This chapter focuses on driving consumer and industrial demand for heat pumps while building a base of manufacturers and installers. It discusses energy pricing, including taxes and levies on electricity and gas, carbon pricing and other types of instruments to encourage the deployment of heat pumps in Moldova.

A main barrier identified during stakeholder consultations for this study was a lack of consumer knowledge and experience with heat pumps. This is an issue that should be addressed upfront, as it can result in uncertainty about the operation of heat pumps and spreading of misinformation about their applications or limits. Ultimately, a lack of consumer knowledge can suppress demand, which in turn discourages industry investment in both scaling manufacturing and training installers.

This knowledge deficit is less of a factor for district heating networks. Network operators are largely aware of the technology, and many participated in the IEA’s stakeholder consultation on this project. In some cases, companies have already studied the feasibility of a switch to heat pumps in their networks; their primary concerns are the high upfront cost of the technology and a shortage of skilled maintenance workers. Increased exposure to international examples of heat pumps powering district heating networks – a key part of the communication process – could stimulate industry interest and offer innovative solutions to current challenges.

Effective communication is critical early on, since addressing a lack of knowledge up front is much easier than fighting widespread misinformation. Consumers may also be unaware of existing government incentives to promote heat pumps, especially since these have only been introduced in recent years. The 2024-2025 energy challenges stemming from the gas transit shut-off to Ukraine, alongside progress in diversifying Moldova’s natural gas supplies, provide a timely opportunity to promote the benefits of heat pumps.

Awareness campaigns on heat pumps will be key to educating the public on the long-term cost savings potential for households as well as the environmental benefits. They will also help dispel some of the common myths observed in other countries, such as concerns over heat pump performance in cold climates and potential noise issues. Awareness campaigns should also target installers, since they are often consumers’ primary point of contact and play a crucial role in providing accurate information.

Creating stable, long-term consumer demand for heat pumps is critical for fostering broader industry growth. While limited awareness is a significant limiting factor, several other barriers also constrain uptake.

As in other countries, one of the main barriers to heat pump adoption in Moldova is the high upfront cost. Both the technology and its installation remain significantly more expensive than traditional standalone heating systems that use natural gas and biomass. Lowering upfront costs over the long term while providing support for heat pump purchases in the short term will be essential. Solutions to address this cost barrier are discussed in the following chapter on financing the transition.

Energy prices are another constraint on heat pump uptake. This is because in many countries, electricity is more expensive than fossil fuels per unit of energy. Due to a heat pump’s efficiency, even if electricity is more expensive than natural gas, the useful heat produced may still be more affordable. For example, assuming a very low coefficient of performance (COP = 2), even if the electricity price were double the price of natural gas per unit of energy, a heat pump might still be cheaper to operate than traditional heating systems.

In Moldova in 2023, the price ratio was low enough that heat pumps were indeed more affordable to operate than gas boilers. According to the IEA’s Energy Prices database, households paid an average of USD 171/MWh (2 950 MDL/MWh) for electricity and USD 107/MWh (1 850 MDL/MWh) for natural gas. Assuming a gas boiler efficiency of 90%, a heat pump would have been the more economical option at a COP of 1.5 or above.

Another lever for lowering heat pump operating costs is implementing time-of-use tariffs. These can either be dynamic, with prices adjusting at frequent intervals (e.g. every 15 minutes) throughout the day or simplified on-peak and off-peak rates. Distribution system operators in Moldova are working with the Ministry of Energy to pilot the installation of 35 000 smart meters, partly to test time-of-use tariffs.

In early 2025, the ANRE approved time-of-use tariffs with two rate windows, from 07:00-23:00 and 23:00-07:00. It was originally announced that the off-peak rate would be 25% to 30% cheaper, depending on the supplier and region. At the same time, the regulator said rates for district heating  in the urban centres of Chisinau and Balti would increase. ANRE also adjusted its methodology for calculating regulated tariffs for natural gas to align with the European network code.

Another key development in energy pricing is the replacement of outdated vertical distribution heating systems with modern horizontal configurations that enable individual apartment metering and consumption-based billing. A utility switching fee was also abolished, allowing consumers to choose more cost-effective providers or those offering more competitive packages.

In the past, electricity and gas tariffs in Moldova involved cross-subsidisation, with higher-income households paying above-market rates to subsidise lower-income households who were charged below-market rates. While this practice yielded higher and less transparent energy costs overall, its gradual phase-out proved politically challenging due to the resulting tariff hikes for low-income users. This underscores the challenge of reforming energy tariffs in a way that sends accurate price signals while safeguarding equity.

In many countries, consumption taxes and levies represent a significant share of the price paid by end-users. These charges serve an important purpose, often incentivising investment in energy efficiency and generating public revenue to support clean energy. However, they are often disproportionately applied to electricity compared to natural gas and do not always reflect the environmental impacts of different fuels, especially natural gas and biomass. Electricity is also often subject to higher value-added tax (VAT) rates than fossil fuels.

In 2022, in the wake of the energy crisis, energy costs accounted for around 54% of the average European household’s electricity bill, while 25% reflected network infrastructure costs. This was a sharp increase from 2019 – when energy and network costs represented a combined 59% of the bill. In 2024, taxes and levies accounted for 10% of the bill, down from 25% in 2020. Network costs and VAT rates remained stable over this period.

In contrast to most of the European Union, electricity and district heat provided to Moldovan households is exempt from VAT (as of 2024). VAT for natural gas used in households is set at 8%. Thus, residential electricity prices consist of energy and supply (95%) and network costs (5%). As of 2025 there are no confirmed plans to increase VAT, however any future adjustments must not create an imbalance between electricity and natural gas prices. In addition, VAT or other taxes should not be the primary tool to account for externalities, e.g. environmental impacts, but instead an additional price component, such as carbon tax included in the fossil fuel price. Balanced taxation will help make heat pumps more competitive on operating costs.

Another way to stimulate demand for heat pumps is through energy efficiency obligation (EEO) programmes, which require energy utilities to help their customers achieve specific energy savings targets. EEOs often include heat pumps as an eligible technology due to their energy saving potential. Moldova’s Energy Efficiency Obligation Scheme (Law No. 139/2018) and programme approval (Government Decision No. 1064/2023) allow for heat pump installations to meet these energy savings targets.

In the European Union, as of 1 January 2024, the Energy Efficiency Directive no longer allows measures relating to the use of fossil fuels to count towards energy savings targets. In practice, this means that replacing a natural gas boiler with a more efficient model will not count towards the targets.

Other mechanisms exist for improving the operating economics of heat pumps relative to natural gas. Many countries have introduced carbon prices which tax fossil fuels proportionally to their carbon emissions. In Sweden, the introduction of a carbon price was instrumental in expanding the heat pump market. The European Union is on track to introduce an update to its Emissions Trading Scheme (ETS2) that will target fuels used for heating and transportation. ETS2 is expected to come into force in 2027.

Fostering industrial and district heating demand for heat pumps presents significant challenges. Even in countries with more mature heat pump markets and industries, the use of heat pumps for these applications remains nascent. Unlike residential applications, industrial and district-scale heat pump projects require customised solutions, larger capital investments, and integration with existing energy infrastructure – making adoption more complex. Many industries and municipalities remain unaware of the full capabilities of heat pumps, particularly their efficiency in delivering high temperatures and their potential to integrate with waste heat sources.

The first step toward scaling deployment is clear, targeted communication of heat pumps’ advantages, including energy savings, emissions reductions, and long-term cost benefits. By fostering dialogue among policymakers, industry leaders, and technology providers, the market can build confidence, address knowledge gaps and pave the way for broader adoption.

Although spurring heat pump demand is important to laying the groundwork for a growing industry, there are still important measures to help stimulate heat pump supply at the same time.

Where they exist, heat pumps in Moldova are largely imported, yet there are established manufacturers active in the sector. ALTAL Grup S.R.L., founded in 2008 in Chisinau, makes air-source and geothermal heat pumps and provides metalworking services. DINA COCIUG S.R.L., founded in 2003, builds commercial refrigeration equipment, including air-to-air heat pumps (air-conditioning units). Like heat pump importers, these companies specialise in residential and commercial applications. As a result, industrial and district-scale heat pumps have no manufacturing presence in the country.

Various incentives could be used to encourage investment in Moldova’s domestic heat pump industry. Tax breaks on new heat pump manufacturing facilities, for example, can be effective. In Poland, reduced corporate taxes in Special Economic Zones encouraged international heat pump manufacturers like Daikin and Viessmann to build production facilities there. Public loan guarantees can also help reduce investor risk, while International Financial Institutions offer low-interest loans and grants for clean manufacturing projects. (The European Bank for Reconstruction and Development, as well as the World Bank have a history of supporting projects in Moldova.)

Even in countries with mature heat pump markets, skills gaps can slow heat pump adoption. It is important to plan industry development from the outset and ensure that a trained work force is in place to install and maintain heat pumps in Moldova. Certification of heat pump technicians can play an important role in this.

The European Heat Pump Association (EHPA) offers the EUCERT programme to train and certify installers across the European Union, while national initiatives, such as the BWP Certification scheme in Germany and France’s QualiPAC, provide standardised training and accreditation. Elsewhere, the North American Technician Excellence (NATE) certification ensures HVAC professionals are qualified to install and maintain heat pumps, while cities like New York also offer subsidised training. Canada provides grants for heat pump installer training, and the industry offers certification programmes. This is also the case in Japan, which certifies technicians through technical colleges. Moldova can update its Directive no. 1051/2018, which includes regulating the qualification and registration of heat pump installers, to develop such a certification programme. It also can further integrate heat pumps into existing engineering degrees at the Technical University of Moldova.

When it comes to district heating applications, local stakeholders indicated that maintaining these systems poses challenges. Often, the original installers do not provide ongoing maintenance services, and the specialised expertise required is not available in-house. This gap leads many district heating operators to prefer Energy Service Company (ESCO) models that offer comprehensive solutions, including guaranteed maintenance. ESCOs not only handle the installation but also ensure long-term operation and upkeep of heat pump systems, often under performance-based contracts. The Wandsworth Riverside project in London relies on an ESCO to operate its heating and cooling system, for example.

• Narrow the electricity-to-gas price gap to make heat pumps more affordable
• Organise heat pump capacity building for officials and the public
• Roll out public awareness campaigns to inform citizens about the benefits and economic advantages of heat pumps
• Create stakeholder platforms for citizens and heat pump installers to engage and share experiences
• Introduce manufacturing incentives such as corporate tax breaks
• Establish facilities and programmes to train heat pump installers