Axpo Romania open for new long-term PPA opportunities

LONDON (ICIS)–Axpo Energy Romania would be interested in signing new long-term power purchase agreements (PPAs), Radu Rat, managing director at the company told ICIS in an interview.

“We are ready to discuss with new partners and are actively originating new opportunities, and I think that our recent deal with CEZ/Macquarie in Romania has proven that we can deliver such a solution to the market in a sustainable and profitable way,” added Rat.

On 24 August, the Swiss energy firm Axpo and CEZ Romania signed a seven-year PPA expected to support the local renewables market. Axpo will hedge close to 50% of CEZ’ Romania’s three onshore wind farms with 600MW combined total capacity. The deal with the wind farms covers more than 4TWh of electricity production, according to the official statement.

“As Switzerland’s largest producer of renewable energies and a leading marketer of wind and solar energy across Europe, the renewable energies are at the heart of Axpo’s strategy. Our origination business makes a substantial contribution to the expansion of renewable energies in some 40 countries, mainly by means of long-term PPAs,” said Axpo Romania’s managing director.

The company’s business activities in Romania are part of the same strategy. “For Romania we want to be close to the sector, continue our innovative activity to ensure that we will have a positive contribution in the transition to a low carbon economy,” said Rat.

Romania is expected to completely lift the ban on long-term power PPA by the end of the year, followed by the introduction of a new renewables support scheme by the end of 2022, local participants told ICIS recently .

The development of additional renewable capacity is key to Romania’s 2030 energy strategy as the country is heavily dependent on coal-fired plants for energy production.

Rat said Romania has a lot of potential for supporting investment in renewables but some hurdles still remain.

“Regulation continues to remain a challenge – while the framework for physical PPAs is being put in place we are not quite there, and some adjustments are still required to the local regulations. Secondly, renewables projects in Romania are in an early development stage. Finally, balancing costs are still very high in Romania compared to countries more advanced in this area and as such classical PPAs of “pay as produced” are yet to become feasible,” said Rat.

Axpo was one of the frontrunners and pioneers for offshore wind in Europe and will continue to invest heavily in wind onshore via its subsidiary Volkswind which is mainly active in the development, construction, and operation of onshore wind farms in Germany and France, with a project pipeline of more than 3GW, added Rat.

TRADING FOCUS

Axpo is one of the leading European energy trading companies.

“We are open to doing new business with both industrials and renewable power producers in Romania, on all the commodities our licenses in Romania cover: power, gas and all related products. The country offers many interesting opportunities, and we are ready to make use of them,” added Axpo Romania managing director.

Axpo is active in some 40 countries across Europe and the USA.

“We focus on three different areas: asset-backed trading in Switzerland (e.g. for our hydro power plants), proprietary trading on international scale, and origination. The latter is the business area where we focus, amongst other, on marketing of renewable energies and PPAs,” added Rat.

BULGARIA-ROMANIA COUPLING

The Day-ahead power market coupling between Bulgaria and Romania planned to go live at the end of October, will offer opportunities to Axpo.

“Decreased market concentration and of course regulatory alignment should improve market conditions (competition, long term visibility, price coupling). Of course, this is highly dependent on several other factors as well. In the meantime, we will continue to have a strong presence in the region and exploit all opportunities that will come from this transitional phase,” concluded Rat.