In-Depth Review of the

Energy Efficiency Policy of

Moldova

PEEREA Working Group

Brussels, 12 June 2015
PEEREA Working Group | Brussels, 12 June 2015 1
 Country Overview
Territory: 33 800 km2
Main rivers: Dniester, Prut and Rut
Population: 3.56 million people
Climate: moderate
Independent since 27 August 1991
New Government since January
2015
National currency: Moldovan Leu
(MDL)
http://kids.britannica.com/comptons/art-52669/Moldova? 1 EUR = 18.6321 MDL
1 USD = 14.0388 MDL

PEEREA Working Group | Brussels, 12 June 2015 2

Economic background
2500

2000

1500
USD
1000

500

0
1996

2000
1990
1991
1992
1993
1994
1995

1997
1998
1999

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
GDP, billions of 2000 U.S. dollars GDP, billions of U.S. dollars

GDP 96.5 bln MDL in 2013 ($ 7.67 bln, 5.77 bln )

During 1995-2013 GDP increased by 7.4 times
Highest cumulative GDP growth relative compared to its
regional partners (Romania, Ukraine, Russian Federation)

PEEREA Working Group | Brussels, 12 June 2015 3

Energy supply and demand
Minor reserves of coal, petroleum and natural gas
and a moderate hydro electronic potential
High dependence on energy imports (mainly from
Russia, Ukraine and Romania)
3000

2500

2000

1500

1000

500

0
2005 2006 2007 2008 2009 2010 2011 2012 2013

Total primary energy supply Energy imports

PEEREA Working Group | Brussels, 12 June 2015 4

Energy supply and demand
During 2005-2013:
o Fivefold increase in average annual natural gas import prices
o Sharp increase in tariffs for gas supply and locally produced
electricity and heat
Main driving force to alternative energy resources and
optimization of energy consumption
o Final use of natural gas decreased from 28% to 18%
End of 2014, Ukraine ceased electricity supply due to the
difficult situation
Local power production decrease from 25% in 1997 to 18.3% in
2013

PEEREA Working Group | Brussels, 12 June 2015 5

Total final consumption of energy
and energy resources
100%

90%
34,7 33,8 37,1 37,5 36,9
80% 38,5 39,7 38,9

70%

60% 15,0
16,1 13,8 13,5 12,3 12,3 11,3
11,6
50%
13,1 14,3 16,0
40% 15,6 15,5 15,3 15,3 16,2
3,2 3,8
30% 3,2 3,6 3,7 3,1 3,5 4,2

20% 27,2 27,2

25,8 23,0 24,4 24,4 23,5 22,9
10%
5,5 5,8 4,1 6,1 5,7 5,6 5,8 5,9
0%
2005 2006 2007 2008 2009 2010 2011 2012

coal natural gas biomass coke electricity heat petroleum petroleum products

TFC relatively stable in the period 2005 2013

In 2013:
TFC was 2061 ktoe
Highest share was of petroleum products (36.5%)

PEEREA Working Group | Brussels, 12 June 2015 6

Total final consumption by
sectors in 2013
2,00% 12,50%
12,40%

Industry

Transport

Agriculture
28,40%
Residential sector

Public sector/ services

41,60%

Other
3,10%

PEEREA Working Group | Brussels, 12 June 2015 7

Energy intensity of Moldova in
comparison with other countries
0,8

0,7

t
o
0,6
e
/
t
h 0,5
.
2
0 0,4
0
5
U 0,3
S
D
P
0,2
P
P

0,1

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Moldova OECD total Non-OECD Europe and Eurasia Bulgaria Romania Ukraine

PEEREA Working Group | Brussels, 12 June 2015 8

Electricity and Heat generation
capacity
Share of Production, import
and other sources of electricity
supply to Moldova during
1997-2013, %

2001 2005 2010 2011 2012 2013

Local electricity production, total (GWh) 1,042.9 999.8 888.1 854.3 776.1 747.9

share in total local production, %

Local electricity CET-1 11.1 12.9 9.2 7.0 6.1 7.1
production CET-2 77.9 72.5 74.9 76.8 82.0 79.4
CET-Nord 3.0 5.6 6.4 6.8 7.0 6.6
HPP-Costesti 6.9 8.4 8.8 8.8 4.3 6.0

other local producers 1.1 0.7 0.6 0.6 0.5 0.9

CET-2, CET-1, CET-Nord: total 92.0 90.9 90.6 90.5 95.2 93.2

PEEREA Working Group | Brussels, 12 June 2015 9

Electricity market
Until 1997: single vertically
integrated state owned company
Moldenergo operated
Moldovan energy system
1992: loose of control over the
region Transnistria during the
military war
1997-2000: legally and
operationally unbundling of
Moldenergo into 19 companies
2000: three out of five DSOs were
purchased by a Spanish company
01.01.2015: based on the
provisions of the Directive
2009/72/EC, DSOs were further
unbundled

PEEREA Working Group | Brussels, 12 June 2015 10

Dynamics of electricity tariffs
during 1997-2013
Electricity tariffs in c$/ kWh
16,00
14,17
14,00 13,26 13,34
12,36
11,63
12,00 12,82
12,40
12,07
9,59 11,33
10,00 10,81
8,35
8,00 8,71
6,26 6,08 5,93 7,93
5,22 5,50 5,66 5,53
6,00 5,16 5,15 5,27
4,67
4,17
5,61 5,46 5,33
4,00 5,22 5,16 5,04 4,81 4,95 4,96
4,67 4,52
4,17
2,00

0,00

RED Nord i Nord-Vest RED Union Fenosa

PEEREA Working Group | Brussels, 12 June 2015 11

 Policy goals and targets
Indicator 2015 2020
Energy security
New interconnections:
electricity transmission grids, km 139
natural gas pipelines, km 40
Increase of local power generation, MW 800 Increase in energy
RES share in annual electricity production, % 10 efficiency by 10%
Energy efficiency
Decrease in energy intensity by, % 10 could result in annual
Decrease of electricity losses in transmission and savings of about 830
distribution networks to, % 13 11
Decrease of natural gas losses in transmission and
million MDL in
distribution networks by, % 20 39 current prices by
Decrease of heat losses in transmission and
distribution networks, % 2 5
2020
Decrease in greenhouse gasses emissions by (as
compared to year 1990 level), % 25
Decrease in buildings' energy consumption by, % 10
Share of retrofitted public buildings, % 10

PEEREA Working Group | Brussels, 12 June 2015 12

Institutional framework
Government
Republic of Moldova

Deputy Prime Minister,

Minister of Economy

Deputy Minister

Directorate on
Agency for National Energy
Energy Security and
Energy Efficiency Inspection
Energy Efficiency
(AEE)

PEEREA Working Group | Brussels, 12 June 2015 13

Legislative framework
Law on energy efficiency (approved on 02.07.2010) main principles:
Promotion of energy efficiency by supporting energy efficiency
improvement programs
Promotion of private initiative and the development of energy service
companies
State monitoring, provided by the competent authority
Support cooperation between energy producers, transporters,
distributors, suppliers and consumers
Cooperation with other countries aiming promotion of advanced
technologies, implementation of scientific innovation and of advanced
experience in the field of energy consumption
Informational support for energy efficiency activities
Training of decision makers at all levels
Awareness raising and involvement of civil society in decision-making
processes and in implementation of the energy efficiency
improvement measures

PEEREA Working Group | Brussels, 12 June 2015 14

Energy efficiency policies and
their implementation
Electricity and Heating Sector
o Major difficulties
High share of households in total electricity and heat consumption
High share of low-income population
Need for subsidizing centralized heat production
o National Energy Efficiency Program for 2011-2020 is a set of energy
efficiency improvement measures
For example: updating the concept paper for renovation of the
national heat supply system
o National Action Plan for Energy Efficiency for 2013-2015 is a set of
concrete measures for the energy transformation sector
o Law on heat and promotion of cogeneration transposes partially
the Directive 2012/27/EU of the European Parliament and of the
Council of 25.10.2012 on energy efficiency

PEEREA Working Group | Brussels, 12 June 2015 15

Energy efficiency policies and
their implementation
Industry
o One of the main targets for the Energy Conservation Program for 2003
2010
o Now National Energy Efficiency Program for 2011 2020 and National
Action Plan for Energy Efficiency for 2013 2015
2013-2015 2013-2016
Industrial sector
ktoe % ktoe %
Energy saving targets per sector, calculated based on the Top-
43 10,0 87 10,0
Down approach
Energy saving targets per sector, calculated based on the
16 29,28 27 11,05
Bottom-up approach
o Difficulties
Companies are still using energy intensive technologies and equipment
Providing new technologies will solve this problem and create better
economic results
o National Cleaner Production Programme (NCPP)
Subsets of outputs and activities in Capacity, Demonstration, and Policy
and Strategy

PEEREA Working Group | Brussels, 12 June 2015 16

 Energy efficiency policies and
their implementation
Buildings sector (residential and public)
o Energy saving target is estimated at 1.29 TWh/a until 2020
Would result in 70.68 mln of annual savings
Requires 503.6 mln of investments
o Law on energy performance of buildings (2014)
Lays down the requirements for the creation and management of the
national information system (IS) on buildings energy efficiency
Minimum energy performance requirements are set by the central
public administration body
o Ministry of Regional Development and Construction (MRDC)
Leading authority in preparing a set of draft secondary regulations to
transpose some European standards in energy performance of
buildings

PEEREA Working Group | Brussels, 12 June 2015 17

Energy efficiency policies and
their implementation
Lighting and energy using products
o Top of the ranking of energy efficiency measures
o Public sector and NEEP 2011-2020
Planning to implement programs on improvement of street
lightning
Planning to raise public awareness regarding best practices,
costs and benefits of energy efficiency, RES, etc.
o NEEAP for 2013-2015 includes the following measures
Improvement of energy efficiency in the public sector
Optimization of public street lighting
Labelling of energy-related products and implementation of
eco-design
o Expected energy savings are around 337 ktoe until 2020
o Part of Energy Community process and EU-Moldova Association
Agreement is to implement a list of Directives and Regulations

PEEREA Working Group | Brussels, 12 June 2015 18

 Financing energy efficiency
During 2009-2014, share of energy projects in total Moldovan projects
only 6 %
Leading donor is the EU with 883 million , followed by EIB, EBRD, USA,
WB, Romania, Poland, UN, Japan, Germany and Sweden
Establishment of the Energy Efficiency Fund (EEF) regarding the Law on
Renewable Energy
o At least 10% of the total Funds amount should be financial allocations from
the Government
The Moldovan Sustainable Energy Financing Facility (MoSEFF) project
was launched by EBRD in 2010
o Total amount is 42 million by now
o Supports investments in energy efficiency and renewable energy
o 236 projects and 54 mln projects loan were approved by MoSEFF team
EBRD set up the Modova residential energy efficiency financing facility
(MoREEFF)
o 1450 energy efficiency loans totalling 5 526 581
o 1 477 128 incentive grants

PEEREA Working Group | Brussels, 12 June 2015 19

 Renewable Energy policy
Strategic and legal background
o National Development Strategy
By 2020, 400 MW power generation based on RES
Mainly wind power generation and to a lesser degree solar energy
Biomass will continue to be used mainly for heating
By 2030, 600 MW power generation based on RES
o Law on renewable energy (2007) is legal framework for
renewable energy sources (RES)
Agency for Energy Efficiency (AEE) is national authority in the field of RES
One of the fundamental principles is promotion of electricity production
from RES
o National Renewable Energy Action Plan for 2013-2020
150 MW by 2015
250 MW during 2016-2019
By 2020,
360 MW based on wind and solar energy
40 MW based on other RES, mainly biomass/ biogas

PEEREA Working Group | Brussels, 12 June 2015 20

Renewable Energy policy
Renewable energy potential and developments
o Share of renewables in the total energy mix was only about 4% in
2012
Technical potential
PJ million toe
Solar 50.4 1.2
Wind 29.4 0.7
Hydro 12.1 0.3
Biomass Agricultural wastes 7.5
firewood 4.3
Wastes from wood processing 4.7
Biogas 2.9
Biofuels 2.1
Total biomass 21.5 0.5
Total RES potential 113.4 2.7
Low energy potential sources, including geothermal > 80,0 > 1,9

o In 2011, initiation of the Moldova Energy and Biomass Project

Funding of 14.56 million by the European Commission and UNDP
141 biomass heating systems with total installed capacity of 49 MW in
144 rural public buildings

PEEREA Working Group | Brussels, 12 June 2015 21

Environmental policies, related
to energy efficiency
2011-2014, a number of policy papers, programs and action
plans regarding issues of environment and climate change were
adopted
o Including greenhouse gasses emissions (GHG) targets
Decrease of GHG emissions by 25% as compared to the 1990 level
Low Emissions Development Strategy 2020
o Suggests that technical tasks related to the implementation of the
mitigation aspects of Low Emission Development Strategy could be
assigned to the Energy Efficiency Agency
o Suggests that monitoring, reporting and verification of Low Emissions
Development Strategy (LEDS) and National Appropriate Mitigation
Actions (NAMAs) are assigned to the Climate Change Office and the
Financing Carbon Office of the Ministry of Environment

PEEREA Working Group | Brussels, 12 June 2015 22

General Recommendations
Stabilisation of legislative framework to attract investments in the
energy efficiency and renewable energy sector
Reflection of the potential contribution of energy efficiency towards
decreasing fuel imports and supporting economic growth and the
environment
High priority on energy efficiency and renewable energy
Detailed analysis of economic energy efficiency potentials in all sectors
Mitigation of barriers
Strengthening of the capacity to analyse and assess energy efficiency
and renewable energy as a basis for future policy development
Efficient development of production, transmission and distribution
assets in the gas and electricity sector
Unification and creation of energy strategies, policies and targets must
be better coordinated on national level
Practical implementation of the EU legislation and proper enforcement
on different levels

PEEREA Working Group | Brussels, 12 June 2015 23

Institutional Framework
Recommendations
Special emphasis on the Energy Efficiency Directorate within the Ministry of
Economy and on the Energy Efficiency Agency
Energy Efficiency Agency should obtain a leading role in implementing
energy efficiency and RES policies and regulations within the country
Enhancement of inter-ministerial coordination
Consideration of ways to strengthen work on energy efficiency at regional,
district and local levels
Support of efforts of various stakeholders, including IFIs, professional and
sector associations, universities, research centres and NGOs
Support of research and development activities on renewable energy and
energy efficiency technologies
Guarantee of the independence of energy regulator

PEEREA Working Group | Brussels, 12 June 2015 24

Energy Market and Pricing
Recommendations
National Energy Regulatory Agency (ANRE) should ensure that
the energy prices are cost-reflective
Restructuring of the electricity and gas market

PEEREA Working Group | Brussels, 12 June 2015 25

 Specific Energy Efficiency
Programmes and Measures
Creation of short-term Energy Efficiency Action Plans with priorities and
intermediate monitoring and evaluations
Establishment of high efficiency standards for new and existing buildings, with
focus on energy efficiency labelling schemes and minimum energy
performance standards
Stimulation of energy efficiency through a wide range of measures for the
buildings and industry sector
Facilitation of development of the market for energy services
Prioritisation of highly efficient cogeneration and district heating plants
Improving the qualification of energy auditors, technicians and other energy
professionals
Promotion of introduction of the energy management systems in industry
Enhancing awareness raising and information dissemination activities to
promote energy efficiency
Enhancing of international cooperation
Clear definition of the role of the district energy manager

PEEREA Working Group | Brussels, 12 June 2015 26

Recommendations for
Renewable Energy Sources
Prioritisation of RES development
Production of heat from renewable energy sources should
be covered by support schemes
Further utilization should be supported by development of
necessary regulation, certification and quality control

PEEREA Working Group | Brussels, 12 June 2015 27

Recommendations for Energy
Efficiency Financing
Reducing the grant component, towards loans with
attractive interest rates
Careful consideration of the tender documentation in order
to ensure the selection of the best available products and
services
Ensuring a good coordination mechanism with IFIs and
donor communities, including priority settings, monitoring
at the national level, and compatibility with the overall
national strategy on energy efficiency and renewable
energy
Exploring most appropriate financial incentives for
stimulating energy efficiency in different sectors

PEEREA Working Group | Brussels, 12 June 2015 28

Recommendations for Data
Collection and Monitoring
Set up of a central coordinated project database
Results at the project level should be aggregated at the
national level
The statistics on the building stock should be created first
Full implementation of international environmental reporting
standards and methodologies concerning renewable energy
and energy efficiency
Usage of metering devices needs to be considered in different
sectors

PEEREA Working Group | Brussels, 12 June 2015 29

 Thank you for your
attention!

Are there any questions?

PEEREA Working Group | Brussels, 12 June 2015 30