A traditional energy system is made up of power plants that generate energy, the transmission system, the distribution system and consumers - industrial, commercial and residential. In a traditional system, energy flows only from the producer to the consumer, who does not know what is happening behind the socket. Such a system runs on alternative energy, which cannot be stored in large quantities and production must constantly track consumption.

With the development of renewable energy and information technologies, consumers are generating more and more of their own power using renewable sources, especially solar energy. This changes the direction of energy flows and makes it more difficult to manage the energy generation process, especially as renewable energy is intermittent, i.e. it depends on whether there is sun and wind or not.

Such an energy system contains: banded generation, e.g. from thermoelectric or nuclear power plants, usually variable renewable energy sources, intermittent sources on natural gas, transmission, distribution, consumers and prosumers, and energy storage systems.

The structure of energy consumption in the Republic of Moldova and its limitations

The Republic of Moldova consumes about 4 million MWh of electricity annually. Of this, almost 45% is consumed in households and only 15% in industry. This consumption structure generates peak consumption of about 700 MW in the morning and evening, when everyone is getting ready for the day's work or returning home and plugging in all the household appliances they may need. But at night, consumption drops to 180 MW.

So Moldova cannot integrate more wind energy into the energy system than the minimum consumption at night and more solar energy than the maximum consumption during the day. If we produce more green energy than we can consume, it will either go into the Romanian or Ukrainian grid either for free or Moldova will have to pay for the imbalance in the system. If less energy is generated than is consumed, it will flow from neighboring countries, but at an "unplanned exchange price", i.e. more expensive.

As renewable energy production increases, less conventional energy is needed. In other words, the cheapest conventional energy remains on the market, e.g. from combined heat and power (CHP) or nuclear power plants, and the market price falls. When consumption is high but there is not enough renewable energy, the price will rise because the shortfall will be made up by more expensive balancing energy from natural gas power plants or storage.

Balancing the energy system
While previously the focus for balancing the system was on power plants, in an intelligent energy system an increasing role is played by consumption dispatching, i.e. managing the behavior of consumers, especially those who are also prosumers. The better consumption and energy exchanges with the public electricity grid are regulated, including by storing cheap energy in high-capacity batteries and consuming it during hours when energy is expensive, the more renewable energy can be integrated into the grid.

On June 1, 2022, the Republic of Moldova introduced the European market rules, which require balancing of the electricity grid, i.e. a mechanism that balances unplanned fluctuations in energy production or electricity consumption. Given that the Republic of Moldova has no other producers capable of quickly changing their production and thus compensating for variations in production from renewable sources, this compensation is achieved through unplanned energy exchanges with neighboring countries at relatively high costs.

These problems are addressed in a new law on renewable energy sources drafted by the Energy Ministry. The law was drafted with the support of the European Energy Community and transposes EU legislation in Moldova.

What is net metering and why the move to net metering for photovoltaics?

PV panel owners deliver more energy to the grid in the summer when there is more sunshine, then in the winter when there is less generation, they consume the required amount from the universal service provider they have a contract with, for example Premier Energy. Similarly, I produce more electricity than I consume during the day, and consume from the grid in the evening and at night. So they use the grid as a battery, but the grid costs, for running and maintaining the so-called battery, are paid by all other consumers.

The mechanism is called net metering and was applied in the early days to encourage self-generation, but not as a business, just to cover their own consumption. Now all EU countries are moving to another system, net metering. In this system, the amount of energy fed into the grid by the prosumer is paid at the energy producer's price and the amount of energy taken from the grid is paid by the prosumer as any final consumer. In this way the system is much fairer and the grid is no longer used as a big storage tank without payment.

After January 1, 2024, households and businesses that install photovoltaic panels for their own consumption will operate under the new system. This will encourage the simultaneous consumption of the energy generated and the correct sizing of production installations, allowing more households, municipalities and companies to install photovoltaic panels. Net metering will cover the costs of transmission, distribution, supply and balancing the grid, with balancing energy sometimes up to 5 times more expensive. Those who have installed panels by December 31, 2023 will benefit from net metering until the end of 2027.

What renewable energy support mechanisms are there in Moldova?

The state has three support mechanisms for green energy producers, guaranteeing the purchase of surplus energy delivered to the grid and thus helping them to recoup their investments:

- net metering, which will be replaced by net billing from January 1, 2024 - valid for small producers with installations for their own consumption

- fixed tariff for 15 years - for parks and plants up to 1 MW photovoltaic or 4 MW wind

- fixed price - also valid for 15 years - for parks and power plants above 1 MW PV or 4 MW wind - capacity allocated through auctions. Auctions for large capacities are planned to start in the first part of 2024.

How much renewable energy do we have and where do we want to go?
Due to consumption structure limitations, renewable energy generation capacities are capped in Moldova. Thus, 105 MW have been allocated for wind energy and 60 MW for photovoltaic, to be commissioned by 2025.

In 2023, only 6% of electricity consumption is renewable energy.

54% of this is wind, 34% - photovoltaics and 6% - hydro and

biogas. The last two are continuous and reliable sources and do not depend on the vagaries of the weather. The largest unused capacity is biogas energy.

The Republic of Moldova is committed to increasing the share of electricity produced from renewable sources to at least 30% of the year's electricity consumption in 2030. The target is set in the Integrated Energy and Climate Plan, developed

with the support of the European Union and UNDP. By 2050, the Republic of Moldova has set itself the target that greenhouse gas emissions will be fully offset by the absorption of greenhouse gases. Renewable energy will thus help mitigate global warming.

This material has been produced with the financial support of the European Union through the Program "Addressing the Impact of the Energy Crisis in the Republic of Moldova", funded by the European Union and implemented by UNDP Moldova. The contents are the sole responsibility of the authors and do not necessarily reflect the views of the European Union.