Strong Currents: What We Can Learn from Energy Transparency in Eastern Partnership Countries

In the energy sector, transparency and public oversight unlock many benefits. Not least of these are security and stability. How do Eastern Partnership countries measure up? What can the rest of us learn from them?

By Bohdan Serebrennikov, Andry Ursta, and Joseph Foti

Moldova’s recent referendum vote to join the European Union is a bellwether. This shift toward the West signals two of the major global transformations going on right now. One is the evolution of political alliances. The second is a change in technology, specifically related to energy.

In neighboring Ukraine, the fight for sovereignty is also a story of energy. EU members still depend on Russian oil and gas. Russia consistently targets Ukraine’s energy infrastructure. These issues are central to peace and stability.

However, military efforts and casting ballots alone cannot achieve these objectives. Rather, fighting corruption and getting good value for money constitute a second front in the struggle for democracy. Cleaning up energy markets is a double win. It reduces opportunities for corruption and capture, which also makes European integration easier.

Energy Transparency Underpins European Integration

Russia’s attacks on Ukraine and other European countries have made one thing clear — countries need diverse supplies of energy.

Eastern Partnership countries (Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova, and Ukraine) are striving for deeper integration with Europe. The aim is to reduce reliance on external, non-EU energy sources. Transparency in the electricity and natural gas sectors is a strategic cornerstone to achieve this goal.

Energy sector transparency has several benefits.

1. It helps reduce surprises. This is important for countries that are looking to integrate with the EU. Future partners, especially service providers, do not want to face unknown liabilities or hazards.
2. It promotes regulatory alignment. Europe is looking to make cheap energy abundant. That means moving energy across borders and into homes, shops, and factories. To do that, one needs reliable standards and practices. To join the EU’s energy market, countries must follow the Energy Community Treaty. The Treaty and EU legislation have mandatory transparency requirements for the energy sector.
3. It builds investor confidence. This attracts private and public investment. It also means that governments and utilities pay less to borrow money, which leads to more electricity at lower rates.
4. It helps stop the worst of climate change. In particular, it could allow Eastern Partnership countries to unlock financing for renewables, decommission outdated systems, and extend the life of cleaner supply.

These benefits matter. To capture the benefits, each country needs transparency and competitive markets.

Transparency Keys: Unlocking the Energy Markets

The third edition of the Energy Transparency Index reveals the key transparency policies in this area and their importance. (Disclosure: OGP and other donors supported the report.).

Here are a few highlights.

Energy Balances

The first critical policy is to ensure transparent energy balances. This means disclosing data on gas and electricity production, imports, and consumption. For countries seeking EU integration, this is vital. Conversations with other European energy entities and investors need this foundation. In Romania, “energy balance” received the highest marks (“absolute” or A+). This shows a high compliance with EU energy statistics rules.

Natural Monopolies

Utilities often operate as monopolies. Left unregulated and unaccountable, monopolies can favor certain participants, fix high prices, and take unfair advantage of consumers. Consequently, there are several options to ensure fair competition. The first is ownership unbundling (i.e., the full separation of competitive and non–competitive activities on energy markets), which is considered one of the most effective approaches under EU law. Where alternative options are chosen and operators remain part of vertically integrated monopolies, public oversight is necessary. This can ensure that investment is high-quality and that tariffs (or rates) are fair. The index evaluated operator transparency, independence, development planning, and tariff setting. Georgia earned high marks for operator transparency, though concerns remained about the independence of regulators and the openness of planning processes.

The report recommends that utilities entities publish the following:

• How they allocate capacities
• Tariff methodologies to eliminate cross subsidization
• Investment and development plans to check for bias
• Legal and managerial firewalls between competitive and non-competitive entities in the case of vertically integrated monopolies
• Compliance reporting

Supply

Supply transparency helps keep markets competitive. It also helps to understand whether prices reflect actual market conditions or manipulation. The index looked at ease of market entry, market concentration, and pricing transparency. Moldova showed some supply transparency, with progress on market rules. But the country had less info on concentration or pricing.

The report goes on to examine other key factors in the electricity and natural gas markets, such as reliability and security, consumption, fiscal reporting, climate reporting, and public regulatory authorities.

We encourage readers to visit the entire report. They may also contact the groups that did this work: DiXi Group (Ukraine), World Experience for Georgia (Georgia), Watch Dog MD (Moldova), and Expert Forum (Romania). This is a consortium of civil society organizations that have been working together since 2020 to enable energy sector transparency and accountability as prerequisites for competition, modernization and the eradication of corruption. DiXi Group developed the method and has applied the index to Ukraine since 2018.

A Spotlight on Ukraine’s Energy Recovery

The subject of transparency in Ukraine is particularly difficult. The report finds that it falls beyond its peers. This is somewhat understandable. Given regular attacks on the power system, there are strong arguments for hiding details that would compromise physical security. For the time being, there are some elements that need to remain secret and others that could be made more transparent, the DiXi Group argues.

Things like personnel and repair status of facilities need to remain protected. On the other hand, the organization finds that some information should be published to set the stage for a more robust recovery. This includes aggregated data on markets such as aggregate demand, supply, volume, and prices. No one can be certain when peace will come or how, but rapid reconstruction of the energy grid will need to be a major part of the process.

Ukraine has officially adopted the index to help guide restoration and development of the energy sector. In December 2024, the Cabinet of Ministers adopted the index as part of its reporting for Sustainable Development Goal 7 on “Affordable and Clean Energy.” This will help guide policy-makers to deliver energy generation and transmission facilities in line with Ukraine’s climate and energy goals.

A Collaborative Path Forward

Electricity transparency is not a bunch of boring administrative rules. Rather, it is the linchpin for broader energy security and geopolitical stability. Making markets open, accountable, and competitive means:

• Reducing vulnerabilities: Transparent and competitive markets resist market manipulation, corruption, and external pressures.
• Enhancing dependability: Reliable, open energy markets help make energy supply dependable and abundant.
• Fostering economic and political resilience. Energy prices and supply have been at the center of unrest worldwide. Transparency attracts foreign investment and economic growth. When governments need aid, especially in war-torn Ukraine, transparency builds donor trust.

Energy transparency does not only change the energy sector. It shores up foundations for the whole economy and grows connections within Europe.

This publication was produced with the financial support of the European Union. Its contents are the sole responsibility of the Open Government Partnership and do not necessarily reflect the views of the European Union.