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Green energy producers are lobbying for storage inclusion in CfD eligibility

29 August 2023

Officials of the renewable energy industry request the inclusion of electricity storage alongside production in the eligibility scheme allowed by the CfD mechanism, as well as the prioritization of grid access for production capacities from renewable sources, without production limits, writes Financialintelligence.

Romania will soon launch its first tender for a Contracts for Difference support scheme, according to the EBRD. Onshore wind power projects and solar photovoltaic (PV) projects with a total capacity of 2,000 MW will be supported through a CfD scheme with a maturity of 15 years. The tender will be launched in the coming period, with the winning bidders expected to be announced in November 2023. According to the EBRD, the two-way CfD scheme stimulates investments in renewable energy, providing income stability for developers and strengthening the market integration of renewable sources. The tenders are the first round of a multi-year plan, which calls for the award of CfDs for a total of 10 GW of wind and solar PV generation capacity by 2030.

The operation of the CfD mechanism means a two-way payment between two entities that will represent the difference between the exercise price and the market reference price (the average of the Market for the Next Day) with a maximum duration of 15 years, as follows:

  • The producer is paid by the CfD counterparty (OPCOM) when the market reference price is below the strike price
  • The producer pays the CfD counterparty when the market reference price is above the exercise price.

Producers holding CfD contracts are free to sell electricity according to their own trading strategy on organized markets or through PPAs.

The CfD mechanism is financed by the Modernization Fund and by a tax paid by end consumers, collected by suppliers (tax implemented from 1 January 2024).

Officials of the renewable energy industry demand that the maximum strike price be set in a realistic way (to bear the interruptions/limitations, as well as to take into account the direction of evolution of the Balancing Market), by referring to the specificities of the local market – the recommendation is to not be less than 120 Euro per MWh. The cost of the technology must be the main determinant of this maximum exercise price, say representatives of the renewable energy industry.

They say that, as far as contracts for difference are concerned, it is necessary to include electricity storage alongside the production technology as eligible, and the installed power to be greater than 20 MW (=> 5 MW).

At the same time, it is proposed to respect the ranges mentioned during the CfD market survey event: 10,000 – 20,000 Euros per MW for the guarantee of participation in the auction and 50,000 – 100,000 Euros per MW for the guarantee of good execution.

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