Energy Crisis Updates

January 3, 2025

As the clock struck midnight and the calendar switched to 2025, Moldova celebrated the New Year with family, food and fireworks.¹ The days following the New Year, through old Christmas on January 7th, tend to be a quiet holiday period. This year the closure of businesses and people’s holiday breaks are all contributing to help stabilize a precarious electrical supply situation stemming from the cutoff of Russian natural gas deliveries to Transnistria on January 1st.

Today we’ll take a look at how Moldova and Transnistria² are managing the crisis so far and what (if anything) it can tell us about what’s coming over the next few months.

The Situation in Transnistria

At 7 am on January 1st Ukraine stopped transiting Russian gas via their pipelines and at 7 am Transnistria cut off hot water and heat to all residential buildings in the region. 122 village, 1810 companies and more than 2600 buildings (including over 1500 apartment buildings) no longer have heat or hot water. All industrial enterprises in the region except those making critical food products have been shut down and workers furloughed.

According to Transnistrian “leader” Vadim Krasnoselsky “The work of hundreds of enterprises has been suspended. Accordingly, thousands of people remain unemployed.”

Taxis in the region increased prices 20% reflecting their switchover from natural gas to gasoline.

The MGRES power plant successfully switched over to coal and is supplying enough electricity for the Transnistrian region but has ceased exporting to Moldova. Apartment buildings still have natural gas for cooking due to residual pressure in the gas lines. This is expected to last between 7 and 15 more days depending on the part of the region.

The region’s gas company, Tiraspoltransgaz, announced that they disconnected 10 villages controlled by the Moldovan government within the security zone as part of their broader disconnections. Mayors from some villages told journalists that they still have gas likely reflecting residual pressure in the lines.

** Update: Around 3 minutes after originally sending this article Transnistria announced that they would begin rolling power outages. Cities and towns will have 1 hour outages during peak hours of 18:00 - 22:00 today.

The Situation in Moldova

So far Moldova has seen no power outages and energy companies have been able to purchase the necessary amounts of power from Romania and Ukraine. Since January 1st the country has been importing approximately 50% of its power from Romania with local production at Thermal power plants and from renewables making up the majority of the rest. This has been an easy week on the power grid with unseasonably warm temperatures, sunshine (great for solar… and rare in winter) and lots of businesses being closed for the holidays. Energocom continues to make market purchases of power but expects the situation to get more challenging after the holidays.

Moldova’s high voltage electrical transmission lines. Used with permission from IEA

Recall, with the MGRES plant offline (Moldavskaia TPP on the map above) Moldova is now importing electricity primarily from Romania via Ukraine and Transnistria. Prices across the region are spiking due to increased demand from Ukraine as well as reduced renewables output with cloudy winter weather.

While the supply has been available from Romania the costs are considerably higher than the price of purchasing from MGRES. The country’s main power utilities requested that the National Agency for Energy Regulation (ANRE) allow them to double their prices effective immediately. After consideration the ANRE approved a split rate charging more during peak hours and less at night. The following are the new rates:

Premier Energy (Center and South):

• Current Rate: 2.34 lei / kWh;

• New rate 7 am - 23:00: 4.32 lei / kWh; 23:00 - 7 am: 3.31 lei / kWh.

Red Nord (North):

• Current Rate 2.84 lei / kWh;

• New rate 7 am - 23:00: 4.89 lei / kWh; 23:00 - 7 am: 3.9 lei / kWh.

Customers on central heating in Chisinau and Balti will also see rates increase 40%+.

The Ministry of Labor and Social Protection announced that rates of energy subsidies for approved families would increase alongside the utility rates and would be announced on a monthly basis. The Ministry decided to cap household compensation at 110 kWh / month in the January - March period. Explaining this choice Minister Alexei Buzu stated that the average household electrical consumption in January - March 2024 was 138 kWh / month. The ministry set the 110 kWh cap reflecting a goal for all households to reduce consumption by 20% compared to last year.³ Currently 1.38 million citizens representing around 680,000 households are receiving some level of energy compensation.

Parliament and state buildings have instituted power savings by cutting around 30% of their lights and disabling some elevators. Power companies are warning people to avoid elevators if possible at peak hours - though there have been no outages yet.

What’s Next?

Even without power outages (yet) in Moldova the blame game is well underway and everyone is blaming basically who you would expect. The government blames the Kremlin; the Kremlin blames the Moldovan government; Tiraspol blames Chisinau; and opposition Russian-adjacent politicians all blame the government.

It’s worth stating up front that this crisis has been caused by the Kremlin who unambiguously cut off the gas as a political choice. There are a lot of bad faith critiques coming from the Russian propaganda machine basically implying that free / cheap energy is always possible if you do what Russia wants.

More seriously, there are Moldovan experts and commentators who are increasingly wondering why the country was not more ready for this scenario? We’ll check back in on the blame game, messaging war and substantive critiques in a future article.

Economically, this energy crisis is shaping up to be painful. Veaceslav Ioniță, economic expert at IDIS Viitorul, stated to ZdG that electricity prices make up around 2-2.5% of household expenditures. He projects the doubling of prices to add around 2.5% to inflation and predicts inflation rates rising from 7% to 10% in the near term. While this is far from 2022’s 35% inflation rate, the country has see a cumulative 70% inflation over the last 4 years meaning that any new rises pile onto a lot of existing pain.

This discussion is likely to get supercharged if rising consumption after the holidays results in power outages. In the meantime, negotiations between Chisinau and Tiraspol are happening at some level. MoldovaGaz has offered to facilitate purchases of natural gas on the open market and deliver it to MGRES and the region more broadly. The problem is, someone has to pay for it.

For the moment events in Moldova are set to play out day by day with Energocom working to purchase and import enough power to prevent outages. The situation in Transnistria is far more bleak and should the weather turn cold risks a major humanitarian crisis. It is very unclear what the Transnistrian authorities will do beyond what they have done already - unplugging most of the region.

We’ll continue providing updates on this crisis as it evolves. Happy New Year.

1. Moldova *really* likes fireworks at New Years and therefore the country’s dogs hate this holiday more than any other. This year Maia Sandu’s dog Codruts managed to escape the grounds of the presidency and run through the streets in fear of the fireworks. Someone noticed the clean looking 3-legged dog with a collar and posted on facebook asking friends if anyone knew the owner - she got quite the response. Codruts was safe at home in a matter of hours.

2. Note: As we’ve done before with articles about Transnistria we will sometimes say “Moldova” and “Transnistria” as a way to indicate the parts of Moldovan territory controlled by Chisinau and Tiraspol respectively. This is easier for most readers than “left bank” vs “right bank” and is simply a convienent shorthand. All territory in question is Moldova.

3. So far this has not been fully explained and the term “average” could mean a lot of things. If the government literally took an average consumption then it is likely that this number will not suit many consumers. Houses in the villages use considerably less electricity than those in the city and apartments with autonomous heating use more compared to those with central heating. It’s possible that they took a more nuanced look in coming up with this 110 kWh / mo number. It is also possible that quick decisions made in a crisis will need to be re-evaluated after some backlash (something we’ve seen a lot of recently).