Contracts for Difference

How the mechanism works

A two-way CfD pays the generator the difference between the strike price won at auction and a market reference price when the market is lower, and requires the generator to pay back the difference when the market is higher. The Romanian contracts run for 15 years, are awarded by the Ministry of Energy through competitive rounds and are financed from the Modernisation Fund with a budget of EUR 3 billion; the EBRD supported the design and has reported that the auctions helped mobilise around EUR 1.6 billion of financing since 2024. Strike prices are adjusted for inflation only every three years and only if cumulative inflation exceeds 10%, a feature the Energy Policy Group has flagged as a risk for aggressively low solar bids.

Results by round

Round 1 closed in December 2024 with 1.53 GW: about 1.1 GW of wind across ten projects and 432 MW of solar. Round 2 closed in August 2025 with 2,751 MW: 1,488 MW of solar across 26 winning offers at EUR 35.50 to 45.20/MWh (average EUR 40.46/MWh) and roughly 1,260 MW of wind across 23 projects at EUR 65.17 to 79.5/MWh (average EUR 73.8/MWh). Because round 2 cleared only about 60% of its 2 GW wind target, a wind-only round 3 in December 2025 awarded about 316 MW at EUR 59.95 to 74.9/MWh. The combined awards exceed the 3.5 GW target set in Romania's Recovery and Resilience Plan.

Obligations and delivery

Winners must reach commercial operation within 36 months of signing, which puts most of the awarded capacity on a 2028 deadline. Bid bonds and performance guarantees apply, and grid capacity must be secured under Transelectrica's 2026 procedures. The concentration of delivery dates is now the scheme's main execution risk: contractors, equipment and grid slots are finite, and the projects most likely to deliver are those with an experienced EPC under contract and a confirmed connection.

Design gaps investors should know

The scheme does not reward storage, so co-located batteries need a separate revenue model. The three-yearly inflation indexation exposes low solar bids to real-terms erosion. And because the reference price is a market index, negative-price hours interact with the payment mechanics in ways that deserve legal review before signing. Future rounds have been discussed publicly, but no dates were confirmed at the time of writing.

What this means for investors

• A CfD award is revenue certainty, not delivery certainty; underwrite the EPC contract, equipment lead times and grid status separately.
• Compare strike prices to your capex under the actual indexation terms, not under annual CPI assumptions.
• Round-2 solar prices show where competitive bids landed; any acquisition of an awarded project should be priced against that benchmark.
• Storage co-located with a CfD plant needs its own business case.

Momentum Energy's view

The CfD scheme has done what it was designed to do on the demand side: it brought international capital and lenders into Romanian projects at scale. The open question for 2026-2028 is delivery. We think a meaningful share of the lowest-priced solar awards will struggle to reach financial close on the original terms, and that the value in the scheme sits with holders of realistically priced contracts and confirmed grid capacity.

The view above is Momentum Energy's opinion and is separated from the sourced facts in the tables. It is not investment advice.