Long-term power purchase agreements (PPA) with renewable energy generators under Romanian Energy Law

PETERKA & PARTNERS Romania is bringing into your attention an interesting topic connected to the dynamic Energy sector.

The legal article prepared by Dan Ciupala, Leader of Energy Practice at PETERKA & PARTNERS, focuses on a presentation of the specific issues related to the sale of the electricity generated from renewable sources through market-based long-term power purchase agreements (“PPAs”), that had been reintroduced in Law 123/2012 on Electricity and Natural Gas (“Energy Law”) by Government Emergency Ordinance No. 143/2021 (“GEO 143/2021”), that was approved in its final form by Law 248/2022, enacted on 24 July 2022, after being banned for more than eight years.

The topic is important for the operators on the current market, for the following reasons:

–             energy generation from renewable sources has substantially improved in terms of technology and efficiency, making renewable energy generation competitive with conventional technologies of power generation;

–             despite market volatility at the end of 2021, PPAs have continued to be seen as a long-term investment, providing developers with long-term bankability, reflected by cheaper prices for longer contracts, protecting prices against short-term market fluctuations;

–             there is no state-sponsored support scheme available in Romania for renewables: the previous green certificates scheme ended at the end of 2016. As a result, the installation of new renewable generation capacities has almost stopped since 2017;

–             the significant increase and volatility of wholesale electricity prices increased the demand for longer fixed-price electricity sourcing arrangements. Depending on the pricing formula, a long-term PPA can provide price certainty for a fixed period and thus protection against the volatility in the electricity prices both for the generator and the off-taker. A predictable and stable revenue stream are essential for the bankability of renewable projects.

For more details and related legal assistance connected to this matter, do not hesitate to contact PETERKA & PARTNERS Romania.

The extended version of this insightful legal material is available to read by opening this link.