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Burduja: The CfD mechanism will be adopted in early 2024 at the latest

11 September 2023

The Ministry of Energy aims that, by the end of this year, at the latest the beginning of next year, it will conclude the contracts for the difference, a scheme needing approval by DG Competition and being fueled by the Modernization Fund, declared, on Thursday, the Energy minister, Sebastian Burduja, on the margin of the Business Forum of the Three Seas Initiative.

“We are preparing for the contracts for difference scheme, another important scheme where we encourage the production of green energy – solar, wind – 1 gigawatt of each technology. This scheme basically fixes a price for investors for a long time horizon, 15 years, and this reference price is set in a competitive way, through public auction, and we have proposed that by the end of the year, at the latest at the beginning of next year, to conclude these contracts. It is an important effort, where we had the support of the Bank European Reconstruction and Development EBRD. (…) The scheme is to be approved by DG Competition and also to be fueled from the Modernization Fund. Romania is the only country that proposed this and I am convinced that we will succeed. So, basically, we use this European money, let’s say – it’s about those financings resulting from the sale of certificates related to gases with carbon dioxide emissions – we use this money to fuel the scheme and then this mechanism of contracts for difference ensures stability for investors and I am convinced that it will be a very competitive tender,” said the Minister of Energy, according to Agerpres.

He emphasized that the mechanism is simple: when the market price is below the reference price, the counterparty, namely OPCOM, will pay the difference to the producer, and when the market price exceeds it, the producer will pay OPCOM this difference.

On the other hand, Sebastian Burduja signaled that Romania is in the middle of a green revolution and will reach three times the target assumed by the PNRR on the energy component.

“We are in the middle of a green revolution in Romania. We have a phenomenon of solar and wind-based production. We are talking about PNRR- 1.6 billion total budget for the energy component. The 1st Investment Call, where we have already started to sign contracts in the last two months or so, that’s probably 3.5 gigawatts when we close the assessment. We’ve committed to somewhere around 950 megawatts, so we’re basically hitting three times our NRDP target. Also, green hydrogen production, where we are in the evaluation. We received 19 applications, 19 applications. There was a re-call, we amicably terminated all seven previously concluded contracts and now, lo and behold, the interest was even greater. We received 19 applications and we can’t wait until at the end of this month, as we asked the experts of the European Investment Bank to complete the evaluation in the most objective and transparent way possible, we will publish the final list of those with whom we will conclude contracts,” said Burduja.

The Minister also announced that, regarding the draft law for offshore wind, the public debate took place and it is to be approved in a meeting by the Government, so that it will be sent to the Parliament and, by the end of the parliamentary session, be adopted.

“So, by the end of this year, let’s have legislation for offshore wind power in Romania. And already, at this Summit of the Three Seas, in this business forum, many states have expressed their interest in learning from Romanian lessons, to bring in good practices. We collaborated very well with the American authorities, with the State Department, they simply helped us improve this legislative project and have an actionable offshore wind law where investors are willing to allocate resources,” the Minister of Energy also said.

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