State of art and the expected future developments in hydropower

State of art and the expected future developments in hydropower

Author: Dr Lorenc Gordani

Legal Adviser in Albania Energy Market

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1.1 Highly technical potential of hydroelectric

A starting point of any investment decision in hydropower is why it is worth to invest in Albania. The comparative advantages are a lot but the first competitive ones is related with the country huge potential of hydroelectric energy: with eight large rivers run through a hydrographic territory, above its today administrative extension by 57%, with average height about 700 m, and a perennial total inflow about 1,245 m3/s, for a combined water flow about 40 billion/m3.

The attempt to provide a clear picture on the developments of granted projects in hydropower is rather difficult task due to large number of projects and extension in time. However, crossing the latest official data on concessions and authorisation procedure, it could be roughly said, that today the:

▶ Total installed capacity have reached around the 2,100 MW;

▶ Concession and authorisation warded and yet to start their development in practice (then potentially looking for financing partnership) are above 1,724 MW.

▶ Unexploited hydropower potential by our estimation amount up to 1,000 MW.

In summary, consider the theoretical potential energy by 4500 MW, today only 43% of hydroelectric potential is currently being utilized. Further to highlight is that the reserves valuing per capita second in whole Europe has made that country could offer lower costs (ref. LCOE) of hydro production in region starting with an average of 35 Euro/MWh.

1.2 Favourable policies and soft measures

Due to above specificity the hydropower has been a key priority, of any government, in their economic development plans from many decades, and the above has been materialise, in:

▶ Governmental incentives and facilitation to support the investments.

▶ High-quality experienced engineering and technical workforce, particularly in the hydropower sector.

▶ Create one of the unique sector with long proven records of successful foreign investments with provenience by countries with most long-standing tradition in hydropower of the Europe.

1.3 New opportunity offers by the transition

Regard the future, as known the energy market it’s close to coming, as well as the sustainability is underway. However, to what exactly we are transitioning? The new energy sector strategy up to 2030 based on two main pillars: the development of reforms market liberalization in the context of regional integration and the promote of the sustainable development.

1.3.1 Overall considerations on launch of PXs

To maximize the above, by putting into practice the EU’s Third Energy Package since 2015, it is working in parallel with the advancement of the platform of Albanian Power Exchange (APEX), that of the intraday and balancing market, and the expansion of network capacity allocation through the joint auction office (SEE CAO) of Podgorica.

Further, by begin of 2019, the Albanian market is expected to be coupled with that of Kosovo or directly in broader scale coupling with Italy, Montenegro and Serbia (AIMS project kicked-off in January 2018). A process that is contributing to accelerate the opens of energy market in Albania and then of the other countries in the South-East Europe.

Independently by the option adapted, we have to think before being there, on: how does it affect the hydropower? The development of the regional electricity market ensure that project developers have a wider option for their production. Then, it make start thinking for the bigger project, which reduce directly the costs of production, and promote market-based incentive projects. The new network of roads in developing today in Albania also enable the projects that are considered up to now unfeasible. As the increase of the interest on bigger plants is with positive impact on the environment, at least for avoiding the current practice of fragmentation in small HPP.

1.3.2 New res law: feed-in and FiP tariffs

Thus, by other part regard the sustainability, to realize the national objective for increasing the share of renewable energy in total energy consumption the country has committed to reach the target of 38% by 2020. In regard, the renewed action plan in March 2018, has tripled the capacity for photovoltaics from 40 to 120 MW, and doubled that of wind up to 70 MW. However, the hydropower technology with its 600 MW, remain the core element of the renewable strategy of 2020.

To be highlight is that the capacity above 600 MW, is covered with feed-in tariff for the producer up to 15 MW, and, the facts show that out of the 540 concession in HPPs, only 109 HPPs are in the construction phase, and in meanwhile 284 of them they have not started yet. Then, all the public policy are putted in place to boost energy investment generally creating a most favourable climate for the construction of power generation works up to 798 MW (20-35%) within 2020.

art and the expected future expected future developments in hydropower expected future developments art and the expected future developments in hydropowerAbout Activity

The “Albania, a Market Place for Large Sustainable Hydropower” was kept by Dr Lorenc Gordani at the Business Forum on Albanian Hydropower, organised by the BFL on 3 October 2018, at Rogner Hotel, Tirana.

Thanking the organiser for the invitation to keep a presentation, seeing the profile of the activity, based in my daily empirical experience it was search to offer some rapid highlights on the state of art and the expected future developments, completed with a synthetic analyse on legal procedures of the granting right and the acquisition of a greenfield project by developers interested to invest in hydro projects in Albania.

Warm thanks again of the organiser for the invitation to this remarkable experience with hundreds of companies represents, developers, experts interested in hydropower sector, which give me the possibility to share relevant insights and discuss the latest developments in the hydropower industry and Albanian energy market!

Disclaimer: The ownership and the opinion expressed pertain to the author. While all the effort are made to ensure the accuracy of this publication, it is not intended to provide legal advices as individual situations may differ and should be discussed with an expert. For any specific technical or legal advice on the information provided and related topics, contact us through “lorenc_gordani@albaniaenergy.org”.

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