The Better Business of Clean Energy
Moldova’s move towards renewable energy supplies has brought a boom in the biomass fuel business. Since the fuel is relatively clean and inexpensive, it’s a triple win for consumers, businesses and the environment.
- Over two years, biomass production increased 10 times; companies now manufacture 160,000 tons of fuel a year.
- One start-up enterprise manufactures enough to heat 30 public buildings.
- Three hundred entrepreneurs have acquired business and technical skills related to biomass production.
- Modern biomass heating systems operate in 130 schools, health facilities and community centres in rural areas throughout the country.
- Over 37,000 people spend winters in comfortably heated public buildings; heating costs have fallen by at least 30 percent.
- The National Institute of Standardization and Metrology adopted 37 European standards on producing solid bio-fuels, with all manufacturers required to comply.
Entrepreneur Oleg Donoaga set up one of the country’s first companies to transform plant debris into biomass briquettes and pellets, which can be burned in special furnaces for heat. In just two years, AgroBioBrichet has grown from a start-up enterprise to one of Moldova’s major producers, manufacturing enough fuel each year to heat 30 public buildings.
“We took a risk in an underdeveloped market,” Donoaga recalls with pride, surveying a thriving factory where workers shovel piles of straw and agricultural waste into machines that compress them into log-like briquettes. These are easy to handle and transport, and burn efficiently. Every tonne replaces about 800 kilogrammes of coal.
“At the beginning, the effort to promote the fuel was great,” he adds. “People wanted an alternative to gas, but were afraid to change.”
Donoaga credits a partnership between UNDP and the European Union with helping his business get off the ground—part of a whole new industry that takes Moldova closer to a future of sustainable energy use. The partnership stands behind the largest renewable energy project in the country. It takes a two-pronged supply and demand approach.
Deputy Prime Minister and Minister of Economy Valeriu Lazar explains, “The project has triggered the creation of both a market and an industry for renewable energy sources and technologies.
”Since UNDP and the EU began collaborating with national counterparts two years ago, biomass production has increased 10 times; companies now manufacture 160,000 tons of fuel a year. After last winter, when AgriBioBrichet was unable to meet a sharp surge in demand, it took measures to boost capacity, such as investing in new sources of raw materials. It has also been active in installing production lines and advising new manufacturers.
In 2012, Donoaga took the stage during the Moldova Eco-Energetica Award Ceremony to receive recognition for the best biomass start-up. The ceremony has been one of many initiatives to stir public interest in the potential benefits of switching to biomass.
A quest for energy security
Moldova is one of the few south-eastern European countries almost totally dependent on external energy supplies. It imports nearly all of its electricity, natural gas, coal and petroleum products. With rising energy costs and growing concerns about energy security, the Government has set several ambitious targets to move towards energy independence.
By 2020, plans call for increasing renewable energy to 20 percent of total energy use, cutting energy consumption by 20 percent in public buildings and reducing greenhouse gas emissions by 25 percent.
The UNDP-EU partnership has been vital in helping Moldova move towards its goals. An initial priority was to demonstrate the potential of biomass, both to policy-makers and the public. Starting in 2011, the project helped install modern biomass heating systems in 130 schools, health facilities and community centres in rural areas throughout the country.
The benefits were quickly apparent. Over 37,000 people now spend winters in comfortably heated public buildings. Heating costs have fallen by at least 30 percent. Greenhouse gas emissions are expected to contract by up to 30 tonnes of carbon dioxide a year as biomass replaces coal and gas.
Nurturing an industry
Other advantages come from the fact that, through the growth of the domestic biomass industry, money paid for fuel stays in the country and can be productively invested. New businesses have created hundreds of new jobs, with more on the way.
Almost every day, entrepreneurs contact the project team about starting up biomass fuel production. So far, the project has trained 300 on how to develop business plans and financial models, and acquire technical skills. This marks an important shift towards systematic support for a fledgling industry. In the early days when Donoaga went into business, he learned mainly by trial and error, and research online.
In 2012, a forum for bio-fuel producers, the first of its type, brought together entrepreneurs from across the country to share experiences and learn from each other on issues such as business modernization and quality assurance. Some entrepreneurs also attended the European Biomass Conference and Exhibition, an opportunity to establish links with big players in the European biomass market. Another group went on a study tour to the Czech Republic, Poland and Romania to see how these countries manufacture efficient biomass-based boilers.
With the biomass industry set to expand, guidance on quality control has become essential to establishing a foundation of trust in its products. The optimal performance of biomass heating systems will also control emissions and costs. In 2012, the National Institute of Standardization and Metrology adopted 37 European standards on producing solid bio-fuels. All manufacturers must comply with them.
With the early pilots having confirmed the value of biomass fuel, and demand on the rise as a result, the Government has been proactive in helping biomass manufacturing expand. The Ministry of Economy and the Energy Efficiency Agency, with project support, have set up a revolving fund for entrepreneurs who otherwise could not afford start-up costs.
Potential producers can use the fund to either lease or purchase equipment. Those who opt to purchase can do so through three-year loans that are tax and interest free. “We aim at developing the private sector for biomass fuel production to make it accessible for everyone,” says Mihail Stratan, Director of the Energy Efficiency Agency.
Sergiu Ochinca is an entrepreneur who sold his home to start a biomass fuel production business. At first, he thought he would sell to the European market, but soon found, to his astonishment, that he could not meet demand in Moldova.
He is one of the first business owners to opt for the leasing programme to expand production. “The offer fits my business development plan like a glove,” he says with satisfaction.
The publication “UNDP Moldova: Towards Equitable and Sustainable Development for All” takes stock of the key results and achievements of UNDP’s work in Moldova during 2007-2011 and presents the priorities of the new country programme for 2013-2017.