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In the picture: Farmer Gheorghe Mereacre (left) and his business consultant Radu Voicu from Alternative AID (right).
At the donor conference for Moldova on the 5th of April in Berlin, the problem was highlighted that practically all of Moldova’s energy is imported, and natural gas is solely coming from one supplier: The Russian Gazprom. This poses a big risk to energy security and has a negative impact on the business environment. First with the effects of the COVID-19 pandemic and then with Russia’s attack on Ukraine, energy prices have soared. The price per cubic meter of gas increased from MDL 4.2 to 15.2 (Moldovan leu, the currency of Moldova). Electricity prices are much higher than what consumers in other non-EU countries of the region have to pay.
In this context, horticultural companies are increasingly interested in investments into renewable electricity generation to reduce production costs and their dependence on external energy sources. Since 2018, AFC has been supporting a credit line of the European Investment Bank (“Fruit Garden of Moldova”) and is now steering the available financing resources for agricultural companies towards investments into photovoltaic installations.
The Farmer Gheorghe Mereacre from Costești grows table grapes on 6 ha of land and operates a cold store with a capacity of 350 tons. The electricity bill was 150,000 MDL (around EUR 7,500) for a consumption of about 100,000 kW. Not only is Gheorghe afraid of price increases, but also of the danger of power cuts, which may lead to a complete damage of produce kept in the cold store. Despite the insecurities following Russia’s attack on Ukraine, Gheorghe recently applied for an EIB-financed investment loan for 1.4 million MDL (about 70,000 EUR) through the Fruit Garden of Moldova project to install a 113 kWp photovoltaic system. The application process was swift, and already in April 2022, the system will be installed on the roof of the cold store – just in time for the 2022 harvest.
Gheorghe Mereacre: “The photovoltaic system will allow me to cut costs especially now when many other inputs got so much more expensive. At the end of the season, more money is left for other investments which I needed now.”
Horticultural producers have to orient their sales now away from Russia, and the EU retail market has quite some requirements that Moldovan producers have to meet – with regards to packaging and certification. All this requires additional investments.
For the EIB credit line, AFC is partnering with Business Development Services (BDS) which assist horticultural companies to negotiate EIB-financed loans from their banks. The most active of the BDS, “Alternative AID”, has processed nine larger projects for photovoltaic installations since the beginning of 2022 and three since the beginning of the war in Ukraine.