ECONOMY and SOCIOLOGY

June No. 1/2023

SUMMARY

The periodic paradigm shifts operating on the energy markets require higher innovative approaches to facilitate the

management of energy portfolios and the design of mechanisms for an accelerated renewable energy integration.

Thus, international organizations, policy makers and managerial boards are continuously seeking for policy

amendments and adjustments that would enhance the investments in the renewable energy sector and stimulate

the transition towards the smart energy grids’ models.

The current study aims to review and apply some of the existing models for the management of renewable energy

investments, using as a case study Moldova’s economy structure and its statistical data. The study is based on systemic

research methods, forecasting models and estimates to identify most productive management tactics, able to ensure

the proper integration of smart energies into the energy network. The author presents a model for forecasting the

demand of the renewable energy market in Moldova till 2025 and 2030 year with an emphasis on the electricity

segment. It also points out opinions and estimates that reflect a different perspective on the effects of investments’

management at the electricity segment level and proposes solutions that may help decision-makers in the development

and integration of the country’s renewable energy policy. The study offers the necessary evidence and grounded

solutions for attracting and promoting investments in renewable energy projects, whereas the obtained methodology

and results have a general relevance for other countries in the region with emerging economies.

Keywords:

renewable energy, investment management models, demand forecast

Schimbările periodice de paradigmă operate pe piețele energetice necesită abordări inovatoare pentru a facilita

gestionarea portofoliilor energetice și formarea mecanismelor pentru accelerarea integrării energiei regenerabile.

Organizațiile internaționale, factorii de decizie și investitorii urmăresc introducerea continua de amendamente și

ajustări a politicilor menite să sporească investițiile în sectorul energiei regenerabile și să faciliteze tranziția către

modelele rețelelor energetice inteligente.

Lucrarea își propune să revizuiască și să aplice unele modelele existente pentru managementul investițiilor în

energie regenerabilă, folosind datele statistice și structura economiei Moldovei ca studiu de caz. Studiul este

bazat pe metode sistemice de cercetare, modele de previziune și estimări pentru a identifica tactici productive

de management, capabile să asigure integrarea corespunzătoare în rețeaua energetică a energiilor inteligente.

Autorul prezintă un model de prognoză a cererii pieței de energie regenerabilă din Moldova până în anii 2025

și 2030, cu accent pe segmentul energiei electrice. Sunt prezentate estimări care reflectă o optică nouă asupra

efectelor managementului investițiilor în energia electrică, propuse câteva soluții care ar putea ajuta factorii de

decizie în elaborarea și integrarea politicii de energie regenerabilă a țării. Studiul oferă mai multe raționamente

și soluții argumentate care ar contribui la atragerea și promovarea investițiilor în energie regenerabilă, iar

metodologia și rezultatele obținute au o relevanță generală pentru alte țări din regiune cu economii emergente.

Cuvinte cheie:

energie regenerabilă, modele de management a investițiilor, prognoza cererii

Периодические изменения парадигмы, действующие на энергетических рынках, требуют инновационных

подходов, чтобы способствовать управлению энергетическими портфелями, а так же формированию

механизмов оценки интеграции возобновляемых источников энергии. Таким образом, международные

организации, институты власти и инвесторы ожидают постоянного внесения поправок и корректировок

в политику, направленных на увеличение инвестиций в сектор возобновляемых источников энергии и

облегчение перехода к моделям интеллектуальных энергосистем.

Целью статьи является обзор и применение некоторых существующих моделей значимых для управления

инвестициями в возобновляемые источники энергии на основе использования статистических данных и

структуры экономики Молдовы в качестве примера. Исследование основано на применении системных

методов, прогнозных моделей и оценок для определения продуктивной тактики управления, способной

обеспечить правильную интеграцию в энергетическую сеть возобновляемых энергий. Автор предлагает

модель по прогнозированию спроса рынка возобновляемых источников энергии в Молдове до 2025 и 2030

годов, акцентируя внимание на сектор электроэнергии, представляет концепции и оценки, отражающие

различный взгляд на эффект, получаемый от вложения инвестиций в электроэнергетику, а также

предлагает некоторые решения, которые могут помочь лицам, принимающим решения в разработке и

интеграции политики страны в области возобновляемых источников энергии. В исследовании предложены

аргументированные обоснования и решения, которые будут способствовать привлечению и продвижению

инвестиций в возобновляемые источники энергии, а методология исследования и полученные результаты

имеют актуальность и могут быть полезны для других стран региона с развивающейся экономикой.

Ключевые слова:

возобновляемая энергия, модели управления инвестициями, прогноз спроса

Irina NASALCIUC

INTRODUCTION

Moldova is a European landlocked, post-Soviet country

with an emerging upper middle-income economy still

undergoing a transition phase in terms of economic

structures and operating regimes. It is important to

note that Moldova has minor reserves of coal, oil, and

natural gas, as well as a moderate hydropower potential.

As a result, the country heavily relies on energy imports,

primarily from Russia, Ukraine, and Romania. This

dependence poses continuous security challenges in

energy supply, leading to an unreliable and sometimes

costly access to energy in various forms and technologies.

Currently, Moldova is making significant efforts

to establish competitive renewable energy market

niches capable of penetrating the energy market

and competing with the conventional technologies.

However, the country faces major issues with its energy

infrastructure, including outdated installations and low-

quality thermal insulation in both residential and public

buildings. Consequently, Moldova’s economy exhibits a

high degree of energy intensity, surpassing the average

energy intensity values of European countries.

The technical deficiencies, coupled with legislative

gaps and the lack of stable governmental frameworks

for renewable energy sources (RES) deployment,

create an environment of investment reluctance.

Investors perceive high levels of risk associated with the

established business regulatory frameworks in which

they would operate while entering Moldova’s renewable

energy market.

Overall, Moldova’s energy landscape requires

substantial improvements in infrastructure, legislation,

and governmental support to enhance energy security,

reduce energy intensity, and attract sustainable

investments in renewable energy technologies (RET).

Over the last ten years, Moldova registered an increase

in both primary and final energy consumption of about

16,4% and 21,5% respectively. The data of the National

Bureau of Statistics (NBS) show that Moldova’s final

energy demand increased by an average of 1-2% per year,

reaching the level of 2,924 thousand toe in 2021. After

2019 year, the gross domestic consumption decreased

due to the stagnant economy affected by the COVID-19

pandemic, registering a level of only 2,670 thousand toe in

2020. However, in 2021, thanks to the economic recovery

processes after the lift of all restrictions on businesses,

the final energy consumption recovered and recorded

the highest level since the 2010 year. Currently, only

20% (or 0,98 TWh) of the electricity that Moldova needs

(3,85 TWh)) is produced and generated in the country

(excluding the plan on the left side of Nistru River, at

Cuciurgan), mainly by the combined heating and power

plants, and only 13,4% of it comes from RES sources.

In the context of the energy crisis that began in 2021-

2022, Moldova’s energy vulnerability has worsened,

exposing chronic problems within the system. As a

result, given the recent progress in developing electric

power frameworks and the country’s obtained status

of an EU accession candidate. Moldova is committed

to transposing European targets aiming to achieve a

34% share of renewable generation in final electricity

consumption by 2025. This target would require a

capacity of approximately 450 MW, based on electricity

consumption levels from the year 2020, and would

primarily rely on photovoltaic, wind, hydrological, and

cogeneration-based projects.

On the same note, it is essential to mention that at the

beginning of the year 2023, the main national energy

operator and distributor - Moldelectrica, reported a

total of 62 requests for connection to the electricity

network submitted between 2016 and the end of

2022. These requests aim to connect future power

plants for electricity production based on renewable

energy sources (RES) technologies such as solar, wind,

and biogas, potentially leading to a total capacity of

1,22 GW. Most of these power plants are expected to

become operational in the near future, which requires

a strengthened electric power system to accommodate

these new sources of generation.

Consequently, a series of physical replanning and

enhancements, along with amendments to the

regulations and norms of the political and legal

frameworks, are critically needed. These measures will

establish the activities of market actors and ensure they

are prepared for the active absorption of RES sources in

the energy system.

Gropa’s research studies (

2018

) demonstrated that

the local power system would be capable of absorbing

approximately 1 GW of renewable sources, considering

current infrastructure conditions. However, an

increased absorption of solar and wind generation

would pose a significant challenge since Moldova relies

entirely on Ukraine for grid balancing.

To address this issue, the government decided to

impose ceilings on the development of RES capacities,

aiming to avoid network management problems and the

high costs associated with balancing RES generation.

The Government of Moldova is actively interested in

fostering a business environment that facilitates the

development of projects based on RETs.

ECONOMY and SOCIOLOGY

June No. 1/2023

LITERATURE REVIEW

Energy transition processes depend on market saturation

levels at certain stages and long-term quantitative

energy demand forecasts. Adapting the modeling of

RES energy portfolios to future market needs is based

on long- and medium-term energy demand forecasts.

The investment management models are essential in

the planning, testing, streamlining, and development of

energy markets at local, regional and national levels.

The development of the energy demand forecasting

models started around 1985 year, it spiked after 2005

and continues till nowadays. Initially, there was a

stringent need to assess the energy planning models to

determine the long-term and medium-term evolution of

energy markets, and later, when the RETs penetrated the

energy markets, the need for a more rigid and rigorous

management of energy supply and demand fluctuations

arose. Based on the realities of the modern energy

markets, there was also the need to develop energy

forecasting models that would allow the identification

of more efficient investment management models

that would align to word’s current pace of innovation,

conducted operations on the market and globalization

of the economies. Also, given the constant increase

in worldwide energy consumption, it has become

imperative to entail targeted energy consumption

efficiency models both at the industrial level and at

the level of individual households. Ultimately, the

biggest concern of researchers and academia in the

development of energy production models is the

minimal environmental impact and/or carbon capture,

so that the climate change process is slowed down

(

Nasalciuc, 2016a

), in accordance with the sustainable

development principles (

Greene D. L., 2009

), and with

the World Energy Council’s “Energy Trilemma Index”

(

2002

), which considers: 1) “a nation’s capacity to meet

current and future energy demand reliably, withstand

and bounce back swiftly from system shocks with

minimal disruption to supplies, 2) a country’s ability

to provide universal access to affordable, fairly priced

and abundant energy for domestic and commercial use,

and 3) a country’s energy system transition towards

mitigating and avoiding potential environmental harm

and climate change impacts”.

The specialized literature is generous in terms of

case-studies researching various RES investments

implemented in different regions of the world

(

Schwerhoff et. al., 2017

;

Schinko & Komendantova

2016

;

Abdullahi et al., 2017

;

Movilla et al., 2013

), or for

different RETs (

Shaktawat & Vadhera, 2021

;

Schiera

et al., 2019

;

Qiu et al., 2020

). There are also a series

of research papers that assess the major barriers for

large-scale RES investments and the associated risk

management practices (

Egli, 2020

;

Kitzing, 2014

;

Liu

& Zeng, 2017

;

Nasalciuc, 2016b

), that can serve for

planning of policy adjustments. At the same time, there

is a limited number of studies that assess and apply

different models for investment management of RES at

the macro level (

Lee et al., 2017

), investment planning

(

Taghizadeh & Yoshino, 2020

;

Cohen et al., 2021

;

Cohen

J. J. et al., 2021

) and planning from the environmental

point of view (

Dato, 2018

). These gaps can be filled

by models selected and adapted to the energy sector,

considering the expected effects, the profile/design of

the energy market, the portfolio of managed sources,

the structure of the economy and the socio-economic

situation.

In carrying out a deep study of RES investments’

management, the author reviewed the literature,

especially the one applicable and considered by the

European market, (

Kleinpeter, 1995

;

Prasad et al., 2014

)

that determines and identifies the existing models used

in the management process of energy sector investments

that can serve for the design of the necessary resources,

the substantiation of investments (at the same time

being an argument for the definition of policies aimed

at promoting the energy transition), and propose the

following classification of energy management models:

•

Energy demand analysis and forecasting models

•

Energy supply planning models

•

Energy optimization models (integrated energy supply and demand models)

•

Emission reduction models

In this study we will focus primarily on the demand

analysis and forecasting models to provide qualitative

findings to inform the energy market policy design

and identification of RES market development targets.

Analysis and systematization of existing literature

(

Deeble & Probert, 1986

;

Sterman,1988

;

Sterman &

Davidsen, 1988

;

Labys,1990

;

Zmeureanu, 1992

;

Badri,

1992

;

Michalik, et al., 1997

;

Debnath & Mourshed, 2018

)

provide a certified methodological basis for identifying

energy markets’ development stages, analysing the

energy demand and for designing long- and medium-

term management directions.

Studies (

Ang & Zhang, 2000

;

Ang, 2004

) show

that energy demand can be researched using the

decomposition method by identifying changes in the

economy based on the following three factors:

Irina NASALCIUC

DATA SOURCES AND METHODS

•

changes in the technological efficiency of energy use at the sector level;

•

changes in the structure of economic activities; or

•

changes at the level of economic activities.

The economic activities, which are reflected in chang-

es of economic production from one period to another

(e.g., increases in total production of economies), as

well as changes in the structure of economic activities

observed at the sectoral level (e.g., transitioning to ser-

vice-based economies like in Great Britain), and the ef-

ficiency of energy consumption in different industries,

all drive fluctuations in energy demand levels over time.

The results of the referenced studies (

Ang & Zhang,

2000

;

Ang, 2004

) demonstrate that the structure of the

economy plays a significant role in determining energy

intensity values, which in turn directly affects energy

demand levels.

Energy demand forecasting involves the prediction of

the future energy demand based on the observation

of historical demand trends that consider the demand

growth rate, the demand elasticity, and the energy

intensity.

Demand growth rate – indicator that measures the growth rate of energy demand either from one year

to another or from one period to another. Therefore:

Elasticity of demand – indicator that measures the variation of demand (in %) under conditions where

the determining variable changes by 1%. In economic analysis, the variables of elasticity most often used are - eco-

nomic activity (GDP), price and income. The demand elasticity indicator can be measured by using the correlation

of the annual growth rate of energy consumption and the determining variable or through the lens of econometric

correlations related to time series data.

where: a – annual increase in demand; Et+1 – energy consumption in year t + 1 and Et – energy demand in year t

a = (Et+1 − Et )/Et (1)

where: t – a given period of time; EC – energy consumption; I – the determining variable of energy consumption

such as GDP, added value, price, income, etc. and Δ – variable change.

Energy Intensity (EI) – measures the amount of energy required (aggregated or disaggregated) per unit of

economic production.

where: E

= energy consumption for each type of energy in year t, I

= the determining variable of energy consumption

– GDP volume per national economic sector.

Usually, GDP growth shows a positive correlation with

energy demand growth, respectively in the situation

when the GDP growth is greater than 1%, the demand is

elastic in relation to the gross domestic product and in the

situation when the elasticity is 0<e

GDP

<1, the demand is

considered inelastic. In most cases, developed countries

express inelastic demand vis-à-vis gross domestic

product and developing countries tend to consume larger

amounts of energy to ensure the growth of economies

that invest in industrial activities and provide higher

levels of consumer demand from the residential sector.

On the other hand, demand elasticity is inversely

proportional to each percentage increase in the energy

price, implying that higher energy prices result in

decreased energy demand, at least for the short term.

Consumers may be unable to adjust their budgets in

response to energy price hikes, leading to reduced energy

consumption. However, in the long term, elasticity tends

to adjust as consumer budgets adapt to the higher prices.

Moreover, the price elasticity of demand for energy

varies depending on the type of fuel used in the energy

production process.

ECONOMY and SOCIOLOGY

June No. 1/2023

In the comparative analysis of the levels of energy

intensities at the macroeconomic level as well as for the

non-productive sectors - transport and residential, it is

recommended to use the determinant variable - GDP,

and in the case of productive sectors such as commercial,

industrial and agricultural, the use of added value as

the determinant variable. However, comparing the

energy intensity at the level of different countries is a

difficult task since both the GDP and the added value are

aggregated and structured variables at the level of each

country, presenting particularities of measurement.

For example, in the measurement of GDP there may be

measurement gaps when the economy operates under

the conditions of informal economies (most often found

in developing countries) or in the case of converting GDP

at the same exchange rate - in the most frequent cases

the conversion to USD is chosen, which does not always

express the real dynamics in the economic sector.

The study uses the regression method for forecasting

the medium-term (for a period of five years or less) and

long-term time frames (for a period of 10 years or more)

for modelling the renewable energy demand forecast.

Also, based on the model described in the papers of Ang

& Zhang (

2000

) and Ang (

2004

) for the changes in total

energy demand, we have:

where: EI

– the energy intensity at the level of sector i (e.g. the rate of energy consumption relative to the economic

production of the sector); S

– the structure of sector i (e.g. the contribution of the production of sector i to the total

production of the economy); Q – the total productivity of the economy; Q

– the productivity of sector i; E – total

energy consumption; E

– energy consumption of sector i.

When attempting to identify the changes impact of one of the three factors listed above over energy consumption,

we will have:

•

for changes in the technological efficiency of energy use at the sector level:

•

for changes in the structure of economic activities:

•

for changes at the level of economic activities:

All provided models may be applied to Moldova’s case

study and the results may inform the decision makers

on the necessary measures that have to be adopted for

a rapid integration of RES sources into the national

portfolio of energy.

Observing historical energy demand trends in Moldova

serves as the primary foundation for evaluating future

demand growth levels, the degree of demand elasticity,

and the energy intensity rate. These indicators play a

crucial role in medium and long-term market evolution

forecasting exercises and in planning national energy

portfolios that balance the integration of RES and

conventional energy generations. The application of

this approach in the long-term energy market planning

ensures that the energy system develops and adapts

effectively to market transitions.

In order to identify the average annual growth rate of

final energy consumption as well as to identify the levels

of final energy/electricity consumption towards 2025

and 2030 year, the following relationships were used:

where:

– total final energy consumption in T

, n – number of years.

Also, to determine the elasticity of the energy demand

of Moldova, according to the relation (3), in relation to

the selected elasticity variables (in our case - economic

activity - GDP) according, we will identify the type of

economic policy carried out by the decision-makers with

regards to new investments and the type of prioritized

economic activities.

Irina NASALCIUC

MAIN RESULTS

The analysis of the historical energy demand trends

and the assessment of its growth forecast for 2025 and

2030, considering the data published by Moldova’s

National Bureau of Statistics (NBS) in the period of

2010-2021 years and the data of the World Bank (for the

GDP indicator), is structured as follows (Table 1.):

Table 1.

Forecast of energy demand growth trends in Moldova for 2025 and 2030 year

Indicators

2011

2013

2015

2017

2019

2021

For

eseen le

vels

2025

2030

GDP (M USD)

8 414

9 497

7 745

9 670

11 970

13 680

16 812

21 755

Total final consumption

(thousands toe)

2 406

2 390

2 455

2 719

2,739

2,924

3 164

3 491

Final electricity

consumption (MWh)

3 384

3 559

3 687

3 803

4 129

4 472

4 942

Annual growth rate of

final energy consumption

-0,003

0,014

0,052

0,004

0,033

Annual growth rate

of final electricity

consumption

0,025

0,018

0,016

0,042

Annual GDP growth rate

0,062

-0,097

0,117

0,113

0,069

Average annual growth

rate of final energy

consumption (r1)

0,01989249

Average rate of annual

increase in electricity

consumption (r2)

0,02016983

Average GDP growth rate

0,52897438

Source:

calculated based on NBS and the World Bank (WB) data

When considering the historical final energy

consumption trends, we can observe the continuity of

energy and electricity consumption growth by 10,74%

towards 2025 year and by 22,19% towards 2030 year.

The trend of 1,99% annual growth of energy demand

is necessary when considering Moldova’s current

demographic situation as well as the current economic

development rates. Thus, for the pessimistic scenario

we will consider the registered shares of renewable

energy (24,3%) in gross final energy consumption (2 857

thousand toe) of the 2020 year, which is considered as

baseline data, and will apply the average annual growth

rate of the identified final energy consumption. To

continue evaluating the growth rate of Moldova’s energy

demand in the medium (toward 2025 year) and long

term (toward 2030 year), it is necessary to consider the

following strategic country targets:

•

The 3,5% target of annual GDP growth till 2030 year according to the National Development Strategy

(NDS) of Moldova until 2030 year.

•

The inflow of foreign direct investments as a share of GDP, which sets a target of 3,5% annually until 2026

year and of 4% until 2030 year (

NDS, 2020

•

The target of 410 MW of new electrical RES capacity installed by 2025 year, mostly from wind and

photovoltaic sources (amendment of Government Decision (

HG 401/2021

ECONOMY and SOCIOLOGY

June No. 1/2023

Also, when applying the relation (6), we obtain EPIB

=0,177/ 0,385 = 0,46 and respectively a relatively

inelastic demand vis-à-vis the country’s GDP (0 <EPIB<

1). Thus, a 3,5% annual increase in GDP predicted in the

SND until 2030 will be directly proportionally reflected

in the levels of gross energy consumption, including

those of RES energy (Figure 1.):

Figure 1.

Forecast of RES gross final energy consumption evolution applying the average annual growth rate of

final energy consumption and considering the forecast levels of GDP until 2030 year (in thousands toe)

Source:

calculated based on NBS and the World Bank (WB) data

The results show that under the pessimistic RES energy

demand forecast model, the growth trend of final gross

consumption of RES energy towards 2030 year shows an

increase of 21,77%. An average scenario for forecasting

future RES energy demands would consider the

predicted rates of economic development and the future

needs of the country, while the optimistic scenario

would consider the future targets set for RES shares in

gross final energy consumption until 2025/2030 years.

Even though Moldova secures 24,3% of its total

energy supply from RES sources, these indicators

are determined by the solid biofuels widely used in

the residential sector, especially in the rural areas

of the country. However, in terms of the supply and

consumption of electricity from RES sources, a critical

level of only 13% of final consumption is recorded,

which imposes serious problems on national security

if considering the emerging trends of electrification

of final consumption as well as consumption levels

observed at the international level. Based on the above,

we propose extracting the electricity segment from the

proposed forecasts and projecting them until 2025 year

and respectively until 2030 year considering (Figure 2.):

•

The historical average annual GDP growth rate of 5,29% during the period of 2011-2021 years;

•

EU’s target of 34% generation from renewable sources in the final electricity consumption (until 2025 year)

and respectively 38% (until 2030 year);

•

The current regional and international energy crisis urges the need to identify funding sources for investments

in new RES plants, which will be develop quite actively until 2025 year;

•

The undeveloped potential of Moldova’s energy from RES sources amounts to approximately 27 GW of

capacity (

IRENA, 2019

);

•

RES distributive generation leads to little losses in the electrical network, respectively we will consider the

electricity generation from RES sources equal to its consumption;

•

In the period of 2025-2030 years, the generation of electricity from RES sources will slow down due to the

infrastructure limitations of the electricity networks that exist, as well as the existing balancing limitations.

Irina NASALCIUC

Figure 2.

Forecasts of RES electricity generation growth considering the optimistic, medium and pessimistic

scenarios

Table 2.

The evolution of energy intensity levels of Moldova’s economy in the period of 2011-2021 year

Source:

calculated based on NBS and the World Bank (WB) data

Source:

calculated based on NBS and the World Bank (WB) data

The optimistic and medium scenarios of the proposed

forecast envisage reaching ambitious but realistic levels of

RES technologies’ integration in final consumption of the

economic and residential sectors. It is worth mentioning

that the current national electric system and infrastructure

network can absorb the proposed volumes of intermittent

energy, whereas maintaining the same ambitious levels

of RES integration after the 2025 year is conditioned

by ambitious investments in the modernization and

adjustment of the national energy infrastructure.

To determine the extent to which some segments

of Moldova’s economy are energy consumers, it is

necessary to measure the energy intensity indicator of

the various national economic sectors according to the

formula (4). As input data, NBS data will be used that

reflect the amounts of energy required for the economic

production of the industrial, agricultural and services’

sectors, as well as World Bank’s data on GDP levels in

Moldova (Table 2.):

Sector/Indicator

2011

2013

2015

2017

2019

2021

Final Energy Consumption (thousand toe)

2 406

2 390

2 455

2 719

2 739

2 924

GDP (M USD)

8 414

9 497

7 745

9 670

11 970

13 680

Total Energy Intensity (EI) (toe/GDP unit)

0,285

0,251

0,317

0,281

0,229

0,214

Final Energy Consumption of the Agricultural

Sector (thousands toe)

107

123

161

Agricultural Sector GDP
(M USD)

957,5

1 096,9

891,4

1 109,1

1 217,3

1 421,4

Agricultural Sector EI (toe/GDP unit)

0,072

0,058

0,083

0,096

0,101

0,096

Final Energy Consumption of the Industrial

Sector (thousands toe)

235

257

209

217

234

245

Industrial Sector GDP (M USD)

1 759,4

2 051,3

1 757,3

2 114,8

2 696,8

2 819,4

Industrial Sector EI (toe/GDP unit)

0,134

0,125

0,119

0,103

0,087

0,081

Final Energy Consumption of the Services

Sector (thousands toe)

277

259

260

267

272

290

Services Sector GDP (M USD)

4 507,4

5 014,4

4 097,1

5 144,4

6 502,1

7 503,5

Services Sector EI (toe/GDP unit)

0,061

0,052

0,063

0,052

0,042

0,037

Source:

calculated based on NBS and the World Bank (WB) data

ECONOMY and SOCIOLOGY

June No. 1/2023

In order to identify the energy intensity levels of the

three economic sectors of Moldova was used the

(3) relationship. As we can see, the aggregated final

energy intensity at the economy level shows a 33,17%

decrease trend during the 2011-2021 years. This

result demonstrates that Moldova is going through

various transitions in terms of the development and

specialization of the national economy, including

changes in the structure of the economy, with the

dominant engine of country’s economic growth being

the services’ sector. Thus, the analysis identified a

64,86% decrease in energy intensity of the services’

sector and a 65,43% decrease for the industrial sector.

During the entire analysed period, the services’ sector

contributed with more than 50% to the country’s GDP

composition and the volume of GDP poured into the total

GDP increased by 66%. Similarly, in the industry sector,

which contributed on average with more than 20% to

the country’s GDP composition, a 60% increase in the

GDP volume of the sector poured into the total GDP is

attested. Therefore, we can rely on an improved yield of

the economic productivity of the services and industry

sectors, that is a result of the energy management

solutions and technologies implementation, as well as

a possible migration towards the types of economic

activities that are less energy-consuming, which leads

to the efficiency of economic activities.

At the same time, a trend of 25% increase in the energy

intensity of the agricultural sector was identified, given

that the sector recorded a 48% increase in the volume

of GDP poured into the total GDP, but also a historic

decrease of 1 % in the contributions to the country’s

GDP composition. In this case we can talk about an

astringent need to integrate efficient technologies and

processes while maintaining high standards of labor

competitiveness, product quality and compliance

with European and international standards and to

aggressively develop market linkages to facilitate trade

and investment, especially under the DCFTA trade

liberalization agreement with the EU.

Monitoring the energy intensity of economies is a tool

that provides valuable data for informing the adaptation

of energy sector management policies and development

strategies towards transitions focused on less energy-

consuming activities, more active RES generation, and

higher energy efficiency rates (see Figure 3):

Figure 3.

The evolution of Moldova’s energy intensity levels during 2011-2021 years

Source:

calculated based on NBS and the World Bank (WB) data

During the period of 2015-2021 years (Figure 3), the

intensity of Moldova’s economy registered a 33,17%

improvement of production efficiency. This trend is

primarily determined by the industrial and services’

sectors, which show decreases of 65,43% and 64,86%,

respectively, while the agricultural sector registers an

increase of approximately 25,0%, given the traditional

energy consumption at the level of several economic

subsectors.

The analysis of the energy demand includes the indicator

of the total productivity of the economy, which refers to the

measurements of the outputs of the production processes at

the level of economic sectors and their efficiency (Table 3).

Irina NASALCIUC

DISCUSSIONS

Table 3.

Analysis of the energy efficiency of production processes at the level of the main Moldova’s economic

sectors

Source:

author’s calculations

*Note:

The University of Groningen database was used for the total productivity factor indicator (https://www.rug.nl/ggdc/productivity/pwt/)

2011

2013

2015

2017

2019

Total Productivity Factor (Q)*

0,94

0,98

0,95

1,0

1,03

i(agriculture)

11,38

11,55

11,51

11,47

10,17

i(industry)

20,91

21,60

22,69

21,87

22,53

i(services)

53,57

52,80

52,98

53,20

54,32

i (agriculture)

0,072

0,058

0,083

0,096

0,101

i (industry)

0,134

0,125

0,119

0,103

0,087

i (services)

0,061

0,052

0,063

0,052

0,042

(agriculture)

-0,158

-0,153

0,241

0,524

(industry)

-0,191

-0,517

-1,203

-2,367

(services)

-0,466

-0,352

-0,851

-1,958

(agriculture)

0,009

0,024

0,037

-0,085

(industry)

0,085

0,279

0,353

0,453

(services)

-0,039

-0,081

-0,089

-0,042

(agriculture)

0,027

0,048

0,121

0,205

(industry)

0,108

0,135

0,247

0,392

(services)

0,110

0,167

0,304

0,456

Also, to analyse the changes in the total energy demand of the three economic sectors of Moldova, the (4) relationships

were used.

The results show that at the level of changes in the

technological efficiency of energy use (I) is recorded

an increase of 320,17% for the services’ sector and for

the industrial sector the increase is by 12 times. In

the services sector, the improvement of the indicator

was possible thanks to the active adoption of modern

and efficient technologies. In the industrial sector, the

processes driving the improvement of the technological

efficiency of energy use showed a greater amplitude,

which was determined by the active adoption of

efficient technologies and the more efficient allocation

of resources. In the agricultural sector, the situation is

different. It regressed by 231,65% during the analyzed

period, mainly due to inadequate risk mitigation

measures related to limited access to irrigation and

meteorological factors. Additionally, the reduced

adoption of modern and innovative agricultural

technologies with energy-efficient consumption has

contributed to this regression.

At the same time, for the indicator of changes in the

structure of economic activities (S), a decommissioning

economic process in the agricultural sector is identified.

This process is attributed to the sector's failure to adapt

to modern and innovative market structures, as well as

its reliance on outdated methods and processes from a

systemic perspective. The industrial sector recorded a

remarkable improvement in the structure of economic

ECONOMY and SOCIOLOGY

June No. 1/2023

activities of 432,94%, which speaks of an active transition

of economic activities to modern market structures, and

a continuous monitoring and evaluation of economic

processes to continuously adapt the economic activities.

In the case of the services sector, we can identify a 7,69%

decrease in the efficiency of the structure of economic

activities, which is not significant and doesn’t impact

other indicators analyzed in the study. The agricultural

sector’s structure of economic activities recorded the

most dramatic regress in the period of 2005-2010 years,

with an 844,44% decrease trend in the efficiency of the

established market structures.

Respectively, the rise in energy intensity trends within

the national economy could also be attributed to a

potentially more significant shift towards an informal

economy. Although there are observed trends of

improving energy intensity in the economy, Moldova's

companies have made very limited progress in terms

of efficiency and competitiveness. The World Bank

(

WB, 2013

) study findings during the 2003-2011 years

demonstrate a negative total factor productivity of the

economy in both the industrial and agricultural sectors,

with modest progress recorded in the services sector.

The main obstacles that Moldova’s economy is facing

are political instability, corruption, an unprepared and

uneducated workforce, as well as a reduced access to

financing (

EBRD, 2014

). The results identified at the

economy’s intensity level of Moldova can be explained

by identifying changes in the technological efficiency of

energy use at the level of economic sectors, changes in

the structure of economic activities, or changes at the

level of economic activities.

In order to achieve a higher level of development of the

RES market in Moldova and prevent the emergence

of energy shortage problems on the local market, it is

crucial to protect the interests of economic agents and

citizens. Additionally, a robust RES market represents

an essential source of investment for the country's

economic development. To achieve this, it is necessary

to attract the required volume of investments by

promoting innovative market reforms, implementing a

liberalization agenda, and ensuring equal competition

within the sector.

Moldova's energy consumption tends to remain

relatively uniform compared to its GDP growth levels.

The country does not invest significantly in economic

growth or new industrial activities and processes,

primarily focusing on ensuring the necessary energy

demand levels for consumers in the residential sector.

These findings underscore Moldova's position among

the group of former socialist countries that still exhibit

features of inherited economies and are actively engaged

in the process of restructuring their economies.

CONCLUSIONS

The decreasing trend of final energy intensity is

expected to align to the values recorded in developed

European countries as Moldova's national economy

transitions towards the structure and models seen

in Western economies. This improvement in energy

intensity is driven by more rational energy consumption

and increasing technology adoption in the industrial

and service sectors.

However, the agricultural sector shows a contrasting

trend with increasing energy intensity over time. This

can be attributed to the low integration rate of modern

and innovative agricultural technologies and energy-

efficient processes. The lack of integration hampers

efforts to mitigate risks related to limited access to

irrigation, meteorological data factors, and compliance

with high workforce competitiveness and product

quality standards required to meet European and

international benchmarks.

The research presented in this paper expands the existing

knowledge on RES investment management. The focus

on forecasting RES integration scenarios, particularly

in the electricity segment, and promoting investments

in Moldova until 2025 and 2030 is commendable. The

findings from this research can serve as valuable insights

for policymakers in designing renewable energy policies

and encouraging investments in modern renewable

energy technologies to produce electricity.

Moreover, the proposed methodology and results hold

general relevance and can be applied in assessments for

other countries in the region with emerging economies.

To enhance the research further, incorporating expert

interviews and case study assessments could help

explore other nuances and aspects within the sector

that contribute to the topic under investigation. This

comprehensive approach would enrich the study and offer

a more robust foundation for policy recommendations

and investment decisions.

Irina NASALCIUC

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