Republic of Moldova has set ambitious targets for the transition to a more sustainable energy system
Interview with Ion Muntean, Director of Agency for Energy Efficiency
The energy crisis and the war in Ukraine have affected people’s ability to cope with rising bills. In less than a year, significant increase in energy prices for final consumers was register in the Republic of Moldova: +290% for electricity and +530% for natural gas.
Being a post-soviet country, Moldova inherited an old intensive infrastructure. The energy intensity is more than three times higher compared to the EU average despite the fact that Moldova is not an industrialised country. These preconditions amplified by the energy crisis that started in the fall of 2021, but also the war in Ukraine, revealed the vulnerability of the Republic of Moldova and consumers in the energy sector.
UNDP Moldova and its partners contribute to strengthening the authorities’ capacities and increasing energy resilience by diversifying energy supply sources, but also providing support to consumers to cope with energy vulnerability and increased tariffs.
Discover more about the priorities of increasing the energy resilience of the Republic of Moldova from the interview with Ion Muntean, Director of the Agency for Energy Efficiency.
How does the topic of energy efficiency resonate in Moldova in view of the current energy crisis that Europe has been facing?
Despite all economic difficulties, budget constraints strained by the pandemic, weak energy infrastructure and a war at the border, Moldovan authorities, with the support of the international community, managed to ensure a continuous supply of the energy to the end consumers during the energy crisis. This happened in the situation where our neighbours faced long gas and power outages.
In Moldova, the crisis lead to dramatic increase of energy prices for the end consumers, +290% to electricity and +530% to natural gas during a less than one year period. The energy prices increase overcame the payments capacities of the energy bills for the majority of the population. Of course, this situation radically changed the attitude towards the energy use, so energy efficiency become the main discussed topic everywhere on mass- media and social-media.
Because of limited time, it was impossible to launch an impactful energy efficiency program. However, the Moldovan Government, having the priority to reduce the impact of the high energy prices, focused all the efforts on implementing of a compensation mechanism.
Thus, by the beginning of the heating season of 2022-2023, the Energy Vulnerability Reduction Fund was established, which was also supplied with the support of the international donor’s community. In parallel, with support from UNDP, EU and Slovak Government, an informational system for monthly compensation directly on the bills for the most vulnerable energy consumers was developed.
This measure was critical and helped to avoid a social crisis which effects were unimaginable considering that in the same period we had a war at the border and a massive influx of refugees from Ukraine.
The budget spent for the compensations during the last heating season was equivalent to the total costs of the natural gas the Moldovan consumers have paid to Gazprom during the whole year in 2019.
How important is energy efficiency for the energy security of Moldova
Being a post-soviet country, Moldova inherited an old intensive infrastructure. The energy intensity is more than three times higher compared to the EU average, despite the fact that Moldova is not an industrialised country. About 75% from the final energy consumption of the country is imported. The residential sector counts about 48% of the final energy consumption in the energy balance of the country.
Thus, with such an energy profile, there are no doubts that the energy efficiency is the cheapest energy that Moldova can access in order to increase the energy security through reduction of energy imports.
However, there is another dimension of the energy security, which has to be addressed by diversifying energy routes and markets. In this regard, the Government of Moldova succeeded to advance a lot in the last 1.5 years by interconnecting its electricity transport system to ENTSO-E, by importing gas using reverse flow through the Trans-Balkan pipeline and by starting to buy natural gas form the EU market, making possible passing the last winter almost without Russian gas.
Another effect of the energy crisis we are monitoring currently is the sudden increase of the number of beneficiaries of the the net metering support scheme and installed capacities of photovoltaic systems.
During the first four months of 2023, only in the residential sector, without any subsidies, the number of beneficiaries of net metering scheme increased by 63%. These positive evolutions on the energy security already rise the technical concerns regarding integration of bigger volumes of renewables in some zones of the existing grid.
Thus, at the end of April 2023, the number of beneficiaries of the net metering mechanism reached approximately 3050, with a cumulative installed capacity of over 55 MW.
What are the priorities of the country in this context — with respect to both residential and public buildings?
The Republic of Moldova has set ambitious targets for the transition to a more sustainable energy system. Energy efficiency and renewable energy are essential elements of this transition.
The energy crisis we have passed has highlighted the main vulnerabilities of the energy sector and reshaped the strategic priorities that are being reflected currently in the new Energy Strategy by 2050 and National Energy and Climate Plan by 2030, which are in process of development, with support of UNDP, EU and USAID. Obviously, the energy efficiency will have the central role in both documents, with a deep focus on decarbonisation.
Recently the Moldovan Parliament amended the Law on Energy Efficiency, which will allow for consolidation of the institutional capacities of the Agency I represent and offers more competences and operational flexibility in implementation of financing instruments for energy efficiency and renewable projects. The residential and transport are the main sectors that have to be tackled. They counts together about 76% of the final energy consumption.
At the same time, the energy vulnerabilities of the country shall boost the generation of innovative solutions, both technologically and methodologically. In this regard, the Government facilitates the development of the innovation hubs and related infrastructure in order to stimulate the creation of start-ups, which have an important role in accelerating innovation in the energy sector.
Does the country plan to operationalize nation-wide energy programmes and demonstrate solutions to increase energy affordability in residential and public buildings, targeting specifically the most vulnerable and affected groups of population?
The energy crisis enforced the political commitment towards energy efficiency. In the same time, targeting the energy vulnerable households for subsidizing the energy efficiency measures is very important in order to reduce the budgetary allocations of their compensations.
In this regard, our Agency already works on development of two national programmes dedicated to residential sector, which will be launched soon. The first one is a Voucher’s Programme, which will consist in substantial subsidies for replacement of the old household appliances with new ones more efficient.
The second one is the Green Home Programme, which aims subsidizing the packages of energy efficiency measures in households. Both programs will be based on an information system, which will allow fast and transparent decisions without involvement of the human factor in the decisional process. The programs are developed and are to be launched with the support of UNDP Moldova and the European Union.
Also, our Government initiated negotiations with the development partners on setting up the Moldova Residential Energy Efficiency Fund dedicated especially for the multifamily residential buildings which have a huge potential for savings.
Do you see a value in exchanging knowledge and experience with other countries in a similar context?
The experience and knowledge counts a lot nowadays, when the speed of technological development is very high and the implementation opportunities are very divers. The recent crisis came in a context when a political consensus at European level achieved towards decarbonisation by 2050.
Most crises create new opportunities, which are different in all countries. Therefore, a common understanding should be towards the opportunities that appears and which have to be directed to achieving the common goal. From this perspective, exchanging knowledge and experience between the countries is very important.
Also, it is worth to mention the role of the international development agencies with experience in the countries all around the world which can facilitate the adoption of individual solutions in a specific context or particular conditions from a certain country. In the end, the results will be achieved faster and less costly.
The original interview was published by the Kurir publication in the context of the regional symposium “Energy efficiency of the buildings in the Balkan+ region”, at which the Republic of Moldova participates and is represented by Ion Muntean from Agency Energy Efficiency and Irina Apostol from Green City Lab Moldova.
The event is organized by UNDP with the support of the Governments of Germany, Japan and Slovakia and takes place on 30–32 May in Belgrade, Serbia.