{"id":49625,"date":"2022-09-27T15:50:34","date_gmt":"2022-09-27T13:50:34","guid":{"rendered":"https:\/\/libmod.de\/inputpaper-energiesicherheit-moldawien\/"},"modified":"2022-12-06T12:17:22","modified_gmt":"2022-12-06T11:17:22","slug":"energy-sec-at-edge-moldova","status":"publish","type":"post","link":"https:\/\/libmod.de\/en\/energy-sec-at-edge-moldova\/","title":{"rendered":"Energy security at the edge \u2014 how vulnerable is Moldova?"},"content":{"rendered":"

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Foto: Imago Images<\/figcaption><\/figure>\n

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The second series of input papers for the project \u201cEastern Partnership Plus\u201d deals with the question of the depen\u00addence of the three associated countries on energy imports and a better integration into the European energy market.<\/h2>\n

[\/vc_column_text][vc_column_text]Victoria Rosa, Senior Associated Expert, Foreign Policy Associ\u00adation, Moldova<\/em><\/p>\n

 <\/p>\n

The war in Ukraine exacer\u00adbated one major security dilemma both for the Eastern European region and Europe as a whole \u2013 the energy security. Even though it was clear for Moldovan author\u00adities at all times that energy<\/em> is not only a trading good <\/em>but also a weapon, there was no rush in securing alter\u00adna\u00adtives to energy imports or develop on a fast-track green energy resources.<\/p>\n

According to the IEA, in the Republic of Moldova the total final energy consumption in 2019 comprises: 31% oil, 24% natural gas, 20% bioenergy, 14% electricity, 6% heat and 3% coal. Moldova\u2019s energy sector is charac\u00adterized majorly by depen\u00addence on one supplier, the Russian Feder\u00adation and\/\u200bor the Russian-owned thermal power plant in the Transnis\u00adtrian region[1]<\/a> \u2014 \u201cMoldavskaya GRES\u201d. The energy infra\u00adstructure is poorly developed and the legal framework is scarce.<\/p>\n

Moldova imports 99% of its gas supply from Russia for domestic, indus\u00adtrial consumption, and electricity production. In 2021, Moldova purchased 75% of its electricity supply from MGRES, which is located on the left bank of the Nistru River, the Transnis\u00adtrian region. 21% of electricity needs are covered by domestic right-bank production and the remaining 3% Ukrainian imports.<\/p>\n

Gas and Electricity as Elements of Hybrid Warfare <\/u><\/em><\/strong><\/p>\n

Gas sector <\/em><\/p>\n

 <\/u><\/em><\/strong><\/p>\n

The energy sector is one of the main vulner\u00ada\u00adbil\u00adities of the Moldovan economy. Since its indepen\u00addence, Moldova faced several gas crises generated by the Russian Feder\u00adation when geopo\u00adlitical gains were at stake. The latest, and the major energy crisis unleashed starting 2019 once with the expire of the contractual agree\u00adments with Gazprom and the unclearness with the gas transit through Ukraine. Coinci\u00addence or not, the gas diffi\u00adculties emerged immedi\u00adately after the pro-European forces took office and expressed the full speed towards EU membership.<\/p>\n

Nonetheless, after difficult negoti\u00ada\u00adtions which presumed, from the Russian part, geopo\u00adlitical aspects as well, the Moldovan pro-European government renewed the gas contract with Gazprom in October 2021. Among the commit\u00adments taken by the Republic of Moldova could be listed paying back the old gas debts that Gazprom claims against Moldova after completing an independent external audit at MoldovaGaz. The total debt<\/a> today amounts to approx\u00adi\u00admately 8 billion USD for the entire territory of the Republic of Moldova, the consti\u00adtu\u00adtional author\u00adities recog\u00adnizing only the debt accumu\u00adlated on the right bank of the Nistru River which is over 700 million.  The peculiarity of the debt resides including in the fact that Gazprom owns 50% plus 1 share of MoldovaGaz, 13.44% shares are held by the seces\u00adsionist author\u00adities in the Transnis\u00adtrian region[2]<\/u><\/sup> while the Moldovan government owns only 35.33%<\/a>.<\/p>\n

The consuming negoti\u00ada\u00adtions with Gazprom over price formula and payment condi\u00adtion\u00adal\u00adities reflected negatively in the domestic debate and daily life of the people affecting drasti\u00adcally the welfare of the Moldovan people. The gas import price went from USD 458 per 1 000 m\u00b3 in December 2021 to USD 687 in January 2022 and reached almost USD 1 200 in April 2022<\/a> which is signif\u00adi\u00adcantly higher than the USD 221 in April 2021. Following the increase in inter\u00adna\u00adtional natural gas prices majorly as a result of the sanctions imposed to Russia due to its aggression in Ukraine and the new import contract with Gazprom agreed in 2021, the author\u00adities increased the tariff for natural gas from around MDL 5 per m3 to MDL 11 in November 2021, and then to MDL 15 in January 2022<\/a> ending up to MDL 18.6 in June 2022.<\/a> A different tariff is calcu\u00adlated for the consumers in the Transnis\u00adtrian region of the Republic of Moldova as there is a separate agreement signed with Gazprom which regulates the gas delivery. The 300% increase of the natural gas tariffs imposed the Moldovan Government to come out with solutions thus a subsi\u00addized tariff was applied to house\u00adholds\u2019 initial 150 m\u00b3 of natural gas consumption per month between November 2021 and March 2022.<\/a> The reduced rate covered 70% of household consumption<\/a>, the government directly subsi\u00addising the tariff for consumers with MDL 1.1 billion<\/a> during the cold period.<\/p>\n

A big part of the subsidies was covered by grants and loans offered by foreign stake\u00adholders, the EU playing a crucial role. Brussels made available<\/a> \u20ac60 million in funds to help Moldova cope with rising fuel costs and pledges further support by adopting a Strategy for an EU external energy engagement<\/a>. Looking ahead to the next winter as no gas subsidy is envisaged for the period April-October, negoti\u00ada\u00adtions were held and 300 million loan with the EBRD<\/a> was secured which, among other measures, will allow buying and storing one winter month worth of natural gas consumption in Romania. Moldova does not hold in-country gas storage facil\u00adities thus Romania becomes a strategic partner for Moldova in allevi\u00adating immediate energy security threats. The EU has also provided Romania with support to increase its gas storage capacity from 3 bcm to 4 bcm<\/a> so that assis\u00adtance to Moldova could be offered.<\/p>\n

The Romanian system operator Transgaz built a new 120-kilometer pipeline<\/a> connecting Moldova\u2019s key consumption centres to the Romanian system, thus providing alter\u00adnative infra\u00adstructure. Theoret\u00adi\u00adcally, the pipeline is capable of carrying up to 1.5 bcm of gas \u2014 more than a third of Moldova\u2019s peak needs. The gas flows via the new pipeline are operated by the newly certified trans\u00admission system operator, Vestmold\u00adtransgaz, though due to lack of unbundling of the gas incumbent MoldovaGaz and non-imple\u00admen\u00adtation of the current regulatory framework, this is still not reality.<\/a>Never\u00adtheless, the new gas infra\u00adstructure is providing a much-needed buffer to Moldova\u2019s natural gas supply.<\/p>\n

A major short\u00adcoming repre\u00adsents the fact that the retail market is still heavily regulated<\/a> under a public service oblig\u00adation scheme, under which MoldovaGaz is respon\u00adsible for the supply of house\u00adholds, appointed by an act of ANRE (National Agency for Energy Regulation) without trans\u00adparent or compet\u00aditive proce\u00addures. Provi\u00adsions on supply of last resort univer\u00adsally apply to all customers without adequate eligi\u00adbility criteria for such gas supply.<\/p>\n

Electricity sector <\/em><\/p>\n

The electricity sector is also regarded as a vulnerable domain. According to the Energy Community 2021 Country Report on Moldova none of the Third Energy Package unbundling models can be imple\u00admented under the current legislative framework as unbundling of the trans\u00admission system operator still needs to be achieved. The devel\u00adopment of the inter\u00adcon\u00adnection project with Romania is pending, synchronous inter\u00adcon\u00adnection (through back-to-back stations) is expected to be completed by 2024<\/a>. Unfor\u00adtu\u00adnately, the energy sector critical infra\u00adstructure was never a priority for the previous Govern\u00adments even though it was clear that depen\u00addence on one source which is in the hands of a seces\u00adsionist regime is a real threat. The current war in the region revealed even more the imper\u00ada\u00adtiveness to speed up the construction of the power inter\u00adcon\u00adnection with Romania Vulca\u0306nes\u0326ti \u2014 Chis\u0326ina\u0306u high voltage line and Vulc\u0103ne\u0219ti back-to-back station, the national author\u00adities declaring it public utility of national interest. <\/a><\/p>\n

Purchasing electricity from the Cuciurgani \u2014 Moldavskaya GRES gas-fired power plant owned by the Russian company Inter-RAO and located in theTransnis\u00adtrian region of the Republic of Moldova<\/a> is a topic of continuous debate as it touches upon two important aspects: the settlement process of the transnis\u00adtrian conflict and the energy security of the country. The acqui\u00adsition agreement is seen as unwill\u00adingly supporting the seces\u00adsionist regime offering the local author\u00adities leverages over national author\u00adities. The leverage consists mainly in the fact that having the infra\u00adstructure under control, the seces\u00adsions author\u00adities can, at any time hinder the energy flow coming from Ukraine.<\/p>\n

The created situation asks for immediate actions taken in order to ensure proper infra\u00adstructure and connec\u00adtivity that would allow passing off the Transnis\u00adtrian region, thus ensuring for the right bank of the Nistru River a more solid position in negoti\u00ada\u00adtions. An important step forward repre\u00adsents the recent integration of Ukraine and Moldova into the European Electricity market<\/a>. The synchro\u00adni\u00adsation of the Ukrainian and Moldovan electricity grid with the conti\u00adnental ENTSO\u2011E grid ensures the security of emergency supplies for the two inter\u00adcon\u00adnected power systems. This also opens an oppor\u00adtunity to TSOs (Trans\u00admission System Operators) from Conti\u00adnental Europe to open electricity trading with Ukraine, thus ensuring energy security for the region.<\/p>\n

Further on it is important to focus on the devel\u00adopment of a Wholesale Market Design. The 2020 Wholesale Electricity Market Rules<\/a> (including a functioning balancing mechanism for electricity exchanges) entered into pilot phase on January 1, 2022, and the window for testing was extended to April 30, 2022, due to the emergency situation.<\/p>\n

Renewable energy<\/em><\/p>\n

According to an analysis of technical potential for RE gener\u00adation<\/a> (Inter\u00adna\u00adtional Renewable Energy Agency conducted in 2019) Moldova is in excess of 27 GW of potential renewable gener\u00adation capacity, including 20.9 GW and 4.6 GW of wind and solar potential respec\u00adtively, in addition to both biomass and hydro potential. Despite the large potential for wind and solar power, its deployment has been very modest, the devel\u00adopment of renewable energy being stagnating and there has been almost no progress to date. The renewable capac\u00adities remain the same as reported in 2020,<\/a> namely one hydropower plant (Costes\u0326ti, 16 MW) constructed in the late 1970s, 37 MW of wind, 5 MW of solar PV and around 6 MW of biogas. It is important to note that an increase of variable renewable energy in the electricity system requires suffi\u00adcient balancing capacity. Currently, only MGRES can provide balancing for right-bank Moldova, which is difficult to implement due to insuf\u00adfi\u00adcient enforcement capacity of ANRE in the Transnis\u00adtrian region. Therefore, Moldova is also exploring alter\u00adnative options for balancing capacity, such as combined-cycle gas turbines.<\/p>\n

Moldova overreached its 17% target for the share of renewable energy<\/a> in gross final energy consumption by 2020 due to the revision of biomass data and increasing the use of biomass in the heating sector. The use of bioenergy, as the main renewable energy source, remains a national priority. Nonetheless, the biomass, mostly firewood, is used still in ineffi\u00adcient boilers and stoves. As positive examples could serve the instal\u00adlation of several solar water heaters in public insti\u00adtu\u00adtions turning out to be a cost-effective and environ\u00admen\u00adtally friendly solution for high hot water demand.<\/p>\n

In order to exploit its renewable energy capac\u00adities, the Inter\u00adna\u00adtional Energy Agency<\/a> and the Energy Community<\/a> came up with some recom\u00admen\u00addation to Moldovan authorities:<\/p>\n