Power Purchase Agreements (PPAs) have become the central pillar of financing the energy transition across Central and Eastern Europe, as volatile markets, regulatory gaps, and rapid renewable deployment force investors to look beyond traditional support schemes. In Romania, 2025 is shaping up as a breakthrough year, as the market matures, project pipelines reach commissioning, and CfD auctions start sending clearer price signals. Yet, amid optimism, three key challenges stand out: the need for de-risking mechanisms, the increasing complexity of contracting, and the urgency for policy clarity.
PPAs are essential tools to replace the missing forward market and long-term market in Europe, said Michał Motylewski, Energy Transition Director at Clyde & Co. “Why does a PPA matter? It’s to make sure that you have a reliable source of funding for your project,” he said at the panel “Power Purchase Agreements (PPAs): Trends & Risks” within the Energy Week Black Sea conference organized in Bucharest by Invest In Network.
PPAs are anchors in a volatile landscape
With short-term electricity markets becoming increasingly volatile – and even negative in some hours, particularly for solar assets – PPAs have become vital instruments for ensuring stable revenues. This, in turn, is a prerequisite for attracting both equity and debt financing. PPAs give you confidence, as a reliable source of funding for any project, Motylewski emphasized.
Joffroy Beckers, Head of PPA at DRI, echoed this: “We see more and more negative prices. That’s why we are shifting our strategy toward more flexibility or flexible assets”. But even with that, “long-term PPAs remain crucial to secure financing”. In Romania, the buyer has the power. “It’s a buyer’s market”, and the developers must be ready to deliver fixed start dates and offer hybrid, green baseload solutions, urges Beckers.
To gain the trust and engagement of industrial offtakers, developers must present a well-structured, de-risked business model from the earliest stage — ideally, starting with a clear and robust term sheet that reflects a solid understanding of both the market and the contractual landscape. In addition, “maybe you need an aggregator. These are all things you need to look at early enough in the project to drive it forward”, insisted Motylewski.
All customized PPAs
One of the strongest messages from the panel was the growing sophistication and customization of PPAs. There is no longer a standard template or ‘vanilla’ contract. Today’s agreements are tailored – bespoke – to match diverse project configurations, multiple offtakers, and varying regulatory regimes. “Exceedingly bespoke,” was how Fuphan Chou, Manager, Infrastructure Europe at IFC, described the new generation of PPAs. Now contracts combine merchant risk, virtual hedges, state-backed CfDs, and physical delivery in the same financing package, said she. “It’s not about ticking boxes anymore – it’s about aligning complex pieces.”
Varinia Radu, Partner, Deputy Head of EPC, CEE at CMS and CEO of Energynomics, added: “Most of the PPAs we see are highly negotiated, with complex risk-sharing mechanisms. There’s no market index for forward pricing in Romania, so we often have to rely on external references. Add to that the challenges of grid delays, licensing timelines, and negative pricing clauses, and you have an extremely bespoke structure that requires deep legal, technical, and financial expertise.”
“The earlier you involve lawyers and financiers in shaping your term sheets, the more bankable your PPA becomes,” added Motylewski. “The most successful deals we advised on started at that level – not at contract drafting, but at structuring the business model.”
Strategic turning point for Romania
Romania’s PPA market is evolving fast. After nearly a decade-long ban during the first wave of renewables, long term bilateral contracts were re-legalized in 2022. Still, the energy crisis and the government’s price cap mechanism discouraged industrial offtakers from entering long-term agreements – until now.
“We are finally seeing a change in corporate behaviour,” said Radu. “With the cap scheme ending in June 2025, more industrial players are returning to the table. Many are driven by ESG targets – particularly Scope 2 emissions reductions required by Western parent companies.”
Andrei Manea, Executive Director of RPIA, pointed to recent momentum: “We’ve tripled installed PV capacity in four years. For 2030, we’re targeting 10 GW. But out of the 5 GW already built, not all have PPAs. In 2024, we saw five new PPAs signed [for a total of 24, e.n.]. That’s a start, but the pipeline is huge, and we must learn from Poland not to repeat the same grid integration mistakes.”
CfD auctions are also beginning to influence the PPA market by providing a benchmark for pricing. “The CfD results, with weighted average prices of 65 euros per MWh for solar and 51 euro per MWh for wind, offer a useful reference point,” said Radu. “But the CfD should not compete with PPAs – it should complement them. There is far more demand than the 5 GW offered through the CfD scheme.”
Future based on grids, credit, and storage
All panelists agreed that grid connection is the most pressing bottleneck. “The risk of delay in grid connection or high curtailment penalties must be factored into PPAs,” said Radu. “New rules on automation and grid congestion will affect how these risks are allocated in contracts.”
“Another barrier,” added Beckers, “is the lack of creditworthy offtakers in the region. Many industrial buyers aren’t used to PPAs and are cautious. State guarantees, like in France or Italy, could help unlock demand.”
Storage also loomed large on the agenda, not only as a technical solution to grid congestion but as a critical enabler of commercially viable PPAs. “We expect hybrid PPAs – combining solar, wind, batteries, even hydro – to become the new normal,” said Manea. “There’s money available for storage, but we need bankable business models and clarity on balancing markets.”
Time to engage
The panel closed with a call for deeper collaboration between developers, off-takers, regulators, and financiers. “We are in complex times,” said Chou. “But that’s also where innovation happens. If you’re building a project in Romania today, don’t wait until it’s finished to talk to financiers. Engage early, understand the market risks, and build partnerships that can weather regulatory and price volatility.”
As Romania advances into its next energy chapter, PPAs will not only structure deals – they will shape the business models behind the country’s green transition. The challenge ahead is to ensure that these contracts are not only bespoke, but bankable, equitable, and scalable.
