Romania’s Electrica is moving beyond the conventional gas-fired CHP model with a new project in Craiova designed as much around electricity-market flexibility as around district heating.
The company has signed the implementation contract for a plant combining approximately 82 MW of electrical capacity with about 208 MW of thermal output, replacing part of the city’s coal-based heat supply while introducing a generation asset capable of responding to short-term power-market conditions.
The investment, approved at up to €235 million plus VAT, with financing authority of up to €250 million, is significant in scale. But the more important feature is how the plant is intended to operate.
Rather than simply producing electricity and heat continuously, the project combines fast-start gas engines with thermal storage, allowing electricity production and heat delivery to be partly separated in time. The engines can generate when power prices are attractive, while excess heat is stored for delivery when the district-heating system requires it.
That changes the economics of combined heat and power.
Traditional CHP facilities are constrained by thermal demand. If heat consumption is low, electricity production may also need to be reduced, even when power-market prices are attractive. Thermal storage creates an operational buffer, allowing the plant to optimise more actively against the electricity market.
Electrica says the units should be capable of reaching full load in roughly two minutes, with synchronisation in less than 30 seconds.
Those characteristics place the plant much closer to a balancing asset than a conventional baseload thermal station.
Romania increasingly needs precisely this type of capacity.
Rapid solar development is pushing more generation into daylight hours, while evening prices can rise sharply when photovoltaic production falls. On recent trading days, the difference between midday and evening prices has exceeded €150/MWh.
Fast-start generation can monetise that volatility.
When solar production is abundant and prices are weak, the Craiova units can reduce electricity output. When demand rises and renewable availability falls, they can ramp quickly and sell into higher-price periods.
The plant is also expected to provide black-start capability, increasing its strategic value to the Romanian system.
Black-start assets can restore sections of the grid following a major system outage without relying on an external electricity supply. As European electricity systems become more dependent on inverter-based renewable generation, access to dispatchable plants capable of supporting restoration becomes increasingly important.
Hydrogen readiness adds another layer to the project.
That feature should not be interpreted as evidence that hydrogen will immediately replace natural gas in Romanian power generation. Commercial renewable hydrogen remains expensive and supply is limited. But designing new infrastructure to accommodate future fuel blends reduces the risk that assets built today become technologically stranded before the end of their economic lives.
The broader significance of Craiova lies in the type of thermal generation Romania is now building.
The region does not necessarily need another generation fleet designed to operate continuously.
It increasingly needs assets that can remain idle when renewable electricity is abundant and respond rapidly when the system becomes tight.
Batteries can perform the fastest balancing functions, while gas engines can provide longer-duration support when electricity shortages persist for several hours.
Reservoir hydro, demand response and interconnectors complete the flexibility stack.
Craiova therefore illustrates an emerging SEE investment principle: new thermal capacity is most valuable when it is designed around flexibility rather than baseload generation.
For Electrica, the investment also creates optionality across several revenue pools — district heating, electricity sales, balancing services, system reserves and potentially future capacity mechanisms.
Romania’s energy transition will still require large amounts of renewable generation.
But the Craiova project shows that the assets earning the highest system value may increasingly be those capable of filling the gaps between renewable production.
In that sense, 82 MW of highly flexible generation could ultimately matter more to the Romanian electricity system than considerably larger volumes of inflexible capacity.
