Sustainable Development of the Energy Sector in a Country Deficient in Mineral Resources: The Case of the Republic of Moldova

Abstract

The energy sector is an essential element in an economy’s infrastructure, so a deficit of national mineral resources makes the energy sector dependent on imports of raw materials, which in turn can negatively affect a country’s energy security. The sustainable development of the energy sector for countries with transitioning economies should be based on the energy trilemma. Four principles are proposed: diversification of energy resources and energy generation sources, ensuring energy efficiency, ensuring energy affordability, and green energy production. Based on a comparative analysis of the economic and energy indicators (for the years 2014 to 2019) of European countries that are not members of the European Union, the situation in the energy sector of the Republic of Moldova is classified as critical and its fundamental issues are identified (107th place in the World Energy Trilemma Index). The main objectives of the study are: (1) To analyze energy and economic efficiency as well as the conditions for and problems of the functioning of the energy sector in countries with transition economies (using non-European Union countries as an example); (2) To present a substantiation of the directions for development of the energy sector in countries with transition economies that lack energy resources (using the Republic of Moldova as an example), taking into account the identified factors and principles of sustainable development; (3) To develop an economic and mathematical model for assessing the directions for the development of the energy sector in countries with transition economies using multiple-criteria decision analysis (MCDA). Decision-making methods can be used to select strategic development alternatives, particularly in the energy sector. MCDA has several advantages and uses in the following situations: comparing several alternatives; identifying the most preferable and unacceptable alternatives; comparing alternatives based on several (sometimes conflicting) criteria; looking for a compromise in a situation where different stakeholders have conflicting goals or values. A methodology including a system of 7 indicators and an economic and mathematical model for assessing development paths for the energy sector in countries with transition economies were developed that are based on multiple-criteria decision analysis. An algorithm and a computer program were developed to carry out MCDA and select the best development path for the energy sector of the Republic of Moldova. The article presents a rationale for choosing the best option regarding the development of the energy sector of the Republic of Moldova, which is a country with a deficit of its own energy resources.