The latest CfD auction in Romania has caused an unexpected shift in the Power Purchase Agreement (PPA) market dynamics. While over 1,500 MW of new renewable capacity was awarded, more than 1,200 MW failed to secure subsidies and now depend on PPAs to remain financially viable.

Imre Vass, Partner at Our New Energy, reviews the results and highlights a key issue: while almost all wind capacity secured CfD contracts, less than one third of the solar projects were awarded. This leaves a large number of solar developers looking for buyers in the PPA market.

“For onshore wind, almost all capacity was awarded. In the coming years, we will see less availability of wind PPAs because companies have opted for the stability of CfD subsidies,” explains Vass in an interview with Strategic Energy Europe.

On the other hand, solar projects left out of the CfD scheme face a double challenge: finding corporate buyers and signing contracts under favorable conditions to secure the profitability of their projects.

“Many solar assets were not awarded subsidies or were not awarded at sufficient prices, and they are now flooding the market, which cannot absorb such a large volume,” adds Vass.

Unsuccessful solar developers will need at least 55 EUR/MWh to make their projects profitable—prices they originally bid in the auction—but corporate buyers have seen that CfD contracts were awarded at lower levels. This creates an “anchoring effect” that complicates the negotiation of new PPAs.

“If a developer secured a CfD at 50 EUR/MWh, why would a private buyer pay more? This is the biggest obstacle that PPAs in Romania face now,” says the Our New Energy representative.

The Role of Cross-Border PPAs

Vass also analyzes the current landscape of PPAs in Romania and confirms that cross-border agreements were active in 2024.

According to Imre Vass, international buyers have historically preferred wind power due to its greater stability and lower intermittency. “Last year, we saw International buyers signing PPAs with wind assets in Romania because onshore wind was scarce in their domestic markets (e.g. Germany or Italy). However, we have not seen the same level of interest in solar,” he explains.

One of the biggest challenges for cross-border solar PPAs is Romania’s lack of integration into the AIB (Association of Issuing Bodies), which limits the transfer of Guarantees of Origin (GOs) to other European markets. This regulatory barrier makes some foreign buyers prefer closing contracts in countries with more stable frameworks.

“I think this was a major problem for many buyers who considered Romania a viable country for cross-border PPAs but were unwilling to take the risk of purchasing a Romanian PPA,” adds Vass.

Future Trends: How Will the PPA Market in Romania Evolve?

Romania remains in an early stage of PPA market development, similar to other Eastern European countries. However, according to Vass, Romania could follow the same growth trajectory as Western European markets.

“We expect Romania to go through the same development as other European markets. At first, cross-border PPAs will play a key role, but over time, we will see local companies and utilities take on a bigger role in purchasing renewable energy,” he explains.

This pattern has already been observed in Spain for example, where early PPAs were primarily cross-border or financial agreements before evolving into physical contracts with local corporations and utilities. The key to Romania’s PPA market growth will be its ability to create a critical mass of local buyers willing to sign long-term contracts for renewable energy.

According to Vass, the future of Romania’s PPA market will depend on three key factors:

1. The role of local buyers – While some Romanian companies have started signing PPAs, a larger number of domestic buyers is needed to strengthen the market.
2. Energy price evolution – If wholesale electricity prices rise, developers may prefer to sell their energy on the open market rather than through PPAs.
3. Future CfD auctions – If new subsidy rounds are announced, some of the 1,200 MW of unawarded solar capacity may try to re-enter the CfD scheme rather than seeking PPAs.

Ultimately, Romania has strong potential to develop a mature and diversified PPA market, but this will take time. The key challenge is whether local demand will rise fast enough to support solar and wind growth in the country’s energy transition.