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Moldova (2012)

Source: REEEP Policy Database (contributed by SERN for REEEP)

This policy & regulatory overview is not updated anymore since 2015. We decided to keep it online due to high demand but would like to make you aware of the fact that it might be outdated.

Energy sources

Total installed electricity capacity (2008): >3,000 MW, of which only about 1,600 MW are actually used.

Electricity generation is based almost entirely on gas and the only large power plant is located in the Transnistrian region, on the left side of the river Dniester, which has an uncertain administrative status. Despite the high energy dependence on energy imports and the low supply of primary energy per capita (among the lowest in the project region), Moldova has comparatively high energy intensity. Regarding RES, the share of hydropower in the electricity generation is low (2%); on the other hand, there is a significant use of biomass for heat generation and the potential for increased use of biomass and biogas is considerable.

Moldova has no reserves of coal and gas and only small domestic reserves of crude oil, which account for less than 0.1% of the total primary energy supply, and a low hydroelectric potential.

Moldova features two non-minor power plants; CHP1 with 66 MW installed capacity and CHP2 with 240 MW installed capacity. In addition, CHPNord, NHE Costesti, and other domestic producers account for 136 MW.

This total 440 MW is below the base load of Moldova (2009: 366 MW) and clearly insufficient to meet the peak load (15.12.2008, 18h: 1106 MW). Furthermore, the two non-minor power plants that account for 87% of Moldovan generation are combined heat and power plants. Those are fired with natural gas and feature high marginal cost due to poor efficiency.

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Reliance

Currently Moldova covers less than 30% of its demand (2009: 3,200 GWh) by domestic electricity generation (2009: 866 GWh). This is due to a lack of the total available generation capacity and the high generation cost of the existing capacity.

In recent years, electricity was either imported from Ukraine or Transnistria. In 2007 and 2008, approximately 3000 GWh were imported from Ukraine. In 2009 Moldova switched suppliers and imported about 3000 GWh from Transnistria.

Moldova has no indigenous sources of oil, coal and natural gas. A very modest amount of electricity is generated via hydropower. All of the natural gas is imported from Russia and the coal that is used comes from the Ukraine. There is no oil refinery and, therefore, all petroleum refined products, including diesel, gasoline and jet fuel are imported. Moldova’s dependency on energy imports has resulted in a significant energy-related debt load. Moldova imports approximately 98% of its energy from the Ukraine and Romania.

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Capacity concerns

Chronic under-investment and deteriorating infrastructure operating well beyond its design life results in decreasing reliability of electricity supply, poor service quality and increased power losses, reducing the overall efficiency of the system.  Power plants are old and inefficient, operating well past their design life and need to be upgraded or replaced.

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Renewable energy

Hydro
The overall hydro potential is estimated at 3 TWh per year, of which 1.9 TWh per year could derive from large hydro and the remaining 1.1 TWh per year from small hydro plants.

Wind
In 2001, the Technical University of the Republic of Moldova conducted a research project with the goal to establish the Wind Atlas of Moldova. The results of this study show that there are favourable zones for wind installations, with wind speed equal or exceeding 7 m/s at 50 m above ground. The overall wind potential is estimated to be 1,000 MW, while the Energy Strategy 2020, foresees an installed wind capacity of about 26-34 MW in 2015, capable of generating 89- 111 GWh.

Biomass
The potential for fuel wood and agricultural and forestry waste in Moldova is estimated to be 820,000 toe, while the biogas potential is estimated to be 3.7 million m3.

Biofuels
The potential for biofuels in Moldova is currently unknown. However, some estimates show that with the use of 50,000 ha, which represents 2.5% of the overall arable land in the country, 52,500 t of biofuel could be produced, which would cover 26% of the fuel need for agricultural works.

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Energy efficiency

Currently energy per capita intensity in the country is about three times higher than in the European Union. It has been estimated that a well-planned and concerted implementation of an energy efficiency program in Moldova could reduce the financial impact of the energy sector on the GDP by 1.6-1.7% per year, as at 2008.

Recent measures have been taken to improve EE in heat and power plants and boiler-houses, e.g. switching to natural gas. EE measures in district heating are also being applied, e.g. in consumer installations, including metering and automation equipment. A National Programme on Energy Saving will be developed.

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Ownership

Electricity
Before 1997, the state company Moldenergo was the sole enterprise in charge of the production of electricity and heat. In 1997, however, the energy sector was unbundled, leading to a break-up of Moldenergo into 16 new entities, i.e. eight electricity generation companies, three district heating companies, and five electricity distribution companies. As a step towards liberalization of the electricity market, three out of the five electricity distribution networks of the Republic of Moldova have been sold to the Spanish utility and international investor Union Fenosa in 2000 for USD 26 million. Overall, there are 27 licensed actors supplying electricity at non-regulated prices while five supply electricity at the regulated tariff. Electricity networks in the Republic of Moldova were designed as part of the Southern area of the former Soviet electricity system.

At present, Moldova’s electricity system operates synchronously with the Ukrainian electricity system and by extension with the Unified Electricity Systems of the Commonwealth of Independent States. The Moldovan transmission and dispatching company Moldelectrica is responsible for the balancing and dispatching of the Moldovan power system.

Petroleum and gas
Local demand of natural gas is covered by imports from Gazprom purchased by a Russian- Moldovan joint venture company called JSC Moldovagaz, whose shareowners are Gazprom (50%), the Republic of Moldova (37%) and the region of Transnistria (13%). JSC Moldovagaz owns upstream pipelines for transporting natural gas on the territory of the Republic of Moldova. Tiraspoltransgaz SRL is the transmission and distribution operator of natural gas on the territory of Transnistria.

In spite of the fact that the natural gas market was officially opened by law, at present it cannot be considered a functional market, because the supply of natural gas is limited to a single supplier, i.e. Gazprom. Gazprom controls the transmission networks that provide access to other sources of supply such as those in Middle Asia. This makes it practically impossible to contract natural gas supplies from other sources. In 2008, 12 gas distribution enterprises operated in the Republic of Moldova, the biggest of which is Chisinau-gas LLC, with a market share of over 60% of the total final supply in 2008.

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Competition

In Moldova, the generation market is not regulated, except with regard to three Combined Heat and Power plants (CHP) and one hydro plant (the Power Market Rules limit regulated electricity generation sources to CHP-1, CHP-2, CHP-North and the Costesti hydro plant, which means that any other CHP or hydro plant will not be regulated by ANRE).

Full market opening occurred, at least on paper, in March 2005. The wholesale power market is based on a number of bilateral contracts among distribution companies, customers, generators and other power suppliers (traders). Moldova does not have a spot market.

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Energy framework

2007 Moldovan National Develop­ment Strategy (NDS) 2008-2011
A concise treatment of the overall domestic energy industry — as an integral part of the national economy— was presented in the December 2007 Moldovan National Develop­ment Strategy (NDS) 2008-2011. This has been one of the main internal medi­um-term strategic planning papers, which defines the development objectives of Moldova until 2011 and identifies the priority measures and actions to achieve these objectives. The key objective of the Strategy was to ensure a better quality of people’s lives by strengthen­ing the foundation for strong, sustainable and inclusive economic growth. In this context, the spirit and vision of the Strategy aspire towards Moldova’s alignment with European standards and, consequently, to the accomplishment of the European integration goal.

With regard to energy, the NDS had a particular focus on improving the situation in the en­ergy sector by boosting investments through increased public expenditures, the promotion of public-private partnerships and the improvement of the management of state-owned enterprises. It also provided for the diversification of gas and electricity suppliers as a means of decreasing the country’s total dependence on imported energy sources. In this respect, it recognised that Moldova’s participation in the South-European energy market was an opportunity to secure and diversify its energy supplies.

A new strategy for 2012-2020 is currently being drafted. http://www.gov.md-libview.php?l=en&id=436

En­ergy Strategy of the Republic of Moldova until 2010
Another important document directly relating to the domestic energy sector was the En­ergy Strategy of the Republic of Moldova until 2010, which specified the current state, the key tasks and funds for energy development in the medium-term. Among the main objec­tives are: the development of the functioning capacity of the energy system, the increase of consumption efficiency aimed at improving energy conservation, and the maximisation of the use of alternative energy sources.

Energy Strategy of the Republic of Moldova until 2020
provides for the implementation of specific measures and activities to be oriented toward:

  • creating a more efficient, reliable and competitive national energy industry that is geared towards serving the needs of the customer;
  • enhancing security of energy supply;
  • promoting energy and economic efficiency;
  • liberalising the energy market and further restructuring the power industry; and
  • boosting Moldova’s role as an important transit country for electricity and gas.


In this regard, the new Energy Strategy provides in general terms for the improvement of legislation relating to energy development through the establishment of a transparent and efficient national legal framework, which will include incentives approved by international practice. It also provides for the development of scientific, technical, economic, informa­tional, financial and energy production potential and the identification and removal of exist­ing barriers to the implementation of energy projects.

The Energy Strategy of the Republic of Moldova until 2020 includes the ambitious goal of increasing the proportion of RES in the domestic energy mix to 20% by 2020. It also sets specific targets for the use of biofuels and further foresees the development of the energy potential of biomass, solar energy by conversion to electricity and heat, wind, hydro­power, and, in the future, new sources of energy. In line with the mandates of the Energy Strategy, detailed studies have been initiated for the construction of “mini” combined heat and power plants to be fuelled with RES.

Energy Efficiency Law
In July 2010, Moldova adopted an Energy Efficiency Law, which provides, inter alia, for the establishment of an energy efficiency agency. The country took steps towards an EE programme, the updating of the law on RE, as well as action plans on renewable energy and biofuels.

National Programme of Energy Conservation for 2003-2010
Energy efficiency is a priority in Moldova and strategic policy objectives for energy conservation have been defined in the National Programme of Energy Conservation for 2003-2010 (Government Decree No 1078 of 5 September 2003).  It is the main enacted policy document guiding government actions for pursuing increased energy efficiency of the economy.  It sets out quantitative targets for efficiency improvements, priority areas for energy conservation and efficiency interventions, and it indicates activities to carry out in order to achieve stated objectives.  The Programme aims at increasing energy efficiency by minimizing energy intensity by 2% to 3% annually.
 

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Energy debates

Immediately after becoming a member of the Energy Community Treaty in May, 2010, the Government of Mol­dova drafted a new National Energy Efficiency Programme 2010-2020, which aims at setting a national energy saving target of 20% by 2020 and an intermediary target of 9% by 2016. The draft Programme has completed its public hearing stage and now awaits adoption by the Government.

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Energy studies

  • Pitsas, Nick and Lujanskaya, Tanya. 2011. Energy: Law and Policy – Law Approximation to EU Standards in the Republic of Moldova.

        http://support-md-eu.md/docs/ENERGY_EN.pdf

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Role of government

Ministry of Economy
The Ministry of Economy is in charge of developing and implementing energy policy in the Republic of Moldova. Its main tasks related to the energy sector comprise the development of strategies and state policies such as the Energy Strategy 2020180. Furthermore, it elaborates and implements measures to ensure the energy security in the country and organizes and coordinates the draft legislative and normative acts in the area of energy. In 2008, the Ministry of Industry and Infrastructure, which took over the responsibilities of the energy sector from the Ministry of Energy in 2005, was dissolved, and the Ministry of Economy has taken over the responsibility of the energy sector.

Ministry of Environment of the Republic of Moldova (MEN)
The MEN is the government body responsible for the development of policies and strategies in field of environmental protection and economical utilization of the natural resources.

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Government agencies

Agency for Energy Efficiency (AEER)
The new EEA, first mentioned in the Law No 160 of 12 July 2007 on Renewable Energy, was supposed to replace the National Agency for Energy Conservation, established in 1994, with the purpose to promote Energy Efficiency and Renewable Energy in the country. In December 2006 the old Agency ceased its activ­ity. However, it was only on the 2nd of July 2010, when the Moldovan Parliament passed the Law on Energy Efficiency, that institutional and organisational frameworks for Energy Efficiency were put in place.  Some of  the AAERs main functions are:

  • to implement state policy in energy efficiency and renewable energy sources;
  • to participate in drafting national programmes, action plans and normative acts, including technical regulations and standards, in EE and RE;
  • to assist central and local public authorities in drafting such EE and RE programmes;
  • to develop minimum Energy Efficiency requirements for devices and equipment produced in or imported to Moldova and submit them for ap­proval to the central authority of the energy sector;
  • to provide consulting and informational assistance to energy service compa­nies, other economic agents as well as natural entities engaged in EE and RES;
  • to coordinate EE and RE programmes that are financed by international institutions or organisations based on Government Agreements;
  • to evaluate the potential for improving EE in general within the Moldovan economy;
  • to disseminate information on EE and RE, including mechanisms, finan­cial and legal frameworks adopted in order to meet the national indicative tar­get.


Institute of Power Engineering of the Academy of Sciences of Mol­dova (IPE)
In the field of R&D, the IPE is a governmental organisation carrying out research in the energy sector. The key research directions include energy security and the efficiency of the Moldovan power system, the efficient use of electricity and heat, energy installations and systems, etc. The IPE has a Research Laboratory for non-conventional sources of energy and it advises the Government on specific energy issues.

Carbon Finance Unit (CFU)
The CFU aims to develop the institutional abilities for the implementation of the Kyoto Protocol on the Con­vention-Framework of the United Nations Organisation on climate change. The main ob­jectives of the CFU include monitoring the implementation of CDM projects.

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Energy procedure

On 9 June 2011, Moldova, as Energy Community Presidency in Office, hosted an international conference on “Moldova and the Energy Community” in Chisinau. The conference included the signing ceremony of a Memorandum on Implementation Partnership between the Ministry of Economy, the National Agency for Energy Regulation (ARNE) and the Energy Community Secretariat.

As a precondition to the Energy Community’s accession, Moldova adopted new gas and electricity laws on 23 Dec 2009. In order to further align Moldova’s legal framework with that of the Energy Community Treaty, a shift in focus from primary to secondary legislation is now the needed, logical step.

With the Memorandum, the Moldovan state institutions in charge of energy commit themselves to adopt all the necessary secondary legislation in a timely and compliant manner. To this end, the Ministry and ARNE will not only involve all the domestic stakeholders in regular working groups, but will also seek the Secretariat’s advice and expertise throughout the process.

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Energy regulator

The National Agency for Energy Regulation (ANRE), which was established in 1997, pri­marily regulates and supervises the electricity, oil, natural gas and district heating sub-sectors. www.anre.md

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Degree of independence

ANRE has been set up as an independent regulatory body, which is administered by a board that up to recently — despite ANRE’s presumed independence — was appointed by the government.

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Regulatory framework

The key normative act now governing the domestic electricity sector is the 2009 Law on Electricity, which transposed Directive 2003/54/EC concerning common rules for the inter­nal market in electricity. This Law established the legislative framework for the operation, reg­ulation and further liberalisation of the national electricity market in gradual steps. Its scope of application encompasses electricity generation and the generation of heat and elec­tricity by combined heat and power plants. It also covers electricity transmission, including cross-border flows, distribution and supply, and electricity imports and exports.

The Law has transposed the general requirements of Directive 2003/54/EC related to unbundling and third-party access in electricity networks. In addition, it has strengthened the powers of the energy regulatory authority (ANRE) and defined in detail the tasks and duties of the Transmission System Operator (TSO) and the Distribution System Operators (DSOs). Moreover, it defines the procedure for the approval of regulated electricity tariffs, the licensing of activities in the power market and in respect of the authorisation and ten­dering for new generation capacities. It also introduced general measures and procedures to safeguard the security and reliability of electricity supplied to consumers and to protect consumers’ rights. In this connection, particular attention has been paid to the protection of the rights of vulnerable customers in view of the fact that a sizeable proportion of domestic consumers live below the poverty line.

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Regulatory roles

ANRE is in charge of issuing licences for the conduct of energy related activities and monitoring compliance with licensing conditions. It further develops tariff methodologies and approves transmission and distribution tariffs in the electricity and gas sector. It also monitors the quality of supply from distribution companies. Within the bounds of its responsibility also falls the setting of service quality standards and the taking measures to safeguard consumer protection and to promote competition in the energy markets. ANRE also regulates the renewable energy market, issues licences for the production of RES-E, biofuels and renewable fuels and approves the tariffs for each type of renewable energy sources.

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Energy regulation role

Though ANRE has the power to issue licensing rules and issue, revoke and modify licences (it licenses by function), it does not have the power to issue rules for new capacity. The Government has full responsibility for tendering of new generation capacity and, per Governmental Resolution in 2004; the development of new power plants may be done through a tendering process of direct negotiations. In 2007, the National Agency for the Protection of Competition was established.

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Regulatory barriers

The main barrier for investments in energy efficiency and renewable energy projects in the Republic of Moldova is capital constraints. There are no national or municipal funds for development of energy efficiency projects, and high interest rates on bank loans hinder the formation of a market for private companies involved in development of energy projects.

From the institutional and administrative point of view, one of the barriers to the energy efficiency investments is the fact that so far development and implementation of all energy efficiency and renewable energy projects have been done by state institutions. Lack of public tendering process has hindered the formation of a competitive environment for private companies.

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References

United Nations Economic Commission for Europe (UNECE) – Sustainable Energy Division (SED). FEEI. Regional Analysis of Policy Reforms to promote Energy Efficiency and Renewable Energy Investment. Available at: http://www.unece.org/fileadmin/DAM/energy/se/pdfs/eneff/eneff_pub/EE21_FEEI_RegAnl_Final_Report.pdf [Accessed 7th September 2013]

German Economic Team in Moldova. Georg Zachmann and Alex Oprunenc. Electricity Sector in Moldova. Policy paper series 2010. Available at: http://www.get-moldova.de/download/policypapers/2010/GET%20Moldova_PP%2001%202010_en.pdf [Accessed 7th September 2013]

European Bank for Reconstruction and Development (EBRD). Renewable Energy Country Profile Vs 0.6b. http://ebrdrenewables.com/sites/renew/Shared%20Documents/Country%20Notes/old%20website%20country%20profiles/Moldova.pdf [Accessed 7th September 2013]

EKEEM. European Energy Policy Observatory. Ioannis F. Vichos and Anna Adaktilidou. Moldova’s Energy Strategy and the “Frozen Conflict” of Transnistria. Available at: http://www.ekemeuroenergy.org/en/index.php?option=com_content&view=article&id=179:moldovas-energy-strategy-and-the-frozen-conflict-of-transnistria&catid=45:caspian-sea-black-sea-and-south-east-europe&Itemid=6[Accessed 7th September 2013]

World Bank. Sustainable Development Department (ECSSD) and Europe and Central Asia Region (ECA). Republic of Moldova Policy Note: Action Plan for the Financial Stabilization of the District Heating Sector in Chisinau. September 2009. Available at: http://www.esmap.org/esmap/sites/esmap.org/files/P113570_Moldova_Policy%20Note%20Action%20Plan%20for%20the%20Financial%20Stabilization%20of%20the%20Distric%20Heating%20Sector%20in%20Chisinau_Stuggins.pdf [Accessed 7th September 2013]

United Nations Economic Commission For Europe. Energy Efficiency 21 Programme. Republic of Moldova: National Energy Policy Information for Regional Analysis. Project Title: Financing Energy Efficiency Investments for Climate Change Mitigation. September 2009. Available at: http://www.clima.md/public/102/en/EnergyPolicyInformationForRegionalAnalysisMoldova.pdf [Accessed 7th September 2013]

European Bank for Reconstruction and Development website. Moldova country profile. Available at: http://www.ebrd.com/downloads/legal/irc/countries/moldova.pdf [Accessed 7th September 2013]. Information contained herein is from ANRE´s Activity Report 2008. Available at: http://www.anre.md/upl/file/Rapoarte/ANRE%20Report%202008%20Engl.doc [Accessed 7th September 2013]

Moldovan Parliament. Ordinary Law: On approval of the National Development Strategy for 2008–2011. December 2001. Available at: http://moldova.usaid.gov/sites/default/files/nds_211207_en.pdf [Accessed 7th September 2013]

The Institute of Energy Economics, Japan. Energy Policy of the Republic of Moldova. June 2011. Available at: http://eneken.ieej.or.jp/data/3923.pdf [Accessed 7th September 2013]

Ministry of Economy and Commerce Republic of Moldova and Energy Regulatory National Agency. Cristina Guriev and Veronica Muruziuc respectively. Renewables Sector Development Republic of Moldova. April 2009. Available at: http://www.energy-community.org/pls/portal/docs/324190.PDF [Accessed 7th September 2013]

European Commission. High Representative of the European Union for Foreign Affairs and Security Policy. Implementation of the European Neighbourhood Policy in 2010. Country report: Republic of Moldova. May 2011. Available at: http://ec.europa.eu/world/enp/pdf/progress2011/sec_11_643_en.pdf [Accessed 7th September 2013]

Austrian Energy Agency and Energy in Central and Eastern Europe (ENERCEE). Responsibilities in the administration. Available at: http://www.enercee.net/countries/country-selection/moldova.html [Accessed 7th September 2013]

IPE website. http://www.ie.asm.md/en/ [Accessed 7th September 2013]

Energy Community Website. News Details: “Moldova and the Energy Community” Conference results in the signing of the Implementation Partnership. 09 June 2011. Available at: http://www.energy-community.org/portal/page/portal/ENC_HOME/NEWS/News_Details?p_new_id=4741 [Accessed 7th September 2013] Close References