Thu, Jul
51 New Articles

Moldova: Energy Prosumption – Falling Victim to Its Own Success

Moldova: Energy Prosumption – Falling Victim to Its Own Success

Issue 10.2
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

The ongoing energy crisis in Europe has underscored the urgent need to limit the reliance on imported energy sources. In a country lacking traditional energy sources like Moldova, the way to achieve that is to push for a rapid and sharp increase in renewable energy generation.

One of the most intriguing developments in renewable energy is the rise of prosumers. The term “energy prosumers” refers to people or entities actively engaging in the energy system by simultaneously consuming and producing energy. Injecting electricity into the grid is not a prosumer’s primary economic activity, in contrast to utility companies that produce energy for consumers.

Countries use different ways to promote renewable energy generation by consumers, the most common ones being net metering and net billing arrangements. In both cases, the consumer that chose to install a small generating capacity for personal electricity use can inject the surplus produced into the grid and use it later.

But there is one significant difference – the way of keeping score. Under the net metering arrangement, the prosumer is entitled to the exact amount of electric energy it injected previously into the grid. In the case of net billing, the surplus is converted into money – at the wholesale market price – and can be redeemed back into electric energy later – at the regulated retail price.

Moldova introduced net metering in 2018, and the number of beneficiaries has doubled every year since. Annually, prosumers generate about one-third of total photovoltaic energy.

The existing mechanism includes certain restrictions. All electricity generated must come from renewable sources, and the power plant’s installed capacity cannot exceed 200 kilowatts. A bi-directional meter, or two unidirectional meters, which track the consumption from and injection back into the grid, are the options available to the prosumer.

If at the end of the month the quantity of electricity consumed by the prosumer exceeds the amount of electricity pumped back into the electricity grid, the prosumer shall pay the supplier only for the difference, at the regulated retail price. On the contrary, if the amount of electricity the prosumer received from the supplier is less than the amount of electricity delivered to the grid, the quantity difference is added to that prosumer’s account for use in the months to come.

Annually, if the final consumer has contributed more energy to the grid than they have used, the supplier will pay back the unused extra energy, at the average market price for the electricity paid by the universal service provider over the previous 12 months.

At first glance, this looks like an ideal win-win solution for decarbonization and energy independence. What, if anything, can go wrong with it?

In real life, the net metering mechanism in Moldova fell victim to its own success, as it outgrew the reasonable balancing capacity of the grid. The unique benefit of net metering for the participating consumers is the possibility of using the grid itself as a free “storage” for the electricity produced on sunny days, to be used up when the sun isn’t shining.

Given the volatile and unpredictable nature of photovoltaic energy generation, Moldovan legislation sets the upper limit of the total installed capacity connected to the net metering mechanism at 10% of the maximum distribution grid load recorded for the previous year. Extrapolating the current growth of installed net metering capacity, it becomes quite clear that this limit will run out before the end of this year.

This roadblock can be avoided, provided that Moldova transposes EU Directive 2019/944 on common rules for the internal market for electricity and amending Directive 2012/27/EU in 2023. According to the Directive, the prosumer support schemes should account separately for the electricity fed into the grid and the electricity consumed from the grid, as the basis for calculating network charges.

That would, in fact, mean a switch from net metering to the net billing mechanism. For potential prosumers, that would result in less incentive to install new generating capacity and new incentives to install local battery storage. Thus, prosumers will be given the opportunity to contribute to a more balanced and sustainable energy grid.

By Emil Gutu, Competition Manager, and Domnica Bejan, Junior Associate, ACI Partners

This article was originally published in Issue 10.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

ACI Partners at a Glance

ACI Partners is a leading law firm in Moldova with an expanding network of partners throughout Europe. ACI Partners was established in 2006 and since then has managed to build a very strong and competitive legal practice. Our business strategy strives to deliver a solid and reliable service, going beyond merely grasping the law, which the clients may turn to whenever they need. In reaching this goal, ACI Partners employs a personalized approach to each client, showing a genuine respect for their values and unqualified commitment to their interests and needs, steadily investing in knowledge and data management and ensuring a working environment consistent with our clients’ quality demands and high expectations.

ACI Partners is a one-stop shop law firm proficient in all possible legal matters a business might come across in Moldova, starting with incorporation of a business, and obtaining of all the necessary regulatory permits, continuing with various daily matters, such as contracts, labor, and migration, and finishing with dispute settlement, insolvencies, and criminal investigations. But we pride ourselves especially for our unmatched expertise in most innovative and complex areas for Moldova, as Modern Financial Products, Data Protection, Renewable Energy, Competition, Clinical Studies, Public Procurement, and Regulatory. In our work, we always involve a team of professionals with the relevant skill-mix, which enables us to provide our clients with an integrated and comprehensive advice, superior to our competitors.

ACI Partners has advised the Government of the Republic of Moldova, businesses, international organizations, and other institutions on most challenging transactions, assignments and projects.

ACI Partners is not just another law firm. Over the course of our existence and working in Moldova, and on the international stage for our non-Moldovan clients, we have developed a strong set of core values which, we believe, guide us in everything that we do and, moreover, gives us a competitive advantage – differentiating us from other firms on the market.

Firm's website.