Romania is on track to accelerate its solar deployment in the coming years, and with a similar system as Greece, it gives a good overview as to what can be expected from the Eastern European country.
That is according to Panos Kefalas, senior associate for South Eastern European markets at consultancy Aurora Energy Research, who said there were similarities with Greece, which is a few years ahead in terms of the development of its solar sector.
“We see that there is this anticipation, this market is really hot, everyone is trying to get their share,” says Kefalas, adding that Romania could become on par with Greece when it comes to solar employment in the coming years.
The market in Romania currently has a “high interest”, due to the returns in Romania being higher than some other developed markets in Western Europe, notes Kefalas.
“This is because the market is at an earlier stage of development,” says Kefalas, adding that the first successful players are likely to enjoy higher returns, especially if they manage to sign corporate power purchase agreements (PPAs).
One good indicator of Romania’s solar industry taking off in the coming years is a recent report from trade body SolarPower Europe which placed Romania as the seventh biggest market in terms of EU solar jobs by 2026.
For Kefalas it is “only natural” that Romania could get there in the next five years, in a country where total solar PV installs sits at 1GW currently. The vast majority of installations in the coming years could be expected to come from the utility-scale segment, according to Kefalas.
Moreover, its manufacturing capability could also give the country an edge compared to its European neighbours and attract solar PV manufacturing jobs.
Another incentive for the country is its need to decarbonise, with the state-owned utility CE Oltenia planning to close 1.6GW of lignite generating capacity by 2026, thus creating a big gap in the system that renewables are expected to take the “lion’s share” of, says Kefalas.
“If you were to look at it from a timeline, for the next two to three years most of the competition and the development will be going through the competitive tenders on the CfDs but we will increasingly see PPAs coming into the market for financing new assets.”
New CfDs starting in 2023
Alongside PPAs, project asset owners will have the chance to participate in an upcoming contracts for difference (CfD) scheme being implemented by Romania’s government in conjunction with the European Bank for Reconstruction and Development (EBRD).
Even though the details are still not set in stone, the CfD scheme under development could target up to 3.5GW of solar PV and onshore wind by the end of 2024. The framework is expected to be finalised by Q4 2022, with the first auction in late 2023 and 1.5GW of renewables auctioned, with the remaining 2GW by Q2 2024.
While no amount has still been disclosed as to what extent the Romanian government is ready to finance the scheme on an annual basis, based on previous consultations held in 2019, the size of the subsidy for the mechanism was suggested to be around €125 million (US$122 million) per year.
Not everything is good news for the Romanian solar market with several concerns that could derail the country’s possibility of reaching 1GW of yearly installs, starting from within its government’s own policy, which has been deemed unstable, according to Kefalas.
He believes this risk could diminish over time as it no longer is a debate of coal versus renewables as the cost of renewables is lower for consumers, which will also bring the country closer to its decarbonisation targets set in the EU.
Targets the country needs to reach if it expects to receive money from the EU’s Just Transition Fund, which is in the scale of billions of euros.
The other two major issues Romania could potentially face have been recurring challenges in other countries too, starting with licensing issues, which is currently a very “bureaucratic process” in Romania with only a handful of people able to navigate through it, notes Kefalas. Grid constraints could potentially become a long-term issue.
One aspect that would unlikely have any “major negative impact” on solar PV is the EU proposed revenue cap on electricity generation set to start in December and at €180/MWh (US$177/MWh).
“[Romania] was one of the first countries that took measures to start fighting the energy crisis,” says Kefalas, adding that the country implemented a revenue cap last year of RON450/MWh (US$89/MWh).
The PPA market would unlikely be affected by the EU price cap, as prices for a seven-year PPA starting from next year in Romania is around €70-100/MWh, “which is very far from the cap”, adds Kefalas.
“We are on the brink of the second very big renewable wave in Romania,” says Kefalas, adding that this one will be more continuous than the previous one.
PV Tech publisher Solar Media will be organising the second edition of Large Scale Solar CEE in Warsaw, Poland during 8-9 November. The event will focus on Eastern Europe with a packed programme of panels, presentations and fireside chats from industry leaders responsible for the build-out of solar and storage projects in Poland, Bulgaria, Romania, Greece and Hungary.