For energy-intensive businesses in Romania, long-term Power Purchase Agreements (PPAs) have emerged as a compelling solution to shield operations from volatile electricity markets, comply with ESG commitments, and lock in competitive pricing. On the surface, the model is clear: buy green energy directly from a producer at a fixed price over 10 to 15 years, with bundled Guarantees of Origin to support decarbonization goals. But beneath this simplicity lies a complex web of contractual and financial risks that deserve the full attention of any Chief Financial Officer before pen touches paper.
Rezolv Energy has worked with clients across Central and Eastern Europe to navigate these waters — and their insights are increasingly relevant for Romanian CFOs preparing to commit to PPAs. From cost overruns to counterparty risk, and from contract rigidity to hidden balancing costs, PPAs are not risk-free. However, with a carefully structured agreement and a realistic understanding of the long-term implications, these contracts can still deliver significant value.
The Illusion of Fixed Price Security
One of the main selling points of a corporate PPA is the promise of fixed pricing. For CFOs seeking stability in utility costs, this can be highly attractive — particularly after the energy price spikes seen during the 2022 natural gas crisis. But the word “fixed” can be misleading.
Electricity markets are inherently volatile, and if spot prices fall significantly below the PPA price, companies risk overpaying for energy. Milan Kamaryt, PPA Origination Lead at Rezolv Energy, acknowledged this concern directly: “While a PPA may not always be the cheapest option at every moment, its primary value lies in predictability and risk mitigation, not in chasing the lowest price.”
To guard against this, many modern PPAs are structured with price collars — setting minimum and maximum thresholds — or market-indexed pricing mechanisms that track spot market trends while preserving long-term stability. CFOs should be aware that choosing a fixed price without these flexibilities may lead to unnecessary opportunity costs over the contract’s lifetime.
Volume Risk and the Perils of Overcontracting
A less obvious but equally important financial risk lies in volume forecasting. Unlike traditional supply contracts, PPAs typically require the buyer to commit to purchasing a set quantity of electricity each year. If consumption drops due to reduced production, technological shifts, or macroeconomic shocks, the buyer may be forced to sell excess electricity on the market — often at a loss.
This was one of the topics raised during Rezolv Energy’s presentation of its PPA with Bekaert. Although Bekaert is a high-volume industrial consumer with stable demand, the contract only covers 80% of its estimated annual electricity use. The reason? Risk management. As Milan Kamaryt explained, “Buyers should avoid over-contracting. Market fluctuations and unexpected production changes can lead to excess electricity, requiring resale on the spot market at unpredictable prices.”
CFOs must ensure that their energy procurement teams develop realistic consumption models — not just based on historical usage, but also considering future shifts in product mix, electrification, and efficiency upgrades.
Grid Curtailment and Imbalance Costs
Another category of risk often overlooked in financial models is grid curtailment — when the transmission system operator (TSO) limits the output of renewable generators due to grid congestion or stability concerns. This directly affects the volume of energy delivered under a PPA, raising the question: who bears the financial cost?
In most cases, developers will resist taking full responsibility. As Marc Fevre, Legal Counsel at Rezolv Energy, pointed out, “PPAs are complex, long-term contracts that must clearly allocate grid-related risks. If curtailment occurs, the agreement should specify who absorbs the revenue loss or how compensation is handled.”
Similarly, imbalance costs may arise if the actual generation does not match the forecasted output. Unless a balancing service is bundled into the PPA or contracted separately, the buyer may end up exposed to market penalties.
Credit Guarantees and Balance Sheet Implications
PPAs are not just energy contracts — they are long-term financial commitments. As such, they may require credit support mechanisms to secure performance on both sides. For Romanian companies without an investment-grade credit rating, this often means providing a bank guarantee, a letter of credit, or a parent company guarantee.
These instruments can impact a company’s balance sheet and borrowing capacity, as they are typically recorded as long-term obligations. At the same time, developers will also need to offer guarantees that the renewable asset will be built on time and deliver as promised. According to Marc Fevre, “Because PPAs last for 10 to 15 years, both parties must provide financial guarantees to ensure they can meet their obligations.”
It is crucial for CFOs to evaluate how these requirements affect liquidity, debt ratios, and compliance with existing covenants.
Regulatory and Force Majeure Clauses
Given the long duration of corporate PPAs, regulatory frameworks may shift — impacting taxes, grid fees, carbon pricing, or the value of GOs. Well-structured PPAs include regulatory change clauses, which provide a mechanism for renegotiation or compensation in such cases. Without them, companies may be locked into terms that no longer reflect market realities.
Similarly, force majeure provisions — covering wars, natural disasters, or major grid disruptions — must be carefully reviewed to ensure that they are not too vague or too biased toward the developer’s interests.
Rezolv Energy’s legal team emphasizes that PPAs should be treated as negotiated partnerships, not standard contracts. Each risk must be mapped, quantified, and addressed through clear language and enforceable remedies.
Despite these challenges, the rise of PPAs is not slowing down — and for good reason. When designed properly, they offer companies a unique opportunity to secure long-term energy stability, reduce exposure to fuel price shocks, and deliver credible ESG performance. But they require more than enthusiasm or sustainability ambition. They require cross-functional alignment, rigorous due diligence, and a clear-eyed understanding of financial implications.
CFOs play a pivotal role in this process — not just as gatekeepers of risk, but as architects of the energy strategy itself. With partners like Rezolv Energy and advisors such as PwC, companies can enter PPA negotiations with their eyes open, their risks covered, and their long-term objectives aligned.