Romania has set a ceiling price of €91 ($99.33)/MWh for solar energy in its first renewables auction. A legal analyst tells pv magazine that this strike price is a good level for the nation’s first contract-for-difference (CfD) auction, but warns that certain aspects of the draft legislation could significantly affect the bankability of the scheme.

The Romanian Ministry of Energy has set a maximum strike price of €91/MWh for solar projects and €93/MWh for wind projects in its first renewables auction under a CfD scheme.

The CfD auction, first announced last year, has a total capacity of 5,000 MW split across two auctions. The first 2,000 MW exercise is expected in the coming weeks, while a 3,000 MW auction is expected in 2025. The auctions will be equally split between solar and onshore wind, with project capacities expected to be between 5 MW and 200 MW.

The duration of the CfD agreement will be 15 years from the date of commercial operation. The European Commission approved the project earlier this month with a €3 billion funding package through its Modernization Fund.

Romania’s Ministry of Energy recently updated the draft of its CfD agreement. While many principles remain in line with those previously announced, a key change is that now CfD beneficiaries will have to sell all electricity on centralised markets.

Mihaela Nyerges, managing partner at law firm Nyerges & Partners, told pv magazine the strike price is a “good maximum,” but said aspects of the legislation remain “red flags” that could significantly affect the bankability of the scheme.

“One is that the CfD counterparty has no liability to producers if CfD payments are not made due to CfD fund illiquidity allocated to the respective CfD agreement,”Nyerges said. “Moreover, the beneficiary is not allowed to set-off future payments due to CfD Counterparty with those outstanding from the latter.”

Elsewhere, a decision to give the CfD counterparty the right to terminate the agreement for convenience “significantly contravenes the stability of the scheme, which is essential for ensuring its bankability,” Nyerges said.

She explained that termination compensation would be calculated on historical reference prices, which “may not be a fair representation of CfD payments that would have been gained by producers had the termination not occurred.”

CfD beneficiaries will not receive CfD payment for time intervals with negative prices, which Nyerges said is a “concern from the perspective of cash-predictability.” However, she added that the approach mirrors the UK system, “which was used as a source of inspiration.”

Romania’s Ministry of Energy is accepting feedback on its draft until March 25, after which it is expected to publish the final version along with the Auction Initiation Order, which will give more details on auction requirements and the full eligibility criteria. Nyerges said she expects the auction to be launched in the next couple of weeks.

The Romanian government increased its renewables targets toward the end of 2023. Its current plan stands at 36% of the nation's energy to come from renewables by 2030, with 8.3 GW of solar and 7.6 GW of wind, while it plans to phase out coal by 2032. The country hit 2.9 GW of solar capacity at the end of 2023.