Acasă » Electricity » Radu Rat (Axpo Energy Romania): First physical PPAs in Romania are still some time away

Radu Rat (Axpo Energy Romania): First physical PPAs in Romania are still some time away

30 September 2021

Recently, Axpo Group signed a reference PPA contract for the largest onshore wind farm in Europe operated in Romania by CEZ, in one of the largest PPA transactions ever concluded by the group – 4 TWh of wind energy in a 7-year agreement. However, concluding the first physical PPAs in Romania is still some time away because of three main reasons. Among them, regulation continues to remain a challenge, said Radu Rat, managing director Axpo Energy Romania, in an interview for Energynomics.

Dear Mr. Radu Rat, the agreement you announced is a financial PPA or a physical one, with physical delivery?

It is a financial PPA based on ISDA agreement, no physical deliveries taking place between the two contracting parties.

What was the price agreed upon in the transaction?

The parties involved in the transaction agreed not to disclose any details about the price. What we can say is that the price was very much market based and one that both sides believed it is very much in line with the current market price conditions.

Is it a fix price or some form of price mechanism? If the latter, what is the price mechanism’s structure?

The parties agreed not to disclose any further information with regards to the contractual pricing. What I can tell how however is that we, as Axpo, are very flexible and will work with the needs of our clients and offer what is best suited for their projects so either fix or flexible are on the table and doable.

As the information about the specific contract is confidential, what are the price formulas most frequently used in this kind of arrangement?

Price formulas are decided by the contractual parties which enter into PPA transactions. As for Axpo, as mentioned previously, we are very much comfortable with either fix, floating, floor, etc. price mechanisms. We are ready to discuss various structures with our partners, our focus is very much on the risk management approach in order to make sure both sides are aware of the commercial risks and the necessary tools are put in place to manage them and of course, on the long term partnership we are entering in with any counterparty we are looking at.

Axpo Group is present in several jurisdictions in Europe and globally. Are there any similar PPA contracts signed by Axpo in the countries you are present?

Absolutely, Axpo Group is present on three continents: Europe, Asia & North America. Our activities in the international energy trading and so-called Origination business cover more than 40 markets. We are signing and we will continue to sign more and more PPAs in all these regions. You can find herewith some recent examples of PPAs we have signed in various markets since the beginning of the Axpo Group financial year 2020/21 on October 1, 2020. Here are some of them: Axpo Iberia and Azora Capital signed PPA for a wind farm in Cuenca and for 25 MW solar portfolio in Portugal. Axpo UK and Voltalia signed a 10-year fixed price PPA for a solar park in England. Axpo signed Sweden’s first market-based solar PPA with Sparbanken Skåne solar park. Axpo Iberia and Grupo Enhol signed a 5-year PPA for new wind farm in Navarra. Axpo Polska signed PPA with Energix Group for two wind farms in Poland.

Are there any lessons to be learned by a power generator in Romania or by the Romanian authorities in order to encourage such agreements?

Romania has massive potential in the area of renewable energies, both in wind power and solar energy. To unleash this potential, the full support of the Romanian authorities is needed in order to re-open up the renewable investments into Romania. The investors, developers and banks as well as international energy trading companies such as Axpo are ready to go. Any push in the right direction is greatly appreciated by all market participants and players so that we can move forward in our country and realize the tremendous potential of renewable energies.

As for the power generators in Romania, I think the most important for them is to focus on long-term revenue generation vs. short term selling on the OPCOM Day-Ahead Market. Entering into long-term PPAs with Axpo will provide them with a strong source of secure revenue for long-term giving away the volatility of the price risk. On the other hand, we see an ever increasing interest and demand of energy-intensive industrial companies in Romania when it comes to procuring green energy in the context of their sustainability strategy, while at the same time securing long-term price stability for the energy they need. Axpo has a lot of experience and know-how also when it comes to signing so-called Corporate PPAs with big industrial companies across Europe.

How close or far away are you from concluding physical PPAs in Romania, based on new renewable capacities?

We are still some time away due to three main reasons. First, we don’t see too many renewable projects becoming reality in Romania. There are a great deal of renewable projects in the phase of projects but not being constructed. Then, regulation continues to remain a challenge – while the framework for physical PPAs is being put in place we are not quite there and some adjustments are still required to the local regulations.

Finally, balancing costs seem to be like a “scene out of a horror movie”. Balancing costs are still very high in Romania compared to our peer PPA countries in Nordic markets, Western Europe and/or Iberian Peninsula and as such classical PPAs of “pay as produced” are still not feasible. I guess that once the market participants will feel more comfortable with the balancing costs then we could see a speed-up in the renewable projects in Romania becoming renewable power plants ready to produce MW.


This interview firstly appeared in the printed edition of Energynomics Magazine, issued in September 2021.

In order to receive the printed or electronic issue of Energynomics Magazine, we encourage you to write us at office [at] to include you in our distribution list. All previous editions are available HERE.

Leave a Reply

Your email address will not be published. Required fields are marked *