OPINION: Romania’s renewable energy resurgence

Romania's renewable energy sector has come a long way, navigating periods of stagnation and revival. One of the few constants during this journey has been the European Bank for Reconstruction and Development (EBRD), its persistence and comprehensive support.

A decade of stagnation and renewed momentum

For nearly a decade, Romania’s renewables sector was in dire straits. The boom from 2011 to 2014, driven by the Green Certificate scheme, gave way to a prolonged period of inactivity due to an unfavourable investment climate and regulatory uncertainties. We remained actively engaged, however, assisting Romania in reforming, and modernising its energy sector.

The landscape began to shift in 2020, spurred by the European Union’s Fit for 55 and REPowerEU initiatives, which aim to achieve at least 42.5% of final energy consumption from renewable sources by 2030. This renewed momentum drove a resurgence, but then the Covid-19 pandemic and the war in Ukraine temporarily halted this progress.

In response, we shifted our focus to Romania's utilities so that they weathered the storm. The Bank provided over €80mn in working capital facilities to companies like Premier and Electrica, ensuring the security of supply during a period of unprecedented uncertainty.

With price and liquidity concerns receding, however, we refocused on financing the renewables. Since the beginning of this year, EBRD has financed nearly 1GW of renewable capacity across six projects. These investments, amounting to over €180mn from the EBRD’s own funds, have further mobilised almost €1bn of private and public finance. 

This period also showed that energy price volatility and the absence of corporate Power Purchase Agreements (PPAs) were seriously hindering the renewables development there. To address the former, we recently helped design Contracts for Difference (CfD) renewables auctions scheme for up to 2GW. For private offtakes, the Bank helped introduce a new energy law that enabled corporate PPAs, to boost the sector's resilience.

Current challenges and a model for further growth

Network capacity constraints still pose a significant challenge to absorbing more renewables. To address this, in the last two years, the EBRD has invested over €220mn in modernising Romania’s electricity distribution sector through partnerships with Electrica, Delgaz, and PPC Romania. But there is plenty more to be done.

Across the border, our recent project with the Moldovan transmission system operator has targeted regional energy security and integration. This project, involving a €30.8mn loan will finance the construction of a new high-voltage power transmission infrastructure between Moldova and Romania, but also the overhaul of the former’s domestic transmission network. 

This initiative, co-financed by the European Investment Bank and the EU Neighbourhood Investment Platform supports energy security for both countries, but also the neighbouring Ukraine, facilitating further regional grid integration and electricity trade.

Our experience has shown that EBRD's trademark business model of investment, mobilisation, technical assistance, and private finance is cut out for further growth of renewables. Through its steadfast presence in Romania, the Bank has helped drive the country’s decarbonisation through its highs and lows and is set to remain the country’s key partner for the years to come.

Georgios Gkiaouris is the European Bank for Reconstruction and Development (EBRD) regional head, energy Southeast Europe.