Top 10 Frequently Asked Questions about Renewable Energy in Moldova
In 2015 ACI Partners legal team has evidenced an increased interest and steady flow of requests to our law firm related to Renewable Energy Sector (“RES”) in Moldova. This is also due to an accumulated experience and constant focus of our lawyers on innovative and prospective areas of business and human activity.
What we have also noted is that in most cases questions posed by investors repeat each other and cover relatively similar aspects. This FAQ aims at providing brief and clear information that could serve as a starting point in this area to businesses interested in renewable energy.
1. What is the legal framework regulating RES in Moldova?
- The basic regulations in the area of renewable energy are as follows:
- Law No 160 on Renewable Energy, dated 12 July 2007
- Law No 124 on Electric Energy, dated 23 December 2009
- Law No 142 on Energy Efficiency, dated 2 July 2010
- Law No 92 on Thermal Energy and Promotion of Cogeneration, dated 29 May 2014
- Resolution No 321 of the National Energy Regulation Agency (“NERA”) on Methodology for Determination, Approval and Application of Tariffs for the Electricity Generated from Renewable Energy and Biofuel, dated 22 January 1999
2. What state authorities are responsible for RES?
Agency for Energy Efficiency (“AEE”), established by Government Decision No 1173 of 21 December 2010 and entrusted with implementation of state policies on energy efficiency and RES (http://www.aee.md/)
Energy Efficiency Fund, created by Government Decision No 401 of 12 June 2012, responsible for identifying, assessing and financing of projects in energy efficiency and renewable energy (http://www.fee.md/index.php?l=ro)
3. What are the specific requirements for establishing a company with the business of production, transportation, supply or distribution of electric energy? What are the costs and term of creating such a company?
Companies to be engaged in the business of production, transportation, supply or distribution of electric energy shall be established based on general rules applicable to all companies. Moldovan laws do not provide any specific incorporation requirements to such companies.
The cost for registration of a company in Moldova depends on the legal form of the company and the urgency of registration term. For incorporation of a limited liability company within an ordinary term of 5 days, the administrative fee (not including the legal fees) would be around EUR 50. A speedy procedure for incorporation of a company is also available. Thus the registration authority can register a company within one day or one hour for a higher urgency fee. Translator, notary and other similar expenses usually do not exceed EUR 30.
4. Are there any facilities provided for the activity in the field of RES?
- VAT exempt – construction works and installation of photovoltaic parks
- Customs duties exempt (until 31 December 2015) – import of wind power generating sets with electric generator capacity greater than 1 MW
- VAT and customs duties exempt – long term material assets used directly in production, rendering of services and / or execution of works, intended to be included in the share capital in the manner and within the time limits stipulated by the applicable law
- Investment costs can be deducted within the limits of investment income, if are related to:
- ordinary and necessary expenses paid or incurred during the taxable year in order to obtain investment income.
- interest on debt, provided that the interest shall not exceed the amount of income from investments.
5. Would elaboration of an urban plan be required in order to obtain a building permit for a photovoltaic power plant?
In order to obtain a building permit (construction authorization) for a photovoltaic power plant elaboration of an urban plan is not mandatory. A request for obtaining of a building permit should be accompanied with the project urbanistic certificate.
Exceptionally, local public administration authorities can decide that elaboration of the detailed urban plan is required. This requirement would be communicated to the applicant in the urbanistic certificate. A detailed urban plan is a document setting conditions for construction placement and execution of works for a construction or several constructions with a determined destination on a specified land plot.
6. How much time does it take to obtain a building permit?
The building permit shall be issued within maximum of 10 working days from the date of registration of the respective application for obtaining a building permit.
The construction works shall be started within 6 months from date of issuance of the building permit. This term can be extended only once for an additional period of up to 6 months.
7. What is the procedure for connecting of an energy production plant to national distribution network?
Any company has the right to request connection of its electric plant to the electrical network of the transmission system operator or distribution system operator which operates within the territory authorized by the license. The transmission system operator and distribution system operator must notify the applicant, in writing, the technical and economic conditions for connection to the electrical network and collaborate with the applicant in order to determine and implement the best value connection solutions.
For the purpose of connection to the electrical network the connection approval shall be first obtained. Connection approval is the document which contains optimal technical and economic conditions, and description of the works which shall be obligatorily performed by the applicant in order to connect his installation to the electrical network.
Design and assembly works of the connection installation shall be carried out only after payment by the applicant of a connection tariff and after entering into a connection agreement.
8. What are the criteria for calculating of a tariff for selling of energy?
Regulated tariffs for electric energy produced by electric plants from renewable sources of energy are determined and approved by NERA on an annual basis according to the established methodology.
Tariffs for delivery of renewable energy are approved as fixed tariffs in order to avoid discrimination of consumers during the process of their application. Tariffs are approved by the Board of administration of NERA and are published in the Official Gazette of the Republic of Moldova.
In approving tariffs for renewable energy, NERA shall take into account the type and production capacity of the installations, planned production and delivery volumes, period of delivery of the renewable energy and prices on similar products on the international market. NERA has the right to approve the average tariffs for production of renewable electric energy for a long term period.
NERA establishes tariff for delivery of renewable electric energy based on a set formula (please see http://www.anre.md/ro/acte-normative?field_piata_tid_i18n=25).
9. What licenses shall be obtained in order to build and operate a photovoltaic plant?
In accordance with the procedure and the requirements established by law NERA can issue licenses for the following types of activity:
- production of electric energy
- transportation of electric energy
- distribution of electric energy
- supply of electric energy, at regulated or unregulated tariffs
The license is issued to the owner of the electric plant with an output of 5 MW and more if this power is used for public consumption. If the power of the plant is used for its own (internal) consumption, license shall be issued only if this power is at least 20 MW.
The owner of the public electric plant with a power less than 5 MW or owner of the electric plant for internal consumption with a power less than 20 MW shall notify the NERA of date of putting into service of the electric plant and shall cooperate with license holders which carry out business activity in energy system.
Licenses for production of electric energy, transportation of electric energy, distribution of electric energy and for supply of electric energy at regulated or at unregulated tariffs shall be issued for a period of 25 years.
The fee for issuance of a license is MDL 3250.
10. What are the funds for financing of renewable energy projects?
Financing Line for Energy Efficiency in Moldova (MoSEFF) was launched in September 2009 in Moldova. The scope of it is to support investing in energy efficiency at Moldovan enterprises. A credit line of EUR 42 million, in combination with a grant component of 5-20%, was provided for granting of loans to Moldovan companies through the partner banks of the European Bank for Reconstruction and Development (EBRD).
For more details please see: http://www.moseff.org/index.php?id=13&L=-1%20UNION%20SELECT%20–
EBRD has elaborated Moldovan Residential Energy Efficiency Financing Facility (MoREEFF). This Financing Facility provides credit lines for reputable Moldovan banks in order to provide loans for energy efficiency projects in the residential sector in Moldova.
For more details please see: http://moreeff.info/
Currently, the sector of production of energy from biomass benefits of the most of financing. The project „Energy and Biomass” implemented in 2011-2014, with a total budget of EUR 14.56 million, granted by the EU (EUR 14 million) and UNDP (EUR 560,000) aimed to create a secure, competitive and durable system for production of energy from renewable sources, in particular, biomass from farm waste. The project „Energy and Biomass” has been extended for three years and will be implemented in the period from January 2015 – November 2017 with a total budget of EUR 9.41 million, granted by the EU.
For more details please see: www.biomasa.md
Eighty seven energy efficiency projects amounting to MDL 130 million were approved for financing from the Energy Efficiency Fund resources for a series of public institutions from across the country. The funds for financing of projects in the electric energy sector and renewable energy sector are coming as budget support from the European Union Commission.
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