Europe faces significant energy challenges, including securing stable energy supplies, accelerating renewable adoption, and managing rising prices. Infrastructure upgrades and cost competitiveness are also critical to meeting decarbonization goals. Romania’s energy sector is expected to undergo major changes with full market liberalization planned for April 2026 per the currently applicable legislative framework, reversing partial re-regulation from 2021-2023. Key features include removing price caps and state-imposed controls to align with EU regulations and promote competition.
While liberalization aims to enhance efficiency and attract investments, it poses risks for vulnerable consumers exposed to market volatility. FIC emphasizes that support for vulnerable consumers should be managed and funded by public authorities rather than energy suppliers facing cash flow challenges.
Trading interest in 2025 delivery products, together with the confidence of market players, is waning due to uncertainty around liberalization timelines, i.e., unclarity on future conditions. Significant investments are essential for future energy security and independence, necessitating coordinated strategies between public authorities and private investors with clearly defined roles and rights.
Legislative stability, predictability, and transparency remain vital for attracting large investors. Recent rapid regulatory changes, implemented through emergency ordinances without adequate consultation (e.g., GEO nos. 27/2022, 119/2022, 153/2022, 186/2022, and 32/2024), have strained market players. Frequent legislative shifts, tight compliance deadlines, and legal imperfections are disrupting market functionality.
Balancing secure and affordable energy with decarbonization goals amidst geopolitical shifts and altered supply patterns remains a critical challenge at the EU level. Natural gas continues to play a vital role in balancing renewable energy, with the EU importing over 80% of its gas. Romania must strengthen fiscal and regulatory frameworks to support domestic production while addressing the significant compliance costs imposed by EU regulations. Although essential for climate objectives, these policies risk raising energy prices and affecting consumer affordability.
Market interventions have already stressed fragile supply chains, prompting calls to return to predictable, market-based mechanisms. The European Commission's revision of the security of supply framework should prioritize affordability, as the European Court of Auditors recommended in September 2024.
Gas
Romania’s gas supply infrastructure faces unique challenges. The Gas Interconnector Greece-Bulgaria (IGB) offers new supply routes but highlights Romania's reliance on net-importer neighbors like Hungary and Bulgaria. Despite increased gas imports through Bulgaria and transit flows to Hungary and Moldova, Romania’s role as a transit hub necessitates infrastructure upgrades and strategic planning. Liquefied natural gas (LNG) diversification offers opportunities, but logistical constraints, including Turkey’s ban on LNG tanker crossings through the Bosphorus, limit immediate prospects.
Romania’s regulatory environment should be adapted to increase needed private investments, essential for modernization and energy transformation. FIC advocates for a legislative framework that aligns with European principles, ensuring market fairness and addressing price pressures and long-term supply security.
Electricity
Investments in electricity infrastructure are critical to maintaining stable, efficient, and secure energy systems. Removing technical and regulatory barriers, reducing capital costs, and sharing best practices are essential. However, recent legislative measures—including regulated price obligations and introducing the 1% special construction tax—have disrupted cross-border trading, undermined investment signals, and strained market functionality.
GEO 27/2022 and subsequent amendments introduced consumer support schemes to reduce energy prices but imposed heavy financial burdens on suppliers. The European Commission’s guidelines and infringement procedures warn against support measures that compromise supplier liquidity, emphasizing the need for compensatory mechanisms. Moreover, excessive contributions to the Energy Transition Fund—which fail to account for justified operational costs—double-tax electricity producers, complicating production and trading activities. A recent Romanian constitutional decision highlighted the need to reevaluate the framework governing these contributions, emphasizing compliance with legal and economic principles to avoid jeopardizing market stability.
Frequent, untransparent legislative changes to correct initial errors have led to financial losses and diminished investor confidence. FIC underscores the importance of transparent governance and constructive stakeholder dialogue to prevent such disruptions.
Ensuring the security of supply and stable grid operation without undue distortions of the internal market by an adequate level of generation capacity, an adequate balance between supply and demand, and an appropriate level of interconnection between Member States should be the guiding principles to be taken into account. When making decisions on the future evolution of the EU market and finding long-term solutions, thorough and meaningful consultation with relevant market actors should be the norm, starting at the national level. The response to the triple challenge of ensuring supply security, leading the transition towards a low carbon economy, and affordability of prices should consider the limitations of the current EU market and the global nature of the gas market.
As gas will continue to ensure one-third of the national electricity mix in the medium term, thanks to its reserves, Romania can increase its energy security through new production capacities and reduced demand. Concerning the former, as some of the main reasons behind the current energy price crisis are linked to the limited internal (at national as well as at EU level) gas supply and exposure to the need for imports, an investment-friendly legislative framework is required to uphold and extend current production capacities through the application of technologies which increase the degree of recovery from existing deposits, but also to facilitate the further development of deep onshore and offshore projects. Although increasing the electricity production capacities from other sources of energy is equally important (see the Sustainable energy production & consumption chapter) - an increased share of wind and solar PV in the electricity mix by itself, in the absence of large-scale storage solutions, does not overcome the risks of intermittency. Thus, gas turbines might remain a flexible response source in the energy transition.
In November 2023, the Biriș-Goran study concluded that the effective tax rate, measured as the proportion of taxes specific to the upstream oil and gas sector in Romania in total production revenues, increased from 16.0% in 2020 to 28.9% in 2021 and 43.1% in 2022 (if we exclude the solidarity contribution), or 52.2% in 2022 (with the inclusion of the temporary solidarity contribution). Therefore, at the European level, Romania records by far the highest effective tax rate in 2022 and 2021, standing at a level 4 times higher than the simple average of the effective tax rates identified in the other European states. It is essential to ensure fair, stable, and predictable taxation to enable the sector to continue to invest and grow sustainably, ensuring Romania's energy security.
Romania has a total gas storage capacity of 3.3 bcm (active capacity/year). Efforts should continue and be sped up to extend the capacity and daily output at sites such as Târgu-Mureș and Sărmășel.
The renewable energy sector in Romania has grown significantly due to its potential in wind, hydro, biomass, CCUS (carbon capture, utilisation and storage), and solar energy, alongside a support scheme launched in 2008. The most recent data from Transelectrica ( Figure ???. with information published in April 2024) shows the total installed capacity for electricity is estimated at 15206 MW, with a net power of 14166 MW, thus supporting the country’s goal of having 38.3% of its gross final energy consumption come from renewables by 2030, with a target of 57.8% in final electricity consumption. However, retrospective legislative changes have impacted new investments and created financial difficulties for operational units.
To address these issues, the government has implemented measures since 2018 to improve the green certificate market, including increasing the annual quota and extending certificate availability. In line with the European Green Deal's aim for a climate-neutral Europe by 2050, Romania updated its National Energy & Climate Plan (NECP) in October 2024, targeting 38.3% renewable energy by 2030, a significant increase from the 2020 goal of 24%. This requires Romania to add about 10 GW of new wind and solar capacity by 2030.
The government has also launched a Contract-for-Difference support mechanism, with the first round concluding in December 2024, guaranteeing strike prices for significant onshore wind and solar PV capacities. Additionally, EU funding through programs like the Modernisation Fund and Just Transition Fund will support these targets. The European Green Deal emphasizes biomethane and hydrogen’s role in decarbonizing Europe’s energy system, with the REPowerEU plan and revisions to RED II and III pushing for biomethane and renewable hydrogen deployment and energy transition acceleration.
A clear, predictable, non-discriminatory & aligned with the EU legislative background policy framework is needed for hydrogen infrastructure, with transparent access to infrastructure and market conditions to foster competition.
The goal is to create viable business models with minimal regulatory intervention. This includes harmonizing zones and building permits, simplifying approval processes for electrolysis and hydrogen fueling projects, and implementing fast-track permitting with European standards.
Biofuels can significantly reduce emissions in heavy-duty transport, shipping, and aviation sectors, where decarbonization is challenging. Romania’s agricultural sector provides a competitive advantage.
Romania’s agricultural sector and waste management systems offer high potential for sustainable biomass production, supporting RES deployment and the circular economy, but secondary legislation and co-financing are needed.
New support schemes should be financed through European funds to relieve pressure on Romania’s state budget.
Energy grids are crucial for achieving the European Green Deal’s goals, enabling renewable energy integration, industrial electrification, and energy accessibility. Modernizing electricity and gas grids is vital for decarbonization, energy security, and economic growth, requiring EU member states to embed these infrastructures into national strategies. Key areas include adapting power grids for renewables, transitioning gas grids for green gases, and leveraging digital tools to enhance grid efficiency and resilience. Although green gas grids are a priority, a case-by-case opportunity analysis should underpin and ensure decisions to expand existing natural gas infrastructure together with adequate financial support. Sector coupling between electricity and gas systems further optimizes energy supply and demand.
Electricity grids are increasingly recognized for their critical role in the energy transition. The International Energy Agency (IEA) highlights that delayed grid development could lead to 58 gigatons of additional CO2 emissions by 2050, significantly impacting climate targets. Similarly, the Eurelectric Grids for Speed Study estimates that Europe requires €55-67 billion annually for grid distribution investments until 2050 to accommodate clean energy growth. Without accelerated investments, the EU risks missing its decarbonization targets by approximately 30%.
Strong public support and effective policies are necessary to address modernization challenges and ensure Romania’s successful energy transition while contributing to the EU’s broader climate goals.
Update the Romanian Energy Regulatory Authority (ANRE) mandate to eliminate regulatory and financial barriers and align with European energy transition legislation.
Build on recent electricity market reforms by introducing mechanisms like ex-ante recognition of investments and ensuring timely operational cost coverage.
Develop competitive incentives reflecting the actual cost of capital while balancing debt and equity requirements.
Encourage investments integrating clean energy generation and flexible consumption technologies by providing explicit definitions and reducing associated risks.
Combine private investments with public financings, such as a distribution network fund, and advance the Capital Markets Union to attract European funding.
Address electricity system capacity challenges to meet industrial demands, as emphasized in the Draghi Report.
Prioritize infrastructure to ensure affordable, competitive energy access for residential and non-residential consumers.
Showcase how renewable energy integration has saved EU consumers €34 billion annually, with Romanian households saving €220 during the energy crisis.
Implement measures to effectively manage the intermittent nature of renewable energy generation.
Enable renewable energy producers and storage service providers to participate actively in the energy market.
Simplify authorization processes to reduce delays and align with climate goals.
Introduce state aid schemes and fiscal incentives to offset industry tariff increases.
Ensure non-reimbursable funding supports balanced energy sector development across the value chain.
Collaborate with authorities to align Romania's energy transition with strategic industrial and energy objectives.
Gas infrastructure is critical to Europe’s energy transition, supporting energy security and balancing renewable energy intermittency. Modernizing traditional natural gas grids to integrate renewable and low-carbon gases like hydrogen and biomethane is essential for achieving carbon neutrality by 2050.
The EU recognizes gas infrastructure's dual role in maintaining energy security while transitioning to sustainable sources. Romania, with its strong natural gas sector and extensive network, is well-positioned to lead this transition by:
Upgrading Infrastructure: Supporting renewable and decarbonized gases while ensuring supply stability.
Leveraging Strengths: Building on its established natural gas framework to incorporate green technologies.
Aligning Policies: Adopting regulations that facilitate the shift to sustainable gases.
By advancing its gas grid, Romania can secure its energy future and align with EU climate objectives.
Modernize regulations governing gas transmission and distribution infrastructure to accelerate the integration of green gases into the energy system.
Remove regulatory and legislative barriers to the injection of biomethane into the existing gas distribution networks. Biomethane is a gas that can reach the same composition as today’s methane and fit the same quality requirements, and therefore be injected into existing grids without need for infrastructure changes or modifications to end-use technologies.
Implement certification schemes and proof-of-sustainability documents to verify the authenticity of green gases. This supports market demand by helping off-takers avoid costs associated with carbon certificates and aligns with RED III energy and climate objectives.
Encourage the production and use of green and low-carbon gases to build a more dynamic market. Address the current low liquidity by attracting more participants, including buyers and sellers, to bolster market activity.
Strategically allocate green gases across gas, power, and heating markets. Integrated planning between these sectors will optimize efficiency and enhance supply security.
Introduce subsidies, tax credits, or grants to offset production costs and encourage private sector investment in green gas technologies.
Develop off-grid or microgrid solutions that directly utilize renewable energy sources like hydrogen or
Foster innovation to reduce production costs and enhance the efficiency of green gas technologies, including electrolyzers and biomethane production processes.
The energy transition requires a fundamental shift in how energy is produced and consumed, moving from a unidirectional model to an interdependent system where consumers also act as producers—prosumers. Technological advancements and rising energy costs enable residential and industrial customers to manage their energy use, transforming their role in the energy system.
In Romania, the growing number of prosumers highlights this shift. Clear and predictable regulations are needed to support this trend to ensure sustainable development. Challenges like competition distortions and grid connection costs can be addressed through partnerships between prosumers, energy producers, and transmission companies.
Prosumers contribute to grid stability, reduce energy poverty, and support regional economic growth. Their integration into the energy system is essential for balancing grids, lowering peak loads, and advancing Romania’s climate goals.
The relationship between prosumers and companies in the electricity sector heavily depends on modern grids. Romania should invest in innovation to develop projects and initiatives that will ultimately result in flexible and efficient distribution networks that can accommodate new types of services such as micro-generation, demand reduction, load shifting, or energy storage.
In addition, it would be particularly beneficial for the authorities to encourage Renewable Energy Communities, whose members can participate in installing and using systems for producing and self-consumption energy from renewable sources.
Overall, Romania’s strategic plans should take into consideration the potential of prosumers, and the authorities should encourage this positive trend by providing adequate financial and especially regulatory support.
Legislation should be amended so suppliers can access historical individual prosumer consumption and production values to improve forecast accuracy and mitigate short-term imbalances, which otherwise threaten grid stability and balance market price affordability.
While prosumers are currently in a commercial regime similar to simple consumers, with fixed prices and monthly settlements, their contractual framework should better reflect their situation. For this, where prosumers have adequate metering, contracts should go down to an hourly basis for both volumes and prices of the energy consumed from the grid or injected from production surplus. This would raise prosumers’ awareness of energy value relative to the time of day, and it would likely mitigate the risk of market-wide volume and price fluctuations
EU directives and regulations have largely driven Romania's environmental and energy policy developments. Ensuring timely and accurate transposition of these directives (yet considering RO’s specifics) into domestic legislation is critical for pursuing climate neutrality and achieving the 2030 sustainability agenda. Effective implementation requires strong institutional capacity, administrative efficiency, and inter-ministerial coordination.
Research highlights key challenges in Romania, including poor coordination among institutions, delays in program development due to weak local public administration, and heavy political interference. Additionally, limited project management capacity and strategic planning hinder progress. These institutional weaknesses impact the effective application of EU law on the ground.
To address these issues, the European Commission has introduced tools such as the ComPAct initiative, launched in 2023. Pillar 3 of ComPAct focuses on enhancing the capacity of Member States to lead the green transition, offering a framework of actions and principles to support administrative reforms and future preparedness.
Given the fact that in the new mandate, the Commission will focus on ensuring full and timely implementation of the new legislative framework, in particular the revised RED, Methane Regulation, revised REMIT, revised EMD, and NZIA, including the adoption of the required implementing acts under this Regulation, strong political ownership is needed in the immediate future in addressing the issue of institutional capacity. Therefore, we strongly encourage the public administrations to make the most of the available European enabling tool kit (technical support instrument, EIR-TAIEX Peer 2 Peer tool, ComPAct) to learn, innovate and improve. Furthermore, we call for a strong engagement of all actors and stakeholders of the European Administrative Space, a meaningful collaboration and dialogue within the Commission’s Expert Group for Public Administration and Governance, as well as a strong cooperation through the European Public Administration Network (EUPAN), the Network of Directors of Institutes and Schools of Public Administration (DISPA).
Balancing short- and long-term measures to achieve decarbonization while maintaining economic resilience and competitiveness is a key challenge at both the EU and national levels. Significant developments, as part of the EU’s Fit for 55 package, include the Net Zero Industry Act (NZIA) and the Renewable Energy Directive revision (RED III), which address technologies such as carbon capture, utilization, and storage (CCUS), hydrogen, biomethane, and renewable fuels of non-biogenic origins (RFNBO).
In Romania, progress includes a long-term Decarbonization Strategy, a Hydrogen Strategy and action plan, an Energy Strategy 2025 – 2035 and revisions to the national integrated energy and climate plan (NECP 2030). These align national objectives with EU developments, with FIC contributing via position papers and public consultations.
Hydrogen and CCUS are central to the EU’s decarbonization efforts, recognized for their contribution to reducing greenhouse gas emissions and integrating renewable energy into the energy system. Romania’s National Energy Strategy recognizes the role of CCUS in decarbonization and emphasizes hydrogen’s use across various sectors, leveraging existing infrastructure for decarbonization. Hydrogen also facilitates sector coupling, integrating production, transport, and consumption systems.
Additionally, hydrogen serves as a long-term energy storage solution, addressing renewable intermittency. The gradual adoption of hydrogen-natural gas blends provides a cost-effective pathway for emissions reduction while utilizing existing infrastructure.
Due to the extension during RED II to thermal (heat and industrial sector) energy, to assure the continuation of biomass energy utilization in industrial processes (including for waste-derived fuels with biomass content), a national scheme for certification of biomass and achievement of greenhouse gases saving criteria should be soon established, given the RED III transposition. This scheme should consider the existing national legislation for waste stream traceability and ensure that EU-ETS verifiers can be used to validate GHG savings determination.
For CCUS to become a reality in Romania and objectives for this field to be met, given the fact that decarbonization will take place only when the entire value chain functions and taking into account the 7-10 years’ timeline of such projects – co-financing should be assured for each part of the chain development from Modernization Fund and other national sources, along with support for Innovation Fund applications and specific infrastructure development. Moreover, given the high complexity of this newly forming value chain on CCUS and taking into account how challenging the targets imposed by NZIA are, the involvement of the Romanian state in its regulatory and funding roles is not sufficient – a more proactive approach is needed, that will drive the development of the CCUS ecosystem along the value chain.
This holistic approach should include mechanisms to facilitate dialogue and cooperation among various local actors (e.g., companies, relevant public institutions, research and development organizations, etc.) and know-how transfer between the Romanian ecosystem and more advanced CCUS jurisdictions. Such mechanisms can stimulate the speed of development of such technologies in Romania. They can also contribute to reducing the costs associated with this domain’s development in accordance with local ambitions. Lastly, consistent interinstitutional dialogue between Romanian and EU institutions is needed in the context of the NZIA Regulation's disproportionate effects in terms of national companies' storage capacity obligation.
To meet commercial-scale demand for hydrogen by the objectives outlined in NES, significant volumes of surplus energy are needed. For instance, producing 1 million tons of hydrogen annually would require approximately 50-60 TWh of electricity solely for electrolysis, roughly amounting to Romania's current annual electricity consumption. In turn, 1 million tons of hydrogen equals the energy content of over three bcm of natural gas.
Provide an even-level playing field for low-carbon hydrogen, as blue and yellow hydrogen have the potential to balance immediate hydrogen demand with the longer-term goal of green hydrogen scalability
Hydrogen is a long-term energy storage solution, complementing battery systems that are better suited for short-term storage. Energy policies should consider that the efficient utilization of hydrogen hinges on its ability to absorb energy during prolonged surplus periods.
Encourage the prioritization of hydrogen production during curtailment periods for energy production (on the background of dispatch requests or due to technical or commercial congestions);
Enable the possibility for renewable energy projects to temporarily leverage the advantage of gas infrastructure, which can be used as a storage solution, in situations where technical congestions forbid early access to power grids;
Stimulate R&D activities to improve efficiency, reduce electrolysis technologies' costs, and develop dynamic electrolyzes that can operate flexibly in response to fluctuating electricity supply.
Stored hydrogen can serve as a transportation fuel, an industrial feedstock (e.g., in ammonia or steel production), or be blended with natural gas for use in heating systems. While large-scale electrolyzers must be installed near renewable energy hubs to utilize surplus electricity efficiently, it is to be expected that small renewable energy producers will require means to unload their excess production at a local level. Further development of the energy system would also require an assessment of the existing district heating systems' potential to transition towards green gas utilization, including hydrogen.
Capitalize on low or negative electricity prices, converting cheap or excess electricity into hydrogen;
Encourage innovation conversion technologies in dual-fuel turbines capable of running on both hydrogen and natural gas.
The transition to renewable energy is pivotal for reducing greenhouse gas emissions and achieving climate goals under the European Green Deal. This transition brings significant socio-economic implications for Romania, requiring careful management to ensure equity and stability.
Romania’s energy mix is diverse, comprising fossil fuels (32%), nuclear (20%), hydropower (28%), wind (12%), and solar (4%). However, coal-reliant regions face substantial challenges, with coal mining jobs declining by over 35% in the past five years. Transitioning these workers to renewable energy roles necessitates robust retraining programs and targeted educational initiatives.
Energy poverty and unemployment disproportionately affect rural and economically vulnerable areas. In 2022, 15.2% of Romanian households reported being unable to keep their homes adequately warm, an increase from 10.1% in 2021. This is higher than the EU average, which rose from 6.9% in 2021 to 9.3% in 2022. Addressing energy poverty while implementing renewable reforms is critical to maintaining public support. EU funds, including €2.2 billion from the Just Transition Fund, provide resources to support affected regions and promote sustainable job creation in renewable industries like construction and maintenance.
Investment in advanced technologies, such as smart grids and energy storage, enhances energy efficiency and fosters economic opportunities. Comprehensive strategies that balance environmental objectives with socio-economic equity are vital for Romania’s successful energy transition.
The Vulnerable Consumer Law in Romania requires a thorough review and update, as its current provisions have proven insufficient in addressing the severe disruptions caused by energy market volatility. This revision should focus on increasing financial support for low-income households and introducing flexible mechanisms that can adapt to fluctuations in energy prices or changing economic conditions. Expanding eligibility criteria is also crucial to ensure that more individuals in economically disadvantaged areas receive the support they need.
In tandem, Romania must implement comprehensive workforce transition programs to address job losses in the coal and fossil fuel sectors. These initiatives should align closely with emerging opportunities in renewable energy industries like wind, solar, and energy storage. Particular attention should be given to mono-industrial regions, where retraining efforts can be tailored to local needs. Collaborative efforts between government, private companies, and educational institutions will be essential to equip workers with the skills required for the green economy.
Targeted investment strategies are also vital for ensuring equitable regional development. EU funds, particularly the Just Transition Fund, should be deployed to diversify economies in coal-reliant regions. Investments in renewable energy projects that create local jobs and foster long-term economic growth must be prioritized. Additionally, financial incentives should be introduced to attract businesses willing to establish operations in affected areas, thereby stimulating broader economic activity.
Addressing energy poverty is another pressing challenge that requires immediate action. Enhancing Romania’s National Energy Poverty Strategy involves supporting community-based renewable energy projects to provide affordable energy solutions, especially in rural regions. Promoting energy efficiency measures, such as subsidizing home insulation or energy-efficient appliances, can further alleviate the burden on vulnerable households. Public awareness campaigns are equally important to educate citizens on reducing energy consumption and accessing available assistance programs.
Mapping of the Available Financing Instruments – EU Level
The European Union offers various financing mechanisms to promote sustainable infrastructure, clean energy, and innovation. Key instruments include the Connecting Europe Facility (CEF), Horizon Europe, the LIFE Program, the Innovation Fund, the EU Renewable Energy Financing Mechanism (RENEWFM), and the InvestEU Fund. With a €33.7 billion budget for 2021-2027, CEF supports transport, energy, and digital infrastructure, focusing on projects like grid modernization and hydrogen infrastructure. Horizon Europe, the EU’s flagship program with a €95.5 billion budget, advances research and innovation, addressing societal challenges and climate goals, with Romania securing €258.5 million for 978 projects.
The LIFE Program, funded with €5.4 billion, focuses on biodiversity and clean energy transition, supporting environmental projects in Romania since 1992. The Innovation Fund, offering €38 billion through 2030, prioritizes low-carbon technologies such as renewable energy and carbon capture. RENEWFM promotes cross-border renewable projects through competitive bidding, while the InvestEU Fund mobilizes €9.9 billion in guarantees for sustainable infrastructure and cleantech innovation. These mechanisms are vital for achieving EU climate neutrality and energy efficiency objectives.
Mapping of the Available Financing Instruments – Romania
Romania utilizes national mechanisms to support its renewable energy transition and meet EU climate goals. Key tools include the National Recovery and Resilience Plan (NRRP), the Just Transition Fund, the Modernization Fund, the Sustainable Development Operational Program (PODD), and the Large Infrastructure Operational Program (POIM). The NRRP, with a €1.7 billion energy-related budget, supports renewable energy development, allocating €458 million to 116 projects for wind and solar energy capacity.
The Just Transition Fund provides €2.2 billion to assist regions most affected by the transition, focusing on economic diversification and workforce development. The Modernization Fund aids renewable energy and energy efficiency projects, while PODD and POIM focus on advancing sustainable infrastructure and large-scale energy improvements. These instruments are pivotal in fostering innovation, sustainability, and alignment with EU climate objectives.
The Modernization Fund, with €15 billion for Romania, supports renewable energy, efficiency, green hydrogen, and coal infrastructure replacement, enabling large-scale energy projects critical for the transition. The Modernization Fund is a key financing instrument that supported the development of a large number of major energy Projects in Romania:
Projects in municipalities like Iași, Constanța, and Timișoara received €780 million for high-efficiency cogeneration and €600 million for modernizing district heating networks. The fund also supports renewable energy via Contracts for Difference (CfD), offering long-term contracts to minimize investor risks. The first CfD tender in November 2024 will auction 2,000 MW of solar and wind capacity, with strike prices set at €78/MWh for solar and €82/MWh for wind energy.
In the design phase of the CfD, similar systems were reviewed in many other EU countries, and the modeling considered the comparison with the most prevalent subsidy scheme in force at that time, namely the Green Certificates scheme. The figure below compares the revenue streams of energy generation projects under both a GC regime and a CfD regime. As can be seen from the charts, due to higher exposure price movements, the revenue stream in a GC regime is much more volatile than under the CfD regime. From an investor’s point of view, the respective project constitutes a less risky investment under the CfD regime.
The Sustainable Development Operational Program (PODD) allocates €5.2 billion to address climate change and pollution while promoting cleaner energy, focusing on water infrastructure, environmental protection, climate adaptation, and energy efficiency, including smart energy systems. The Large Infrastructure Operational Program (POIM) dedicates €1.3 billion across axes targeting energy efficiency, renewable energy, and climate resilience, supporting clean energy in residential and public buildings, urban mobility, and climate risk mitigation. These mechanisms are vital for Romania’s energy transition, enhancing security, reducing emissions, and fostering innovation to meet EU climate goals.
Considering the large investment required by the Energy Transformation Strategy to achieve the three main targets on time (greener, cheaper, and safer energy), the primary funding strategy for Romania should be to maximize the catch of EU grants and subsidies. This requires public authorities and private investors to work closely together in a coordinated and complementary manner. To attract private investors to fund the energy transformation, the Romanian government should also consider:
Highlight which areas private investments are welcome/add the most value.
Delivering a strong commitment to resilient support to favor such private investments.
Supporting private investors in obtaining grants and loans from the EU to increase the overall hit ratio (no competition between public and private sectors).
Committing formally to the stability of the laws and regulations that are vital in the business case of investors and critical to attracting private investors and banks to fund these projects.
Promoting this strategy and state support when meeting key investors.
Offering more flexibility regarding access to the Operational Programs for private companies.
