Romania set to remain a preferred renewable energy investment destination

On 23/07/2023 0

This article summarizes the conclusions of a scouting mission to Bucharest in July 2023, where I met with key industry stakeholders to understand Romania's potential as a renewable energy investment destination.


Market dynamics

The first wave of renewable energy projects in Romania (2007-2013) was fuelled by generous government support through the green certificates scheme. However, the market entered a period of hibernation after the prohibition of power purchase agreements (PPAs) in 2012. This was due to public uproar over the huge profits made by traders who had concluded advantageous long-term contracts with Hidroelectrica. These traders simply pocketed the difference between the PPA and market prices. As a result of these contracts, Hidroelectrica was forced to file for bankruptcy in 2012.

The introduction of the Government Emergency Ordinance GEO143/2021 on 31 December 2021 under the pressure of EU Commission was quite successful in that it sparked a new wave of projects. Main features of the law included:

  •  changes to the rules on granting licenses and permits
  • repeal of restrictions on PPAs
  • repeal of legislative provisions that deal with the regulated electricity market
  • other amendments facilitating investment in the sector and clarifying certain rules

Project pipeline and prices

According to some estimates, there are currently 9 GW of renewable energy projects at the ready-to-build stage in Romania, and 30 GW more are registered. However, it is likely that only a fraction of these projects will be implemented, as some insiders estimate that the success rate is as low as 15%.

Prices for renewable energy projects have fallen since the 2022 speculative frenzy. Solar PV projects are often traded for under 100,000 EUR/MW, while wind projects remain higher at 160-180,000 EUR/MW. The prices of course depend on many project-specific factors, such as project economics, stage of development, and developer experience.

Some market players expect prices to recover in 2024, driven by the phasing out of grid connection authorizations (ATRs) that are only valid for 18 months under the new law.

Technology trends

In terms of technology, most current renewable energy projects in Romania are solar PV, in contrast to the first wave, which was dominated by wind park projects.

A growing share of the energy mix but still below expectations

Despite the current "boom" in renewable energy projects, it is unlikely that the EU's 2030 target of a 34% renewable energy share will be met on time. Other considerations include the potential development of nuclear energy (2,700 MW split under 2 plants as well as small modular reactors with a total capacity of 500 MW) and the need to build combined cycle gas turbine (CCGT) plants (mostly gas-fired) to balance the grid in light of the deployment of intermittent generation sources such as solar and wind (storage is unlikely to solve this issue on its own). Accelerated deployment of green energy facilities should remain a top priority for policymakers if Romania is to achieve carbon neutrality by 2050.


Banks are reasonably active in supporting the renewable energy sector in Romania. Some banks are willing to finance projects on a merchant finance basis (without power purchase agreements), although some may soon change their policy on this. As international players enter the market, their parent companies are often able to provide guarantees to special purpose vehicles (SPVs). Loan maturities typically extend up to 10 years.

International investors are quite active in Romania, with the majority coming from Western and Central Europe.

Public support

Romania is the largest recipient of the EU Modernization Fund, with a total budget of 1.4 billion euros to help it reach its 2030 targets. The EU-funded National Recovery and Resilience Plan also includes a significant share of investment in renewable energy.

So far, projects that have received support have been funded up to 80% of their capital expenditure (capex), which seems excessive. In practice, the government has tried to channel these funds to public companies, which has distorted competition with the private sector. It is expected that a more competition-friendly approach will be adopted in the near future.



The 2021 Ordinance lifted the ban on power purchase agreements (PPAs), but very few PPAs have been concluded so far (probably not more than two or three). Market participants are hesitant to commit to long-term contracts in a context of high volatility (high MW prices in 2022, followed by a gradual return to more usual levels).

Land issues

The 2021 Ordinance attempted to simplify the process of obtaining land for solar and wind projects, but this has been turned into a blocking factor by the interpretation of the Ministry of Agriculture. The Ordinace states that land authorized for solar or wind projects must be classified as Intramuros land (as opposed to Extramuros) under the General Urbanism Plan or Zoning Urbanism plan. Romanian law classifies agricultural land in five categories, with category one being the best land. The 2021 Ordinance stipulated that land plots from categories 3, 4, and 5 up to 50 hectares could be reclassified as Intramuros land by the Ministry of Agriculture. However, the Ministry has so far interpreted this to mean that plots above 50 hectares cannot be reclassified. This restrictive interpretation, which effectively blocks projects of more than about 40 MW, was pushed by lobbies who fear that the best land will be taken over by industrialists and lead to a food crisis. However, these fears are greatly exaggerated, as low-category land is not highly productive and there is more than enough land available to meet the country's agricultural needs. In practice, developers have circumvented this limitation by splitting their projects into units smaller than 50 hectares, but the legality of this practice has been questioned by some lawyers and creates legal uncertainty.

The problems with land use for renewable energy projects should be resolved with the entry into force of the 2023/166 law in June, which clarifies the original spirit of the facilitating steps described in the 2021 Ordinance.

Additional land issues relate to the need to trace the ownership of land dating back to the end of the communist regime, as some ownership conflicts have not yet been resolved.


Contracts for Difference

The Government is working on setting up the regulatory framework for Contracts for Difference (CfDs). These are hedging contracts that last for 6-10 years, in which the producer agrees to a strike price with OPCOM (with state guarantee). If the market price is higher than the strike price, the producer must repay the difference to the counterparty. Alternatively when the market price is lower than the strike price, the producer receives a premium equal to the difference.

EU funds

Romania is a major recipient of EU funds, including the Modernization fund and the Recovery and Resilience facility. These funds will support investment in renewable energy.


The renewable energy market in Romania is becoming more attractive for investment, but there are still some bottlenecks.

Developers lack of experience

One of the main challenges is the lack of qualified developers. Many players have entered the market without the necessary experience, such as realtors who are able to secure land but lack financial resources or technical capacity. This has led investors to be more careful when vetting projects. However, qualified developers can build mutually beneficial long-term relationships with investors.

Grid capacity

Another bottleneck is the limited grid capacity. The government acknowledges that the grid needs to be upgraded, but investment in this area is constrained by a lack of fiscal space. The situation varies by region, with the eastern part of the country being more heavily loaded than the western and southeastern parts.

Grid capacity is one of the key factors that determines whether the transmission operator will grant grid connection authorizations (ATRs). In the past, ATRs have been granted on a first-come, first-served basis, without taking into account the developers' capacity or the technical quality of the projects. This has led to an enormous pipeline of projects, most of which are unlikely to be implemented. The 2021 Ordinance has introduced an 18-month validity period for ATRs. As older ATRs expire, new serious projects should be able to obtain grid capacity more easily, which will help to address the grid capacity bottleneck.


There are three promising areas for future development in the Romanian renewable energy market: storage, green hydrogen, and offshore wind farms.


Technical regulations for energy storage were published in January 2023. These regulations facilitate investment in the sector, as storage can be added to a project after an ATR has been obtained. Large battery factory projects are being considered and are seeking financing often with public support (at the end of last year, the government opened a call to award over EUR 100 million for BESS -Battery Energy Storage System- projects).

Green hydrogen

The government's hydrogen strategy has been recently published for public consultation. It includes ambitious plans to build electrolyzer facilities in Dobrogea. However, questions remain about grid capacity and transportation costs, as the industrial consumers are not located in this region. The precise use of green hydrogen also needs to be clarified. Transportation use seems implausible, but the gas industry could be interested, although favorable economics are not guaranteed.

Offshore wind farms

While several studies have been undertaken, the regulatory framework is not yet in place. A draft of the expected law has been submitted to public consultation in July 2023, and the law is expected to be passed by the end of this year or in 2024. Some observers note that the context of the Russian-Ukrainian conflict is not conducive to investments in offshore wind farms. For example, mines could potentially threaten the facilities. Nevertheless, major international players are closely following these developments due to the excellent wind conditions in the Black Sea. Furthermore, offshore projects could be linked to gas projects, driven by the favorable results of initial explorations. The first projects are expected within five years.


In spite of the question marks and limitations mentioned, Romania remains one of the most promising markets for renewable energy in the region. As the market become more mature, it is expected that competition will become stiffer and that investment terms become less favourable for rent-seeking investors, while long term players will gain the upper hand. However, opportunities for pioneering projects should remain available for the less risk averse investors in specific areas.  


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