Energy affordability is a long-standing challenge in Moldova, with three out of ten people reporting the incapacity to keep their home warm enough - one of the highest rates in Europe. Successive price shocks over the past three heating seasons exacerbated these challenges and, without mitigation measures, would have resulted in considerable negative effects on wellbeing. The findings belong to experts of the World Bank and can be found in the latest Economic Outlook, IPN reports.
The analysis notes that the problem of access to energy resources has been a long-standing challenge in Moldova, affecting especially poor and rural households. In 2021, around 30% of the Moldovans could not afford to heat their homes adequately - over four times more than the EU-27 average. The burden of energy costs is unevenly distributed.
The WB experts point out that the government’s basic program to mitigate the impact of rising energy prices has helped households to lessen the impact of high energy prices on welfare and meet energy needs during recent heating seasons. Without mitigation measures, national poverty rates would have been 8.3 percentage points higher.
In the opinion of the experts, a comprehensive strategy is needed to address fundamental aspects of energy affordability, including improving energy efficiency to reduce consumption, promoting the development of renewable energy sources to diversify the energy mix, and reviewing energy subsidies to target those most in need.
“Urban and southern households, which are more likely to be connected to the gas network, are more exposed to fluctuations in natural gas prices, while those in Chisinau are disproportionately affected by district heating price shocks. Rural households, which usually use less modern fuel sources, are more susceptible to rising solid fuel prices. With almost universal access to electricity and high costs, most households are vulnerable to rising electricity prices,” the WB analysis shows.
Moldova’s energy costs are among the highest in the region, making the country particularly vulnerable to energy price shocks, a situation exacerbated by its status as one of Europe’s poorest countries. Moldova ranked fourth in terms of share of energy spending, compared to ten selected countries of the region, with only Poland, Serbia and Armenia spending more.
