Auctions and Contracts for Difference are becoming one of the most important tools for renewable financing in South East Europe. They do not eliminate all risk, but they change the risk profile enough to unlock cheaper capital.
For developers, the value is revenue stability. For lenders, the value is bankability. For governments, the value is competitive price discovery. For consumers, the promise is lower long-term cost and less exposure to extreme wholesale prices.
Romania is the regional leader in this shift. With EBRD support, Romania delivered two renewable-energy auctions under its CfD scheme, awarding 4.2 GW of solar and wind capacity and exceeding the 3.5 GW target in its Recovery and Resilience Plan. The second auction alone awarded 2,751 MW of CfD-backed capacity and attracted bids for more than 5,500 MW of solar and wind projects.
This is a major signal. Romania is no longer only a merchant-renewables opportunity. It is becoming an auction-backed market where projects can be financed with greater revenue certainty.
The CfD model is especially important in volatile markets. Under a two-way CfD, the project receives support if market prices fall below the strike price, but returns money when prices rise above it. This can protect investors from downside while also protecting consumers from excessive upside payments. EBRD notes that Romania’s scheme was designed to provide long-term revenue stability and strengthen market integration of renewables.
The effect on financing is direct. A solar or wind project with a 15-year CfD can support more debt, lower equity risk and attract a broader lender group. The EBRD-backed 531 MW Romanian solar financing shows how CfDs can anchor project finance: the Slobozia plant benefits from a 15-year CfD, while the other plants in the financing rely on market revenues.
Serbia is also moving toward a more bankable auction model. Its second renewables auction attracted 41 proposals, allocated support to projects totaling up to 645 MW, and produced bids as low as €50.9/MWh for solar and €53.6/MWh for wind.
That is important for the Western Balkans. Serbia has the region’s largest power system outside the EU and is a crucial test case for renewable bankability. Competitive auctions, market premiums and clearer offtake structures can reduce reliance on ad hoc bilateral deals and make private capital more comfortable.
Auctions also discipline developers. A competitive process rewards projects that are real, not just announced. Developers need land, permits, grid connection, financing plan and realistic capex. Bidding too aggressively can destroy equity value if costs rise or construction delays occur. The auction creates bankability, but it also exposes weak assumptions.
There are risks.
First, strike prices must be high enough to support delivery. A low auction price may look good politically, but it is not a success if projects fail to reach financial close. Second, grid access must match awarded capacity. If governments award gigawatts faster than networks can connect them, the result will be congestion and curtailment. Third, auction design must handle inflation, FX, commissioning deadlines, negative prices and balancing obligations.
Fourth, governments must decide how storage fits. Romania is already considering dedicated support for storage market integration with EBRD assistance. That is necessary because renewables alone are not enough. High solar and wind penetration requires flexibility, and future auctions may need to reward hybrid projects or grid-support services.
Auctions also reshape M&A. A project that wins a CfD becomes easier to sell, finance or partner. Developers may originate, bid and de-risk projects, then sell to utilities or infrastructure funds. Strategic buyers may prefer auction-backed assets because they reduce revenue uncertainty. Banks may prefer them because debt sizing becomes more predictable.
But auction-backed assets may also trade at lower returns. Stability has a price. Developers that accept a CfD give up some merchant upside in exchange for bankability. That may be the right trade in markets where financing costs are high and capture-price risk is rising.
For SEE, the broader conclusion is clear: auctions and CfDs are becoming the bridge between policy ambition and private capital.
Countries that design credible auctions will attract lower-cost finance. Countries that delay or create unstable rules will rely more on state utilities, DFIs and opportunistic capital. The difference will show up in project delivery.
The next phase should not be only bigger auctions. It should be better auctions: grid-aware, storage-compatible, bankable and transparent.
South East Europe has enough renewable potential. The question is whether governments can turn that potential into financeable projects. CfDs are one of the strongest tools available.
