Addressing the impacts of the energy crisis in the Republic of Moldova

Addressing the impacts of the energy crisis in the Republic of Moldova

Status: Ongoing
Duration: 2022 – 2023
Budget: US$11,216,000
Coverage: Republic of Moldova
Beneficiaries: Ministry of Infrastructure, Regional Development, Ministry of Labour and Social Protection, Agency for Energy Efficiency, National Fund for Regional and Local Development, energy poor/vulnerable consumers, renewable energy producers
Focus Area: Climate Change, Environment & Energy
Partners:

Ministry of Infrastructure, Regional Development, Ministry of Labour and Social Protection, Agency for Energy Efficiency, National Fund for for Regional and Local Development, energy poor/vulnerable consumers, renewable energy producers

Project Document: Addressing the impacts of the energy crisis in the Republic of Moldova
See more information about the project on the transparency portal.

 

Project Summary:

Because Moldova lacks energy resources, it is almost fully dependent on imports of fossil fuels and electricity. Since October 2021, gas prices have increased significantly in Moldova due to both the latest developments on the regional energy markets caused by the post-pandemic economy recovery and the war in Ukraine (the purchasing gas price increased from 265 USD/1000 m3 in 2021 to 1193 US/1000 m3 in April 2022 and 919 US/1000 m3 in May 2022). Unforeseen excessive price increase has caused a domino effect of rising prices in all areas, including electricity, increasing the level of energy poverty of the population. This have put significant pressures on the public finances and the most vulnerable citizens’ ability to afford gas over the winter (60% of Moldova’s population live in energy poverty, spending more than 10% of their budgets on energy bills). In addition, the war in Ukraine and the influx of refugees as a consequence, as well as the decrease in remittances from Ukraine and Russia has put more pressure on the Moldovan economy.

To enhance security of gas supply, Moldovan authorities are seeking to diversify gas supplies and create gas stocks for emergency situations or specific cases, by enabling acquisition, creation and use of gas stocks, especially if there are natural gas shortages.

The Programme is intended to enhance the Republic of Moldova’s energy security and resilience in the face of current and future shocks and prompt the energy transition.

The Programme assists the Government of Moldova to tackle the current energy crisis and energy poverty in addressing prioritized systemic elements in the energy sector to cope with potential future energy crisis. Its ambition is to enable energy markets to become functional, transparent, and ready to integrate in European regional markets, while citizens are benefiting from green energy transition in an inclusive way.

The Programme will assist Moldova to take actions against energy crisis through: (i) improving and consolidating its energy policy and legislative alignment in line with the country’s international and regional commitments, along with (ii) building capacity of the main energy players for prevention of major risks in the current and potential future energy crises. The Programme will foster public support for energy transition and energy efficiency through (iii) awareness raising, information and communication, while addressing disinformation in a gender sensitive manner, together with (iv) demonstration/pilots of energy efficiency and renewable measures to increase energy affordability and development of sustainable financing mechanisms with primary focus on vulnerable households and public sector.

Objectives:

Support the Government of Moldova to: 

  • Put in place the legal and regulatory framework in the energy sector with mainstreamed social and climate considerations in line with the EU requirements;
  • Strengthen the capacities of the energy-related actors and enhancing institutional coordination mechanisms to address and avert risks entailed in recent and potential future energy crisis;
  • Increase awareness and communication among the population to adopt the best energy saving practices and measures and to encourage the use of renewables; 
  • 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.

Expected results:

  • National policy framework and long-term planning in the energy sector improved and aligned to climate commitments;
  • National regulatory framework (both primary and secondary) improved in line with Moldovan energy commitments, ensuring that national authorities are better prepared and can respond to emergency situations in the energy sector and to the needs of the most vulnerable energy users;
  •  Key energy players have increased expertise, technological, institutional and enforcement capacities to prevent major risks in current and potential future energy crises;
  • National capacities to organize transparent and non-discriminatory procurement   procedures in the energy field are strengthened;
  • Government capacities to monitor and provide targeted response to energy poverty is increased through institutionalization of a new mechanism;
  • Facilitate citizen’s engagement in formulation of energy policies and contribute to increased transparency of decision-making process;
  • Enhanced capacities of the Ministry of Infrastructure, Regional Development and the National Agency for Energy Regulation of the Republic of Moldova to implement the mechanism for creating and maintaining natural gas mandatory stocks, at the lowest costs possible and with the minimum impact on final consumers
  • Improved definition and measuring of “energy vulnerable consumer”;
  • National nudging program for household successfully implemented to improve and reduce energy consumption;
  • Advocate for renewables and practical solutions to alleviate energy poverty;
  • Citizens’ empowerment to participate in decision making process in the field of energy, debunk myths and increase level of literacy in the field of energy sector;
  • National Programs to adopt energy saving practices and technologies, including in vulnerable households are successfully launched and piloted;
  • Adoption of energy efficiency measures in apartment buildings is enhanced;
  • Domestic power generation from renewable energy sources for the needs of public buildings available;
  • At least 50 thousand of energy vulnerable families will be able to reduce their energy bills due to the large-scale vouchers programme for householders (switch to more energy efficient home appliances) and the Green Home Programme (use of renewable solutions); 
  • At least 5 multi-apartment buildings will undergo refurbishment of their distribution heating system leading towards saving of energy; 
  • At least 3 medical institutions will reduce their expenses on energy after installation of photovoltaic systems.

Accomplishments:

  • The law on Energy Vulnerability Fund was drafted;
  • The concept and implementation mechanism of the Energy Vulnerability Fund was developed;
  • The Energy Vulnerability Information System was developed;
  • An information campaign to support registration of beneficiaries on the online platform of the Energy Vulnerability Fund conducted;
  • The methodology regarding the distribution of thermal energy consumption and the cost related to this consumption among the consumers of an apartment block connected to the collective thermal energy supply system was drafted;
  • An average decrease of 1.33% in energy consumption among 300,000 households achieved due to the first phase of the national nudging programme with Premier Energy Distribution;
  • The functional analysis of the Agency for Energy Efficiency was performed;
  • A Regulation regarding the organisation and operation of the Sectoral Council in the field of external assistance in the energy sector was developed and approved by the Ministry of Infrastructure and Regional Development;
  • 100 biomass heating systems in public institutions inspected and prepared for winter;
  • 100 operators of biomass thermal power plants trained;
  • 2,000 schoolchildren from rural localities attended thematic shows on energy and resource efficiency and renewable energy;
  • Over 300 schoolchildren aged 10-16 years participated in a drawing competition on promotion of renewable energy, energy efficiency and CO2 reduction.
Years Budget
European Union
2022 $3,235,400