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Moldova’s electricity system: the prisoner of geography

Most people need Google to tell them where Moldova is on the map. No surprise that there is little known about its energy situation and how Moldova ended up being the least energy-secure country on the European continent.

To understand how and why Moldova got here, we need to rewind history 70 years back. At that time, during the Second World War, Moldova was annexed from Romania and absorbed into the Soviet Union.

The Soviet command economy meant that the central planners in Moscow decided what needed to be built, where, and by whom. For Moldova, it meant that a light and heavy industry mushroomed along the Dniester River. Proud Soviet citizens came from across the Union to help build and work in these plants and factories.

Extra-high-voltage power lines started to sprawl across the region, stretching deep into the Balkans. In Moldova, these were designed to intersect at a marvellous piece of engineering – the 2.5 gigawatts (GW) Kuchurgan Power Plant (MGRES). Commissioned in 1964, this power plant was designed to supply the entire country with electricity, and the transmission infrastructure across Moldova itself was practically built around it.

An important nuance is that MGRES was constructed on the left bank of the Dniester River. The significance of this would not be thought of until 30 years later. In 1992, following the dissolution of the Soviet Union, there were calls for the unification of newly independent Moldova and Romania. Non-Moldovan sewing machine operators and steel welders who had settled in the country earlier objected. What followed was a tried and tested playbook for introducing the Russian peacekeeping mission into the country. This resulted in Moldova de facto being split into two parts, with the left bank of the Dniester River proclaiming independence and with it ownership of the MGRES. That is how things stand to this day.

Since the fall of the USSR, Moldova has found it hard to defy Russia’s gravity. Systemic corruption meant that over the past 30 years, Moldova had to bargain its sovereignty in return for access to electricity. Today, over 80 per cent of electrons consumed in Moldova are technically imported. With virtually zero natural resources to burn for power generation and only a single tiny hydroelectric power station, Moldova’s energy security situation is strikingly bad.

Perversely, the war in Ukraine woke Moldova up from its geopolitical hibernation and opened the eyes of the international community to how exposed its energy system is.
Naturally, given the Russian role in the regional gas supply, there is a lot of kabuki theatre going on around the fuel source for Moldova’s power generation. Reviled from behind the curtain, however, is the country’s physical infrastructure. If MGRES is disconnected from the grid today – voluntarily or otherwise – the lights will go off in Moldova.

No matter where the gas comes from to power the combined 350 megawatts (MW) of gas-fired capacity on the west side of the Dniester River, and how much that gas costs, that generation falls far too short of Moldova’s 4.5 terawatt-hours (TWh) annual electricity demand.

Rightly, therefore, the incumbent pro-European government is shifting the focus to enhancing transmission infrastructure, expanding interconnection with Romania and rolling out homegrown utility-scale renewable power generation.

Given the importance of the agricultural sector in Moldova and the country’s fertile lands, wind energy makes for a rational choice. It safeguards the opportunity for local farmers to continue their economic activity.

The underlying fundamentals for the successful development of wind energy in Moldova are very strong:

  • multi GW technical potential across the country with strong 7m/s+ winds at a 100m height;
  • temporal wind resource variability is minimal throughout the day and the year, resulting in consistent power generation susceptible to bundling with existing battery storage technologies;
  • mostly clustered and linear type residential settlements in the country, which expands the addressable land for wind farms with a large buffer to houses;
  • a regulatory framework for the development and permitting of wind energy projects is in place.

To date, the route to the market for utility-scale renewable energy projects has been unduly restricted. However, the situation is changing rapidly with relevant reforms and accelerated policymaking.

We estimate that for Moldova to start taking control of its electricity security and stop being at the mercy of MGRES, there needs to be 1.5 GW of renewables deployed, along with supporting battery energy storage infrastructure.

One of the key impediments today is access to development capital to front-run that deployment. Private equity is hesitant because of the country’s risk, geopolitical risk and the perceived small market size. For most multilateral financial institutions, Moldova is not poor enough to allocate capital directly to early-stage development projects.

Over the past year, we have originated and commenced the development of a 200 MW wind energy portfolio across three sites in Moldova. Two of these, with a capacity of 140 MW, have already achieved grid exclusivity, and we are working towards an expected commercial operation date in mid-2025. It has been an incredibly rewarding experience creating something that goes towards helping to change the course of history for an entire nation.

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