Moldova Electric
Power Market Options
Sector Study
Donors Meeting
Chisinau, June 4, 2015
Energy and Extractives Global Practice
Belarus, Moldova and Ukraine Country Unit
Europe and Central Asia Region
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Electric Power Sector Issues
Electricity Sector
Issues
 Extreme dependence on power imports and natural gas as
fuel





Domestic generation covers only 25% of demand, mostly by
old and inefficient CHP plants
Imports from MGRES now covers almost 75% of demand
Ukraine import share now very minor in terms of volume
Moldova system synchronously interconnected with IPS/UPS
system via 110 kV and 400 kV lines
Existing 400 kV line with Romania not used for imports due to
complex operation and lack of maintenance
 Near-total dependence on one source/supplier of natural
gas, both for domestic generation as well as imports
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Peak Load Demand and Supply
Electricity Sector
Issues
Peak Load Demand and Supply, 2008 – 2013 (MW)
Annual Peak Load
Demand
CHP-1
CHP-2
CHP-Nord
HPP Costesti
Deficit, covered by:
– MGRES
– Ukraine
2008
2009
2010
2011
2012
2013
792
780
805
820
831
833
40
210
20
5
517
30
196
20
9
525
30
201
20
9
545
517
524
545
13.7
173
20
6
607
420
187
25
202
20
0
584
399
185
27
162
20
0
624
438
186
Source: Moldelectrica
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Power System
Planning
Demand Forecast
 Assumptions for electricity demand forecast


Electricity demand has been and is linearly correlated with PPP GDP
GDP growth rate of 3.26 %/year, which is equal to the average during 2001-2013
 Assumptions for peak load forecast


Annual peak load occurs in the winter season (but gap decreasing)
Load factor will increase by 0.5 %/year due to increased use of air-conditioning, etc
 Demand forecast through 2033

Estimated average annual growth in electricity demand 2.1% and in peak demand 1.6%
2013
2014
2015
2016
2017
2018
2019
2020
2021
2025
2030
2033
12.27
12.67
13.08
13.51
13.95
14.41
14.88
15.36
15.86
18.03
21.17
23.31
Electricity Demand
in mill. kWh
4,072
4,170
4,248
4,328
4,410
4,496
4,584
4,675
4,769
5,177
5,766
6,168
Peak Load Demand
in MW
833
849
862
873
886
898
911
925
939
999
1,085
1,143
GDP
in bill. US$
Source: Calculations based on Moldelectrica data and Energy Strategy until 2030 of the Republic of Moldova
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Supply Capacity Assumptions
Power System
Planning
 Moldova Renewable Energy Sources (RES-E)
2% of 150 MW capacity to be installed considered base load equivalent (= 3 MW)
 Moldova Combined Heat and Power Plants
250 MW CHP-3 will be in operational in 2020
CHP-N in Balti will keep 20 MW capacity until 2033
CHP-1 and -2 will be retired in 2020
 Imports from Ukraine
Already prior to current problems forecasts showed UKR not to be able to satisfy its own
peak demand starting in 2018, thus unable to cover Moldova’s power deficit through 2033
 Imports from MGRES
Significant investments needed to keep current capacity operating, so ability to fully cover
Moldova’s power deficit beyond 2020 questionable
 Imports from Romania
Able to export about 3,300 MW at any time during 2020 – 2033 (even excluding Romania’s
4,500 MW RES-E capacity)
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Power System
Planning
Energy Balance Forecast
 Peak load capacity deficit of 870 MW expected by 2033
Year 2012 2013 2015 2019 2020 2025 2030
2033
Annual Peak Load Demand
831
833
862
911
925
999 1,085 1,143
Domestic Generation
247
209
222
222
273
273
273
273
CHP-1
25
27
0
0
0
0
0
0
CHP-2
202
162
202
202
0
0
0
0
CHP-3
0
0
0
0
250
250
250
250
20
20
20
20
20
20
20
20
0
0
0
0
3
3
3
3
TOTAL Deficit
584
624
640
689
652
726
812
870
Covered by: MGRES imports
399
438
550
Ukraine imports
185
186
90
400 Depending on the scenario
289 selected
CHP-Nord
RES-E
Source: Forecasts based on ANRE data. Data for 2012 and 2013 are actuals.
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Interconnection Scenarios Examined
Power System
Planning
The study examined eight different scenarios:
•Self-sufficiency 1 assumes the use of both natural gas and coal for new
plants. Self-sufficiency 2 assumes only natural gas use.
•Synchronous 1, 2 and 4 assume that Romania will cover the entire power
deficit and all ancillary services of Moldova. Synchronous 3 assumes
MGRES will be interconnected with ENTSO-E.
•Asynchronous 1, 2 and 3 link two power systems with different
frequency standards through Back-to-Back stations, enabling
interconnection with ENTSO-E while remaining in IPS/UPS.
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Power System
Planning
Scenario Investment Costs and Tariff Levels
The values for two out of seven criteria used in scenario ranking are shown
below.
Levelized tariffs are used only for ranking purposes. Actual end-user tariffs
may show greater differences between scenarios
Total Investments (US$ million)
Scenarios
Nominal
20-year levelized tariffs, (US$
cents/kWh)
PV*
SS-1
1,445
1,023
16.60
SS-2
1,005
700
16.31
S-1
410
285
15.01
S-2
383
266
14.96
S-3
348
242
14.94
S-4
463
322
15.07
A-1
709
491
15.45
A-2
715
495
15.43
A-3
728
504
15.48
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Multi-Criteria Decision Analysis
Power System
Planning
Multi-Criteria Decision Analysis used the following criteria:
1. Present value of investment costs
2. 20-year levelized tariff
3. Security of supply
4. Level of competition (number of supply sources)
5. Capacity to transit electricity between East and West
6. CO2 emissions
7. Operational difficulty (number of interconnection lines to be disconnected)
Scenario Ranking
1. Values of criteria are calculated by the model based on quantified input data
2. Weighting for each criterion is calculated, by scenario
3. Total score for each scenario is the sum of calculated individual criterion
scores
Criteria can be changed but must be quantifiable
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Power System
Planning
Asynchronous Scenarios
Asynchronous -1 (A-1)
Descri
ption
 Asynchronous interconnection
Suceava
with Romania (ENTSO-E)
through BtB (VSC & LCC)
 Major new lines
Iasi
 400kV Iasi – Straseni
 330kV Straseni – Chisinau
 400kV Chisinau - Vulcanesti
 400kV Vulcanesti - Isaccea
LCC=Line-Commutated Converter
VSC=Voltage-Sourced Converter
Asynchronous -2 (A-2)
Balti
Straseni Ribnita
Chisinau
Vulcanesti
PV of
investmen
t cost
Tariff
Suceava
Balti
Straseni Ribnita
Iasi
Isaccea
Chisinau
Vulcanesti
MGRES
Isaccea
 Higher capability to stabilize power system
 Less expensive
 Mature technology
 Direct supply to demand center
 Less operational experiences
 25% more expensive
 0.5% higher losses (1.2% versus 0.7%)
 Additional equipment to stabilize voltage
fluctuation may be needed (subject to
additional study)
Pros
Cons
MGRES
 Asynchronous interconnection
with Romania (ENTSO-E)
through BtB (LCCs)
 Major new lines
 400kV Suceava – Balti
 400kV Iasi – Straseni
 330kV Straseni – Chisinau
 400kV Chisinau - Vulcanesti
US$ 491 million
US$ 495 million
15.45 US$ cents/kWh
15.43 US$ cents/kWh
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Power System
Planning
Asynchronous Scenarios
Asynchronous -1 (A-1)
 Asynchronous interconnection with
Romania (ENTSO-E) through BtB
(VSC & LCC)
 Major new lines
 400kV Suceava – Balti
Descript
ion
 400kV Chisinau - Vulcanesti
 400kV Vulcanesti – Isaccea
 400kV and 330Kv line bays and
400/330kV transformers
Suceava
Balti
Straseni Ribnita
Iasi
LCC=Line-Commutated Converter
VSC=Voltage-Sourced Converter
Chisinau
Vulcanesti
MGRES
Isaccea
 Higher capability to stabilize power system
Pros
Cons
PV of
investment
cost
Tariff
 Less operational experiences
 25% more expensive
 0.5% higher losses (1.2% versus 0.7%)
US$ 504 million
15.48 US$ cents/kWh
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Recommended:
Asynchronous interconnection
Power System
Planning

The top ranked interconnection scenarios are three alternative asynchronous
interconnection scenarios with Romania, each scenario having two interconnections.

Although one of these scenarios, referred to in this study as Asynchronous-2, ranks
under most assumptions higher than the other two, the three asynchronous
scenarios are within one percent of each other in terms of ranking.

For that reason we recommend that these three scenarios be studied at the same
time at feasibility stage in order to ultimately select the most appropriate one for
implementation.
All three asynchronous scenarios:

Can be implemented by 2020

Integrate Moldovan power system into EnC

Enable supplies from both West and East

Help put downward pressure on electricity prices

Important investments necessary both in the BtB interconnections and in the domestic
transmission system
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Asynchronous vs
Self-sufficiency and Synchronous
Power System
Planning
Self-sufficiency:



Very high cost: US$ 0.7-1.0 billion.
Limited choice of fuel sources.
Increases dependence on sole source and supplier of gas.
Synchronous:



Full synchronization may take 10-15 years or more. Until then Moldova energy
security remains exposed.
Synchronous interconnection scenarios imply disconnection from IPS/UPS
(Ukraine and MGRES) thus reducing competition.
Synchronous 3 assumes major role for MGRES as well, with most assets on
Left Bank to be interconnected with ENTSO-E. However, not possible to political
uncertainties.
Asynchronous: 2 interconnections vs 1 or 3?


1 interconnection not sufficient to cover demand so Moldova remains exposed.
3 interconnections expensive. In future, if Moldova opts for synchronization, the
cost of BtB disposal is even higher.
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Current Market Structure
Power Market
Design
 Limited number of players and no structural basis for competitive market

6 licensed electricity producers

State-owned ENERGOCOM SA acting as single buyer of imports

3 suppliers at regulated tariffs: distribution companies RED Union Fenosa (71.1%
market share), RED Nord (26.7%) and RED Nord-Vest (8.7%) and 7 suppliers at nonregulated tariffs (3.5%)

Small market does not provide enough incentives for private sector investment in
generation
 Regulation and trading framework are missing for competitive market

Most TSO roles of Moldelectrica are missing from legislation

Regulations on wholesale competition are missing

Wholesale market is not competitive given fully regulated domestic generation and
non-competitively procured supplies from MGRES and Ukraine
 Retail market was to be fully opened by 2015

Needed to achieve 100% retail market opening (currently at 10%) by 2015 to meet the
EU Energy Directive 2009/72/EC
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Competitive Wholesale Market Criteria
Power Market
Design
To build a truly competitive wholesale market in Moldova means
meeting the following criteria:
•
•
•
•
Ensuring an appropriate market structure (i.e., having enough sellers
and buyers to enable competition on both the supply and demand side)
Adopting appropriate market rules for trading electricity as well as for
procuring cross-border interconnector capacities over the various
contractual time horizons
Ensuring efficient balancing, i.e., provision of ancillary services by
contracting reserves in a regulated and competitive manner and using
such reserves through a reliable balancing mechanism
Strengthening existing institutions and creating appropriate additional
institutions, including capacity building where appropriate.
A competitive legal framework alone may not provide enough
investment in generation under the authorization procedure.
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Power Market
Design
Market Design Options
Possible market design options associated with interconnection
scenarios and conforming with EnC requirements:
Market Design Option
Interconnection
Scenario
1. Standalone competitive
wholesale market (Moldova
separate bidding zone)
SS-1, SS-2
Description
Electricity subject to competition
(in long-term) would be
produced inside the country
2. Competitive wholesale market
A-1, A-2, A-3
with appropriate rules for energy
trading and cross-border
capacity allocation (Moldova
separate bidding zone)
Suppliers able to purchase
competitively priced electricity
from East and West
3. Merging with an already
competitive wholesale market
(Moldova and Romania one
bidding zone)
Electricity would be produced in
the common market among
Romania/EnC and Moldova
S-1, S-2, S-3, S-4
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Recommended Market Design
Power Market
Design
 Competitive wholesale market with appropriate rules for energy trading
and cross-border capacity allocation (Option 2)

Maximizes benefits in terms of : (i) Security of supply; (ii) Level of competition; (iii)
Affordability; (iv) Compliance with regional integration objectives; and (v) Sustainability.
 Market structure

Making competition rules in Moldovan wholesale market effective requires competition
on sell side, requiring electricity injection from the West. This will benefit Moldovan
retail market and improve conditions for market opening.
 Market rules

Appropriate market rules can be adopted by supplementing domestic generators with
foreign/domestic traders who import electricity from West or East. Ensuring sufficient
interconnection capacity with ENTSO-E would be of paramount importance. Role of
ENERGOCOM to be reviewed.
 Institutions

A market operator should administer day-ahead and centralized forward markets.
Suggest using services of OPCOM, either directly or through a subsidiary in Chisinau.
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Overall Conclusion
Conclusion
 Asynchronous interconnection scenarios are recommended

Rank consistently highest in the multi-criteria decision analysis

Would ensure greater energy security and better prices for Moldova as the
electricity could be bought from East and/or West in a competitive manner

The nominal incremental investments range from US$421-441 million in
current dollars, depending on the asynchronous scenario ultimately selected
following feasibility studies.

Implementation would result in a 20-year levelized tariff of US$ 15.5
cents/kWh.
 Adopt a competitive wholesale market design, with appropriate
rules for energy trading and cross-border capacity allocation

Would help achieve desired increase in security of supply and possibly exert
downward pressure on end-user prices due to competition in markets
outside Moldova

Most of the legislative, regulatory and institutional actions necessary to
implement this market structure are already mandatory under the EnC
Treaty.
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Next Steps
Conclusion
Implementation of recommendations will require:
 Additional studies

Comprehensive system planning study needed to determine required structure of
domestic transmission system (necessary even without interconnection).

Feasibility studies required for each major domestic system component.
 Design of a medium-term investment program and financing plan to
secure adequate interconnection capacity, domestic transmission
network reinforcements and CHP-3 replacement
 Legislative/regulatory changes to open up electricity market and to
align legislation and regulations with EU Electricity Directive and Energy
Acquis requirements
 Institutional capacity building/strengthening of MoE, Moldelectrica
and ANRE. We assume market operator will be set up with OPCOM.
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Sandu Ghidirim Senior Operations Officer
sghidirim@worldbank.org
Moldova Country Office
World Bank Group
20/1, Pushkin Street
Worldbankgroup.org
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