATR”) is mandatory (or not) at the time of placing a bid. There is specific wording in the CfD Agreement template covering the possibility when the Ministerial order for initiating an auction does not require an ATR from the very beginning.
• The Ministerial Order for initiating an auction will set out the currently missing elements (eligibility criteria on the entity and the project, the capacity objective, the maximum strike price, specific procedural aspects etc).
• ANRE has very strict deadlines for enacting the norms relevant for the CfD Scheme (i.e. computation of the reference price, of the CfD contribution etc).

Conclusions

The first CfD scheme is awaited for several years now. Currently, it seems that there are no obstacles since, among others, the funding through the Modernization Fund was accepted by the European Commission. While the CfD Schemes are designed to cover various RES technologies (including storage), it seems this year Romania will finally have the first CfD auction which will be designed only for onshore wind and PV.

For further details, please contact us at:

Daniel Vlăsceanu - Partner

daniel.vlasceanu@vpartners.ro