Romania: Implementation and operation of the support mechanism through contracts for difference for low carbon emissions technologies

Recently, on 10 April 2024, Government Decision 318/2024 on the approval of the general framework for the implementation and operation of the support mechanism through contracts for difference for low carbon emission technologies (“General Framework”) entered in force, through which the Ministry of Energy develops or grants support mechanisms in this regard through contracts for difference (“CfD”).

In accordance with the General Framework, technologies eligible for the CfD scheme are those using: (i) onshore wind resources; (ii) offshore wind resources; (iii) solar photovoltaic resources; (iv) hydro resources; (v) nuclear resources; (vi) hydrogen; (vii) energy storage.

The CfD scheme provides two support mechanisms, the first being the attribution of CfD contracts through tenders to those selected through the competitive process. The second mechanism is provided in the form of ad hoc state support for production technologies that are not eligible for CfD tendering, in which case ad hoc CfD contracts are negotiated and awarded directly to the beneficiaries.

Under the CfD scheme, beneficiaries may receive payments from the Electricity and Natural Gas Market Operator OPCOM S.A. (“CfD Counterparty”) when the market reference price is lower than the strike price. On the other hand, they will have to make payments to the CfD Counterparty when the reference market price exceeds the strike price. The reference price is the price per megawatt-hour based on wholesale electricity markets and the strike price is the price per megawatt-hour used to calculate the payment made under the CfD contract.

Note should be made that in order for the scheme to operate, beneficiaries are restricted from entering into bilateral contracts for the sale of energy outside organised markets. They can therefore only trade energy on organised markets, except for the energy used for their own consumption. Any violation of this rule will result in the termination of the CfD contract and the reimbursement of the difference payments made for the energy sold outside organised markets to the CfD Counterparty.

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