The onshore wind industry is propelled not only by European funds, but also by an unprecedented reduction in costs. Offshore wind is making a timid debut, although the potential of the Black Sea is 76 GW, and the Swedes of OX2 are also closely watching this market segment, as they have extensive experience in the field. OX2 has in its portfolio local projects of 620 MW, especially in the wind field, including the 99 MW project that was the subject of one of the most important transactions in Romania, but over time, OX2 will diversify its technologies, including by launching in projects solar, storage and hydrogen, says Lăcrămioara Diaconu-Pințea, Country Manager OX2 Romania, in an exclusive interview provided by Energynomics.
What are the main investments and projects of the company at the local and regional level? What are your plans for 2025 and in the medium and long term?
In Romania, we already have two very important moments. The year 2021, when we entered this market and 2024, the year of the first transaction in Romania. In August, OX2 entered into an agreement to sell a 99.2 MW onshore wind project to Nala Renewables.
The project is located in the east of Romania and has access to the network. OX2 will be responsible for the construction of the wind farm, the works started in mid-November. Commissioning is planned for the first half of 2026. It is a project that benefits from all necessary agreements and approvals at this stage, including a 12-year PPA agreement with a multinational corporation. It is what we can call a transaction made “as per the book”, offering all the guarantees that the project will be completed and generate green energy. Once commissioned, OX2 will be responsible for technical and commercial project management, operations oversight and production optimization.
OX2 is also in the process of selling another wind project of similar size, located in the same region in eastern Romania, and the transaction is expected to close around the end of this year.
We have been in Romania for less than four years, but we have expanded our portfolio to five onshore wind projects, with a total capacity of 620 MW. We have a realistic development plan in this market, which means constant organic growth, but also through acquisitions that ensure the solidity of the portfolio. Over time, OX2 will diversify its renewable energy technologies – wind, photovoltaic, storage and hydrogen. We aim to double the portfolio in the next two years, with a focus on wind projects.
In the CEE/EEA region, our presence is dynamic and growing. In addition to Romania, we are active in two countries: Poland, where we develop, build and operate onshore wind projects and have several photovoltaic and storage projects under development and construction; Greece, where we are present from 2022 with photovoltaic and storage projects in the development stage.
What was the evolution of the renewables market in 2024 and what are its prospects? What are the main changes in the total Capex costs, also from the perspective of turbines, vanes and other raw materials, and how has the speed of project completion evolved compared to previous years? How has the return on investment changed recently?
Romania has a huge potential in terms of renewable energy sources. It made important steps to benefit from this potential, but still the pace is not the desired and necessary for Romania to reach its targets in the field. According to Transelectrica data, at the end of the first semester of 2024, Romania had installed in green energy projects a gross power of 4,790 MW, dispatchable wind and solar, i.e. projects with an installed power of over 5 MW. The capacity is almost unchanged compared to the 4,708 MW with which Romania ended the year 2023.
European Commission officials in Romania recently drew attention to the fact that the share of renewable energy in Romania’s electricity production mix has stagnated in recent years, and measures are needed to reach the forecasted levels. Thus, the share of wind and solar energy has largely stagnated, reaching 17% in 2023 – from the level of 15.7% already reached in 2020. Therefore, better coordination of investments throughout the chain is needed – of to the implementation of green projects, storage and transport solutions and, at the same time, a continuous dialogue between the private sector and the authorities.
From the perspective of OX2, the evolution of technology costs until 2030 reflects complex market dynamics, with notable differences between technologies.
For onshore wind, we estimate a gradual decrease in Capex from a level of almost 2,000 euro/kW in the last period to around 1,600 euro/kW in 2030. In the definition of this indicator we include all those investment costs since the authorization period.
The price of a wind turbine is influenced by a combination of fundamental factors. First, the cost of raw materials—especially steel for the tower and structural components, composite materials for the blades, and copper for the generators—has a major impact. A crucial element in the pricing structure is the post-installation service package. The existence of a Long Term Service Agreement type contract and the degree of local presence of the manufacturer to ensure the service significantly influence the total cost.
Economies of scale and the global market context – from turbine demand and available production capacity, to the state of supply chains – also drive significant price variations.
A major influence is brought by the cost of connection to the transmission/distribution network and the location of a project as well as the market context
The reduction we anticipate reflects the maturing of the technology and the stabilization of the market. The market for turbine manufacturers is going through a period of transformation, with pressure on margins and the need to invest in innovation, which could influence the pace of cost reduction.
In the solar sector, the downward trend is more pronounced, with an estimated reduction of about 20% to about 500 euro/kW by 2030. This decline is supported by the massive expansion of production capacities, especially in Asia, and the continuous improvements in the efficiency of the panels. Intense competition and global production overcapacity are putting downward pressure on prices. However, we must keep in mind that short-term fluctuations may occur due to disruptions in supply chains or protectionist trade measures.
The most dynamic sector remains that of storage systems (BESS), where we anticipate a significant reduction of more than 20% to around the 400 euro/kW threshold by 2030. This sector benefits from continuous technological innovation and massive investment in capacity production for batteries, boosted by the growth of the electric car industry.
For the period up to 2030, we believe that the key factor will be the industry’s ability to innovate and optimize not just the costs of individual components, but the entire value chain, from development to operation and maintenance.
From our direct experience in project development, we note that these cost reductions are partially offset by increased project complexity and network integration requirements. We are also seeing an increasing trend in the average size of projects, which allows for further cost optimizations through economies of scale.
Project size has also evolved from 30-50 MW a few years ago to 100-150 MW today for onshore wind. This growth is driven by economies of scale and streamlining of development and construction processes.
The outlook for the coming period remains positive, supported by the stabilization of supply chains, the increase in technological efficiency, the increase in demand for green energy from industrial consumers and the favorable regulatory framework at European level.
An important aspect is also the maturation of the corporate PPA market, which offers developers more predictability and options for project monetization.
How do you see the development of the offshore wind market in the next period, in Romania? Are the steps taken so far sufficient and what would be the necessary steps to take from now on?
The first step was taken by adopting the law for the production of wind energy in the Black Sea. We therefore have a starting point to lay the foundations and then develop this market of offshore wind projects. We also have a World Bank study – Offshore Wind Roadmap for Romania – which shows that Romania would have a huge potential, up to 76GW, in wind power plants in the Black Sea. Thus, until the year 2035, it would follow that 19 billion Euro projects will be implemented in the Black Sea, which will mean a capacity of 7GW for the national energy system and approximately 77,000 new jobs. A national target was introduced in the Energy Strategy: by 2032, Romanians should benefit from the energy produced in the Black Sea with an installed power of at least 3GW. If this pace is maintained, it’s good news for any company in the field, as OX2 is. We are a top developer in the field of renewable energy and we want to reproduce in Romania the OX2 business model, which involves the growth and diversification of renewable energy technologies. We have elione onshore projects and obviously we are watching with great interest the development of the offshore market, where OX2 has extensive experience, which we can capitalize on locally. The steps taken so far represent a good start, but sustained efforts are needed to fully capitalize on Romania’s offshore wind potential. Emphasis must be placed on accelerating the implementation of the existing legislative framework and on developing the necessary technical and administrative capacities.
I think it is useful to highlight concrete examples from international experience that can be applied in Romania. In Great Britain, for example, the “staged development” model was followed – the development of large projects in stages, allowing learning and adaptation, and a system of coordination between developers was established for the efficient use of port infrastructure and specialized ships.
Early consultations with fishermen and other stakeholders take place in Sweden, which has significantly reduced opposition and delays. Research programs are also underway to study the impact on migratory birds and marine fauna, which is also relevant for the Black Sea.
From the experience of OX2 I would mention the gradual development model used in the Åland project – starting with pilot areas before scaling up and the experience of project management in weather and maritime conditions similar to those of the Black Sea.
Romania can take model contracts and technical specifications to adapt to local conditions, without the need to reinvent the wheel, which would accelerate the development of the sector.
When do you think we could see the first offshore projects in Romania, in the optimal scenario?
The first offshore wind farm could be operational towards the end of the 2033 – 2035 phase. By then, secondary legislation and zoning are expected to be completed and preliminary studies and market consultations to begin in 2024-2026. Between 2027-2029 the plan is to hold the first tenders for the granting of licenses and for developers to start detailed studies, while the first authorizations should be obtained between 2030-2032 and also then to start the development of the necessary port infrastructure.
The authorization process is complex, the development of the supporting infrastructure is necessary, the projects in the Black Sea come with specific technical problems, and the time required for the maturation of the local supply chain justifies this extended calendar.
How do you see the CfD mechanism evolving and its influences in the market? What about the evolution of the PPA segment?
The CfD mechanism has been set in motion, it is a brand milestone reached by the Romanian authorities as it will contribute to attracting financing from investors and financial institutions in wind projects. The legislative framework exists, but there are still aspects that need to be reviewed to make the mechanism truly attractive to investors. Various problems have been identified, some have been solved, others still remain generating risks that those who participate will assume. I am referring to the risk that a project cannot be put into operation if Transelectrica does not complete its investments from the RET Development Plan and to the one in which the CfD mechanism is canceled by the authorities and the payment of the termination fee is linked to historical prices, not independent estimates of future prices, as would normally be the case.
Contracts for Difference were created to support the achievement of renewable energy targets by stimulating investment. Our expectation as developers is that things will evolve in this direction.
Regarding the PPA segment, I believe it is a key factor that can boost the financing landscape for large-scale projects in the renewables sector. OX2 is part of the still short list of companies that have concluded a PPA, a market that in Romania is still in its infancy, but growing and I hope it will maintain this trend.
How does Europe protect its own producers against cheaper imports from China?
Europe is strengthening its defense position of the local wind turbine industry through several strategic measures. The European Commission launched the 2023 Wind Power Package and identified the wind sector as critical for European strategic autonomy. The main safeguards include: anti-dumping investigations for turbine imports from China, sustainability and security criteria in tenders for renewable projects; focus on “local European value” in the evaluation of offers; financial support for European producers to modernize production facilities. However, the challenge remains significant. Chinese manufacturers offer turbines at prices 20-30% lower than European competitors and have begun to develop production facilities in Europe to avoid potential trade barriers.
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The interview first appeared in the printed edition of Energynomics Magazine in early December 2024.
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