Overview of the renewable energy market in Moldova.

 

Moldova is dependent on energy imports for over 95% of its consumption. This dependence leads to high  energy  prices  and  large debts  to  foreign  suppliers.  Shortage  of  internal  capacities  to  generate energy,  increasing  energy  intensity  of  the  economy, and a  low  level  of  RES  usage  (solar,  wind, hydropower,  and  biomass)  are  other  significant  challenges  for  the  Moldovan  energy sector.  In  this situation,  it  is  necessary  for  national  and  local  public  authorities  to  undertake  concrete  actions  for increasing energy  efficiency  and  the  energy  supply  through  RES,  as  an  essential  condition  for  the sustainable development of the economy.

 

The country indeed offers an interesting potential for the development of renewable energy and energy efficiency: its energy intensity is around 3 times higher than in the EU and the use of renewable energy is still limited.

 

Local Incentives

 

In recent years, the Moldovan Parliament adopted a series of legislative acts in the energy field, including the Energy Strategy of the Republic of Moldova 2030, the Law on energy efficiency (2010), and the Law on promotion of the use of renewable energy (2016). In 2009, Moldova became a member of the Energy Community, which extends the EU internal energy market to South East Europe and beyond through a legally binding framework

 

The  Moldovan  Sustainable  Energy  Financing  Facility  (MoSEFF)  was  launched  by  the European  Bank  for  Reconstruction  and Development  (EBRD)  in  order  to  support  energy efficiency investments of Moldovan enterprises. Under MoSEFF, the EBRD made a total of

 

€42 million  available  for on-lending  through local  partner  banks.  To make  investments into energy  efficiency  projects  even  more attractive,  MoSEFF  contains  a  grant  component  for eligible projects. Depending on the energy savings and CO2 emission reductions achieved, the grant  may  reach  5%  to  20%  of  the  loan  amount.  To  facilitate  and  speed-up  investments  in energy efficiency,  MoSEFF  provides  technical  assistance  and  advice  on  the  optimization  of energy consumption and supply. MoSEFF's technical assistance is financed by the European Union and is available free of charge for eligible projects.

 

 

Strategic direction & Specific schemes

The development of renewable energy and increased energy efficiency in residential, industrial sectors, transport and agriculture are among the priorities of the Moldova 2020 development  strategy (2012). An adequate institutional framework was established with the adoption of the Energy Strategy until 2020 (2007), the National Program on Ensuring Environmental Security for 2007-2015, the Law on Renewable Energy (2016), the Law on Energy  Efficiency  (2010),  the  National  Energy  Efficiency  Programme  2011-2020  and  the  Energy  Efficiency Agency. A gradual approximation of the national legislation with the relevant EU acquis is underway.

 

  • Renewable energy law: increasing the use of energy produced from renewable sources up to 17% of the total gross domestic consumption and 10% of annual electricity production by 2020, feed-in tariffs established for a 15-year period.

  • Energy efficiency: planned gradual increase of energy efficiency by up to 17% by 2020, planned creation of an Energy Efficiency Fund.

Sustainable energy action plan launched by EBRD in 2011 in order to improve the environment for sustainable energy investments in various sectors of the Moldovan economy.

 

The Law No.10 of 26.02.2016 on Promotion of the use of energy from renewable sources

 

The State Policy Objectives for Renewable Energy

 

(1) The renewable energy objectives of the state policy are:

 

  1. diversification of the primary energetic sources;

  2. the achievement of calculated in accordance with the present law share of energy from renewable sources in the gross final energy consumption that is not less than 17%,  in the year 2020;

  3. the  achievement of calculated in accordance with the present law not less than 10%  share  of  energy  from renewable sources in the final energy consumption in transport, in the year 2020;

  4. promotion of cooperation between central and local public authorities;

  5. ensuring security, health support and labor protection in the process of energy production from renewable sources;

  6. promotion of the use of energy from renewable sources;

  7. supporting the researches, scientific and technical cooperation at the national  and  international  levels, the introduction of best practices of using the scientific results and technical developments in the field of energy from renewable sources;

  8. ensuring public relations and inform the society about energy from renewable sources.


(2)  Other  renewable  energy  objectives  of  the  state  policy  are  set  in  the  National  Renewable  Energy  Action  Plan, approved by the Government.

 

The most important fact is that the new law approved the support scheme for the use of renewable energy in Moldova - tenders with limited prices oriented to the lowest price level upon application of the highest level of technology used. The buyer will be obliged to buy the entire volume produced by the supplier of renewable electricity for 15 years.

Another important element introduced by the new law on renewable energy sources, is the principle of accurate account. Thus, any household, which has solar panels and produces electricity in an excess amount, is able to supply it to the network, and at the end of the month, the delivered volume of energy will be summarized.

The settlements between the supplier and consumer of electricity will be produced on the basis of the year-end balance. The new law also eliminated the restriction that only the owners of solar panels with the power more than 10 kW can supply electricity to the network, according  to the tariffs of the National Energy Regulatory Agency. Now, the law restricts only the maximum power limit of the plants - 100 kW. The contracts on the accurate account will be signed on a "first came - first was served" principle, to a volume of 1% of the total volume supplied to the network.

 

Producers of electricity from renewable sources take advantage from the nondiscriminatory  access, regulated to the electricity networks, to the published tariffs, non-discriminatory, cost-based, transparent and predictable, calculated and approved in accordance with the Law on electricity.

 

The costs of building the plant connection, which makes the connection between the power plant using renewable energy sources and electricity grids or between the installation of biogas to be delivered to the networks of natural gas and natural gas networks, supports the applicant, as determined in transparent and non-discriminatory conditions, in accordance with the Law on electricity, the Law on gas and under such regulations as drafted and approved by ANRE.

 

If for the connection of the power plant that uses renewable energy or for the biogas plant that is to be delivered in natural gas networks is necessary to extend the electricity grids or natural gas installations, the network operators will carry the expansion  under  the  Law  on  electricity,  the  Law on gas and elaborated by ANRE regulations, and bear the costs of enlargement, which are included in the price, with the condition of respecting the investment plans approved by ANRE.

 

The basic conditions regarding the marketing of electricity from renewable sources and biofuels.

 

  1. The central provider of electricity purchases from eligible producers, the total volume of electricity fed into electricity grids at prices determined in accordance with this law.

  2. All other electricity suppliers are obliged to purchase monthly from the central provider electricity, electricity at the tariff approved by  ANRE  and  volumes  calculated  according to the share established by ANRE, according to market rules of electricity approved by ANRE. In determining the share of the parties, ANRE will account for its share of the electricity market.

     

    Eligible consumers who consume electricity produced  exclusively from fossil fuels, are obliged to purchase monthly from the central provider electricity, at the tariff approved by ANRE and volumes calculated according to the share of eligible customer, the total consumption of electricity in the country.

 Support schemes for promoting renewable electricity

 

  1. For the promotion of electricity from renewable sources the following support schemes are applied:

fixed price, set out in legislation, according to art. 35, for the eligible producer that owns or is going to own the power plants with a cumulative power bigger than the capacity limit established according to art. 10 lit e).

 

Fixed tariff, established according to art. 14, for the eligible producer that owns or is to own the  power plants with a cumulative power that does not overpass the capacity limit established according to art. 10 lit. e), but that is no smaller than 10 kw.

 

     (2)  According to this law, the status of authorized producer have:

  1. Electricity producers that have won the tender in the conditions of this law

  2. The electricity producers with statute of eligible producer confirmed in the conditions of this law

 

Moldovas strategic objectives for 2013-2020

 

  1. Safety of natural gas supply, by diversifying the supply routes and sources, carrier   types (conventional, non-conventional gas, LNG) and storage facilities, together with  strengthening Moldova's role as a natural gas transmission corridor
  2. To strengthen Moldova’s role as a power transmission corridor, by building new interconnectors, connected to the ENTSO-E system, and by consolidating the internal power transmission network
  3. To create a strong power and heat generation platform, through retrofitting, efficient district heating and advanced marketing
  4. To improve the energy efficiency and increase the use of renewable energy sources (RES)
  5. To provide legal, institutional and operational framework for a real competition, to effectively open the  market, set up energy prices in a transparent and fair way, integrate  the Moldovan energy market into the EU internal market
  6. To provide a modern and competitive institutional framework for the energy industry’s development.

 

Renewable Incentive Schemes

Purchase Guarantee

Energy suppliers are bound to purchase energy produced from RES. The energy suppliers may not refuse to purchase such energy if the relevant conditions have been met by the RE generator.

Feed-in Tariffs

The energy distributors shall purchase energy from RE  generators at tariffs approved by the ANRE according to a certain methodology for each type of electricity  production technology from renewable sources, using the data from international practice with respect to the period of operation of power plants, investment  costs,  the  maintenance  and  operation  costs,  the  level  of  return  on  investment,  which  is determined on the base of the weighted average cost of capital, and, in dependence to the projected total electricity production Producers of electricity from renewable sources, for whom the tariffs were approved prior  to  the  entry  into  force  of  the  present  law, use the approved tariffs, as well as, the guarantee of purchase of their total volume of electricity supplied to the electrical network, before the expiry of the 15- year period after the tariff approval, concluding the related agreement with the central supplier of electric energy.

State Loan Guarantees

An energy efficiency fund was recently created specifically for financing energy efficiency and RE projects in Moldova. Thus, companies implementing projects aimed at improving energy efficiency are eligible for loans and investment guarantees on preferential terms.

Priority Policy

Under the energy efficiency policy, priority shall be given to generating installations using RES. Priority for connection to he transmission and/or distribution system is provided for RE companies.

Investing Guarantees

Foreign and local investors are treated equally under the Moldavian legislation, whereas the legal framework is designed  to  encourage  foreign  investments.  Moldovan  public  authorities  provide  full protection  and  security  to  all  investments  and  shall  be  liable  according  to  the  law  for  infringement  of investors’ rights and for damages incurred.

 

What is the legal framework regulating RES in Moldova?

 

The basic regulations in the area of renewable energy are as follows:

  • Law No 10 on promotion of the use of energy from renewable sources, 26 February 2016
  • Law No 124 on Electric Energy, dated 23 December 2009
  • Law No 142 on Energy Efficiency, dated 2 July 2010
  • Law No 92 on Thermal Energy and Promotion of Cogeneration, dated 29 May 2014
  • Resolution No 321 of the National Energy Regulation Agency (“NERA”) on Methodology for Determination, Approval and Application of Tariffs for the Electricity Generated from Renewable Energy and Biofuel, dated 22 January 1999

 

What state authorities are responsible for RES?

 

Agency  for  Energy  Efficiency  (“AEE”),  established  by  Government  Decision  No 1173  of  21  December  2010  and  entrusted  with  implementation  of  state  policies  on energy efficiency and RES (http://www.aee.md/)

Energy Efficiency Fund, created by Government Decision No 401 of 12 June 2012, responsible for identifying, assessing and financing of projects in energy efficiency and renewable energy (http://www.fee.md/index.php?l=ro)

The National Energy Regulatory Agency of the Republic of Moldova (ANRE) is the central public regulatory authority vested with regulatory and monitoring powers in  the  energy  sector  (natural  gas,  electricity,  heat  energy,  renewable  energy  and petroleum products).  (http://www.anre.md/en/node/135)