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Moldova’s Energy Sector: Strengths and Weaknesses

The European Bank for Reconstruction and Development (EBRD) has recently assessed the energy sector in Moldova, highlighting both the strengths and weaknesses of the country’s electricity framework.

Key Strengths

According to the report, the key strengths of Moldova’s electricity framework are:

  • Regulatory independence: The regulatory body operates independently from the government.
  • Regulatory autonomy: The regulator has the authority to make decisions without interference.
  • Transparency: The sector is transparent in its operations and decision-making processes.

These factors have enabled the sector to operate efficiently and effectively, with a separate state-owned transmission system operator (TSO) providing reliable transmission services.

Key Weaknesses

However, the assessment also identified several weaknesses:

  • Market framework: The lack of competition in the generation market has led to limited investment opportunities and high costs for consumers.
  • Network access: Limited access to the network has hindered private sector investment.
  • Public service obligations: These obligations have resulted in inefficient use of resources and higher costs for consumers.
  • Private sector investment: There is a lack of private sector involvement in the sector.

Sector Overview

Moldova’s power sector was unbundled in 1997, resulting in a separate state-owned TSO, Moldelectrica. The company manages the assets of the power transmission system and dispatch centre. Moldelectrica holds two licenses issued by the National Energy Regulatory Agency (ANRE), which drafts and adopts tariff methodologies.

Challenges

Despite its strengths, Moldova’s energy sector faces several challenges:

  • Security of supply: The country is a net energy importer with weak infrastructure, making it critical to closely monitor security of supply.
  • Winter peaks in demand: The sector faces significant challenges during winter months when demand peaks.

Gas Sector Dominance

The report also highlighted the dominance of the gas sector by MoldovaGaz, a corporate entity owned 50% plus one “golden share” by Gazprom. The lack of provision for third-party access and storage has hindered competition in the sector, leading to concerns over security of supply and price increases imposed by Gazprom.

Conclusion

While Moldova’s energy sector exhibits several strengths, it also faces significant challenges that need to be addressed to ensure a reliable and efficient supply of energy to consumers. Efforts to reduce cross-subsidization in the tariff structure and improve market competition are essential to achieving this goal.

Chart 3: Quality of Energy (Electricity) Legislation in Moldova

This spider diagram presents the sector results for Moldova in accordance with the benchmarks and indicators identified in an assessment model. The fullness of each axis represents an optimum score of 100, which is full compliance with international best practices.

EBRD Assessment Highlights Key Strengths and Weaknesses in Moldova’s Energy Sector

The EBRD’s energy sector assessment has shown that regulatory independence, regulatory autonomy, and transparency are the key strengths of Moldova’s electricity framework. Market framework, network access, public service obligations, and private sector investment appear to be its key weaknesses.

Chart 4: Key Strengths and Weaknesses in Moldova’s Energy Sector

  • Regulatory independence, regulatory autonomy, and transparency are the key strengths of Moldova’s electricity framework.
  • Market framework, network access, public service obligations, and private sector investment appear to be its key weaknesses.