Power policy

Moldova introduced a National Energy Strategy in 2013 that targeted 20% renewables in the country's total final energy consumption and 10% in electricity generation by 2020. It fell short of these objectives but then added a new goal: reaching a maximum of 15% renewables generation by 2030. As of 2021, renewables represented only 5% of total electricity generation.

Moldova's law on renewable energy, which took effect in March 2018, specifies the use of tenders to contract renewable energy. In 2022, it launched its first auction, sized at 230 megawatts (MW), however only 90MW were directed to renewables. Projects were selected on a first come, first served basis, and awarded a 15-year tariff. Capacity quotas were for 70MW of solar, of which 50MW was to be allocated for projects on buildings, with 20MW to be set aside for ground-mounted facilities. Another 15MW was be devoted to wind power, 5MW to hydropower plants, 100MW to cogeneration units based on biogas, and 30MW to cogeneration units based on direct fuel combustion. No further auctions were announced.

Moldova's energy regulator issued a feed-in-tariff policy for small-scale renewables projects larger than 10 kilowatts (kW) using wind, solar, geothermal, hydro, and combined heat and power that burns biomass or biogas, in March 2020. Renewable Energy producers will receive priority grid access by the transmission system operator as indicated in the 2016 Law on the Promotion of the Use of Energy from Renewable Sources. Net metering is available for customers generating up to 100kW for their own consumption.

While the purchase and installation of renewables is exempt from value-added tax (VAT), import duties differ according to the technology and origin. Wind turbines imported to Moldova are subject to duties ranging from 0% from European Union countries to 8% for non-EU countries, and imported solar photovoltaics are exempt from duties from all sources. Complementing this, national legislation means that if a project is implemented using a financing agreement with an international donor – such as the World Bank, the IMF, or European Bank for Reconstruction and Development (EBRD) – and delivers a benefit to Moldova, it may be exempt from all taxes. The rule may explain heightened foreign investment in the country.

Power prices and costs

Industrial and commercial retail electricity rates declined slightly in 2020 to an average of about 1.6 Moldovan leu per kilowatt-hour ($0.1/kWh), as did tariffs for residential customers. The fossil-fueled Kuchurgan power plant, controlled by Russia’s Inter-Rao and located in the breakaway region of Transnistria, has maintained its near-monopoly supply status in Moldova. As supplies to the station are strained amid Russia’s war in Ukraine, the plant is unable to supply necessary volumes. Moldova has been buying energy from Ukraine in an attempt to meet demand.

Power market

Power from Kuchurgan or imported from Ukraine accounts for more than 90% of Moldova’s supply. Electricity supplied by Ukraine’s DTEK is sourced from thermal plants that burn coal but could include some power from wind and solar sources.

Moldova is subsidizing natural gas and electricity for consumers as rising prices plunge some into energy poverty.

Moldova allows bilateral contracts between distribution companies, unregulated customers, generators and other power suppliers. Besides that, licensed companies have the right to import and export energy. Renewables generate under 3.5% of power supply. While distribution has been privatized, the rest of the power market is state-controlled and prices are regulated. Market opening reached 9.7% in 2020 compared with 7.4 % in 2019. The Energy Community Regulatory Board reported that there were five active retail electricity suppliers, however each company has a specific region to serve, and final consumers cannot choose from whom they buy electricity. There are plans to reform the system, which has six licensed power producers operating in part under regulated tariffs.

Moldova has been relying on international assistance to meet its demand, with the EU setting a €60 million ($59 million) grant Financing Agreement and the United Nations Development Programme providing an $11 million budget to address the impacts of the energy crisis in Moldova.

Doing business and barriers

It is legally possible to set up residential and commercial solar projects in Moldova, and the country’s feed-in tariff allows system owners to sell their surplus generation. Overall power demand is growing slowly, from 1,063 megawatt-peak (MWp) in 2020 to 1,074Mwp in 2021, as Moldova’s economy remains predominantly agricultural and contends with a frozen conflict over the breakaway region of Transnistria, which receives economic support from Russia.

The post-Soviet Moldovan energy system requires investment as the grid is outdated and remains unconnected with that of Western Europe. Plans to synchronize the Moldovan grid with the European system are moving forward with the support of the EU.

In October 2021, the Moldova Association Council and EU met in Brussels to discuss ways out of a gas crisis after Gazprom did not renew its long-term gas contract to Moldova at the end of September. The EU said it will keep advising Moldova on diversifying supply routes, the importance of unbundling the supply and distribution of gas and electricity as a means of increasing resilience, and their partnership against geopolitical threats.

The Moldova Sustainable Energy Efficiency Financing Facility has a budget of €42 million to support the use of renewables by local enterprises. Moldova is also a beneficiary of the Green Climate Fund-EBRD Sustainable Energy Financing Facilities program.

Moldova has incorporated EU legislation into its national laws and has been quick in adopting targets for renewables and interconnection policies established by the EU. The difficulties lie in implementation, which is hard and slow because of a lack of funding and a largely state-controlled system that is hard to modernize or overhaul. The country continues to be heavily dependent on electricity from non-market sources, which creates artificially low-price competition for renewables technologies. The absence of a forward power market or scheduled power auctions leaves prospective developers with limited visibility on future prices.

EV market

Moldova was estimated to have around 200 passenger electric vehicles (EVs) in 2019, accounting for less than 1% of the total passenger vehicle fleet.

EV policy

As Moldova’s alignment with EU laws and standards grows, clean transport policies are likely to develop. A new fuel-quality law adopted in 2019 aims to eliminate toxic exhaust fumes. The fuel specifications are in line with the EU fuel-quality directive and are focused on petrol and diesel engines.

Excise duty on EVs is 25% to 50% lower, depending on the model. The 2018 Moldova Sustainable Green Cities initiative, implemented by UNDP Moldova and financed by the Global Environment Facility, set a goal to install 30 charging stations by the end of the following year. In 2020, the UNDP promoted a call of interest for the second phase of this project. Sustainable Green Cities has a total budget of $2.72 million for the five years ending 2022.

Buildings market

Moldova has several regulations on energy efficiency measures and renewable heating. The main ones are the country’s Energy Efficiency Law from 2018 and the National Energy Efficiency Action Plan adopted a year later. According to both documents, several sub-laws were adopted, such as the program for the renovation of buildings owned and occupied by central government authorities. The Buildings Directive also includes a national methodology for the minimum energy performance of buildings.

Buildings policy

Moldova’s renewable energy policies are generally impelled by incentives provided by international development institutions. In the case of buildings policy, foreign investors can help ensure the country’s district heating system is functional. The goal is to reduce energy losses.