The incentives give developers green certificates for each megawatt generated and force power suppliers and large users to buy them based on an annual quota set by the energy regulator. Green energy investors gain once by selling certificates and again when they sell their electricity.
Under the new government bill, wind energy will get 1.5 certificates per megawatt until 2017 and 0.75 certificates onwards, from a previous 2 and 1 certificates, respectively.
Support for solar projects was halved to three certificates per megawatt, while small hydro power plants will get 2.7 certificates per megawatt instead of 3.
The new bill will affect only projects finished after January 2014, an adviser to Prime Minister Victor Ponta said.
The European Union's support scheme, which has been in place since 2012, was once deemed too generous by the European Commission. It brought droves of foreign investors to Romania, particularly to wind energy, including Czech CEZ, Italy's Enel or Energias de Portugal.
In June, the leftist government decided to hold off paying some of the subsidies for several years, a delay which applies to all producers.
The Romanian Wind Association complained to the Commission over the subsidy delays. Czech CEZ, which operates Europe's largest land-based wind farm in Romania, complained that retroactively changing the rules conflicted with basic EU principles.
Elsewhere in the EU, Germany, Britain and Spain have also cut incentives for renewable energy.
EurActiv.com with Reuters