Romania Launches 1.5-GW Renewables Auction for Growth

• Romania’s first CfD auction offers a historic opportunity for 1.5 GW of renewable energy, fueling the nation’s green transition and ambitious climate goals. Bid by November 18!

Romania has launched its first Contract for Difference (CfD) auction, inviting bids for 1.5 gigawatts (GW) of renewable energy capacity—500 megawatts (MW) for solar and 1 GW for onshore wind. The auction, announced by the energy ministry and Transelectrica, follows the scheme's approval in August and is part of a larger EUR 3 billion (USD 3.3 billion) budget, funded by the EU Modernisation Fund, which aims to support a total of 5 GW of renewable projects.

The two-way CfD scheme will provide contracts for 15 years, with ceiling prices set at EUR 82 per megawatt-hour (MWh) for wind and EUR 78 per MWh for solar. Bids for this inaugural auction are due by November 18, 2024. This initiative is backed by the European Bank for Reconstruction and Development (EBRD), aligning with Romania's decarbonisation goals and its National Energy and Climate Plan, which aims for 34% of renewable energy by 2030, and an ambitious target of 44% by 2035.

How does Romania's first CfD auction impact its renewable energy targets and investments?

Impact of Romania's First CfD Auction on Renewable Energy Targets and Investments

- Ambitious Renewable Energy Targets: With the aim of achieving 34% of its energy consumption from renewable sources by 2030 and increasing this to 44% by 2035, the CfD auction is a critical step in Romania's transition to a greener energy mix. The allocation of 1.5 GW through this auction significantly contributes to meeting these targets.

- Attraction of Investment: The CfD scheme is designed to provide stable and predictable pricing for renewable energy projects, making Romania an attractive destination for both domestic and foreign investors. This financial stability is crucial in securing investments needed to develop and expand renewable energy infrastructure.

- Long-Term Contracts: By offering contracts for up to 15 years, the auction provides investors with the assurance needed to invest large sums into renewable projects. Such long-term commitments are essential in the capital-intensive energy sector, facilitating better planning and financing.

- Bidding Process and Competition: The competitive bidding process encourages innovation and efficiency among bidders, which can lead to lower prices for energy production. This competitive environment may result in more efficient renewable energy projects and drive down costs for consumers in the long run.

- Impact on Energy Security: Increasing renewable energy capacity through this auction contributes to Romania's energy independence, reducing reliance on fossil fuels and enhancing the country's energy security. This is particularly important in the context of geopolitical uncertainties affecting energy supply in Europe.

- Alignment with EU Goals: Romania's CfD auction aligns with the European Union's broader objectives for renewable energy and climate action, including commitments under the European Green Deal. This alignment may facilitate additional funding and support from EU programs aimed at promoting clean energy transitions.

- Development of Energy Infrastructure: The projected increase in renewable capacity necessitates upgrades and expansions to the electrical grid and related infrastructure. This development can create jobs and stimulate local economies, fostering a broader economic benefit beyond just energy production.

- Potential for Job Creation: The launch of large-scale renewable projects, especially in solar and wind energy, is expected to create jobs in various sectors, including manufacturing, construction, operation, and maintenance. This can have a significant positive impact on local communities economically.

- Environmental Benefits: Transitioning to a greater share of renewable energy will help Romania reduce its greenhouse gas emissions, contributing to global efforts to combat climate change. The move is also expected to improve air quality, benefitting public health.

- Monitoring Progress: The implementation of the CfD auction will require robust monitoring and reporting mechanisms to track progress against set targets. This ensures transparency and accountability in the achievement of Romania's renewable energy goals, fostering stakeholder confidence.

- Future Auctions and Scaling Up: The success of this initial auction may pave the way for future auctions, providing additional opportunities for renewable energy developers and contributing further to Romania’s renewable energy landscape. As renewable technologies become cheaper and more efficient, future auctions could scale up even more dramatically.