On 25 March 2016 the Moldovan Parliament passed a new law on the promotion of the use of electric energy from renewables ("Law 10/2016"). Law 10/2016 is meant to enter into force on 25 March 2017, and its scope is officially to institute the necessary legal framework for application of EU Directive 2009/28/CE in Moldova. All of these formulations are very nice, of course, but does this new piece of legislation bring something new to the table? Will investors benefit from clear long-expected guarantees for their off-take supply agreements? Will the renewables market finally get a boost in Moldova, as was the case years ago in Romania and Bulgaria?
Support schemes introduced
Pursuant to Law 10/2016, the following two support schemes will be implemented to promote renewables:
- tender-based fixed pricing for supplied electric energy by eligible producer(s) holding, or which will hold a total installed capacity exceeding the figure determined by the Moldovan Government; and
- tariff-based, in accordance with the local energy regulator's (ANRE) regulation (still to be implemented), for supplied electric energy by eligible producer(s) holding, or which will hold a total installed capacity below the figure under 1) above, but in any case, of not less than 10 kW and confirmed by ANRE.
Law 10/2016 inter alia empowers the Moldovan Government to set, approve and update, as necessary, the minimum installed capacity to be eligible for the support schemes listed above. Also, the Government must approve the regulations on organisation of tenders for the scheme 1) above and on confirmation of the status of an eligible producer qualifying under 2) above for the Law 10/2016 to come to life. At this moment there is no hint as to when to expect more clarity in respect of these topics.
It will also be the Government that will set out the volume of energy to be put to tender for the scheme 1) above, as well as setting the capped price which the participants at the tender shall not be allowed to exceed. ANRE shall no longer hold attributions in this respect, but shall only act as a proposing authority. Still, ANRE will set out the tariff size for eligible producers under support scheme 2) above.
Who is an eligible producer?
In accordance with Art.34(2) Law 10/2016, eligible producers are:
- either producers of electric energy declared successful in the tender, organised in respect of the support scheme under 1); or
- producers of electric energy, confirmed in this status in line with Law 10/2016.
An eligible producer status is granted for 15 years as of the moment its power plant (unit) becomes operational. It will be ANRE's right to adjust the prices (when declared successful in a tender) and tariffs (as confirmed) in line with a regulation to be further approved. At this point the extent of ANRE's right to interfere into the set prices and tariffs is not clear.
Option one: Tender for granting of eligible producer status
The whole process can be summarised as follows:
- After receiving the proposal from ANRE, the Government shall determine the volume (including break-downs per category of renewables) to be put to tender and the capped price which the bidders cannot exceed with their offers (bids).
- Tenders shall be organised by the Government through a commission. In its activity, the commission will follow the regulation on organisation of tenders for the support scheme 1) above, which, as indicated above, will have to be approved by the Government.
- The notice of tenders shall be published in the Official Gazette of Moldova at least 2 months before the deadline for the submission of bids. It will be compulsory to clearly indicate the criteria pursuant to which bid(s) shall be determined as winning.
- Any subject (including the ones that do not operate a production facility yet) that fulfills the tender's requirements can participate in a bid. Law 10/2016 prohibits however the submission of bids by participants that are planning to utilise generation equipment manufactured more than 36 months before the putting into operation of the power plant (units). Also, in the case of cogeneration units, only technologies with an efficiency of over 80 % shall be allowed to participate.
- All bids made shall be treated with confidentiality by the commission.
- Bbid(s) that offer the lowest price and which offered production capacity does not exceed the total volume put for tender, shall be declared successful.
In all cases participants whose bids were unsuccessful to supply electric energy by direct negotiations with participants on the market, shall not have their rights affected.
Option two: confirmation as eligible producer
All subjects that were unsuccessful with the support scheme 1) above, are within their rights to apply to the ANRE to have the status confirmed. The confirmation shall be granted in line with a regulation that shall be approved by the Government, whereas the sale of electric energy shall be guaranteed on the basis of tariffs approved by ANRE.
Similar to the tender procedure, Law 10/2016 prohibits requests coming from applicants planning to utilise generation equipment manufactured more than 36 months before the putting into operation of the power plant (units), and in the case of cogeneration units, only technologies with an efficiency of over 80 % are allowed to apply.
Law 10/2016 indicates that the status shall be granted to all applicants fulfilling all applicable conditions pursuant to Law 10/2016, provided overall cumulated capacity is not exceeded.
Law 10/2016 is still in its infancy and it will take the Moldovan authorities doing their best to see in the serious energy players from the EU coming in. Some of the open questions left are: What will the capped price approved by the Government be? How will the awarded prices and approved tariffs be adjusted by ANRE? What will the quality of the governmental regulations to be adopted in accordance with Law 10/2016 be? The answers to these questions are still to be adopted and applied in practice.