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Renovatio: Unprecedented price hikes in recent years have led to a new trend in the energy market – 10-year fixed price contracts.

Bucharest, 18 October 2023 – Unprecedented energy price hikes in recent years have led to a new trend: Romanian companies are looking for suppliers capable of providing them with a fixed or determinable price for periods of up to ten years, announces Renovatio, one of the leading players in solar energy and green technology.

Renovatio has already signed several such multi-year contracts, with a standard 10-year duration and fixed prices, with more than 50 clients in the corporate area and prominent local entrepreneurs, and the process of negotiating and signing new contracts is well underway.

“The benefits of signing such a multi-year power purchase agreement are obvious for interested companies. These companies manage to eliminate price volatility, have medium to long-term predictability, and, finally, reduce their administrative costs of annual or even more frequent re-contracting in some cases,” said Doru Voicu, Director of Strategy at Renovatio.

The more than 50 contracts signed are partially or fully allocated to a renewable energy producer in Renovatio’s portfolio, usually solar or wind.

“If we were to draw a profile of a company that signs a contract of this kind, we would say that for it to do so, energy expenditure has to have a consistent share in the cost structure. Then, on top of that, the ESG policy is superimposed. In terms of monthly consumption, most of those interested have consumption of more than 1,000 MWh,” added Renovatio’s Director of Strategy.

According to the latest available data published by OPCOM, the Romanian electricity and natural gas market operator, in September 2023, the average market closing price was 3.6 times lower than in the same period last year. Thus, in September 2023, on the spot market (Market for the Day Ahead), energy costs 512.07 lei/MWh, while in September 2022, it costs 1,854.94 lei/MWh. However, it is also important to note that the average closing price in September is rising, a trend that has been reversed since June.

In June, the average price was at 422 lei/MW; in July, it went up to 478 lei and then to 502 lei in August. In the first half of this year, prices started falling after unprecedented increases in recent years.

“But with the start of the conflict in Israel, internationally, we are again seeing a steep rise in prices on all markets. In just a few days, there have been increases of around €20/MWh for almost all electricity products, with natural gas rising by more than €15/MWh. This development shows us that we are still in a period of massive price volatility risks, ” added Doru Voicu.

“The prices at which we sell energy for ten years are certainly lower than spot prices, and the contracts we sign are not speculative. Whoever tries to sign such a contract and thinks of “beat” the market will probably not reach a reasonable compromise and will not sign. This kind of talk comes from people who do not understand the role of such a contract,” added the Renovatio representative.

Renovatio has more than 18 years of experience in the energy sector and is an integrated player. Its activities cover the renewable energy value chain (wind, PV, and hydro), from the development and commercial operation of renewable energy projects to the supply of green energy to end customers and the implementation of energy efficiency and storage projects.

More about Renovatio:
Renovatio runs projects in countries such as Romania, Portugal, and Colombia and has also been active in markets such as Poland, Bulgaria, Greece, Moldova, and Italy. Renovatio E-Charge also operates Romania’s first and largest electric vehicle charging station network, which currently comprises more than 655 charging points nationwide.

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