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 within our law firm, 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.
We consider this topic to be of interest to 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.
The extended version of this insightful legal material is available to read by opening this link.
For more details and related legal assistance connected to this matter, do not hesitate to contact our Romanian office.