Granting of rights and acquisition in the Greenfield HPP

Granting of rights and acquisition of the Greenfield HPP

Author: Dr Lorenc Gordani

Legal Adviser in Albania Energy Market

acquisition of the greenfield hpp granting of rights and acquisition public private partnership october 2018 organiser for the invitation

1 Main schemes on the granting rights

A better understanding of the framework in which based the granting rights regime of the hydropower investments resources, make necessary the start by observing that, due to the lack of a coherent European reference framework – as revealed even by the most recent studies – make to be a very considerably discrepancies on hydropower regimes in MSs of the EU.

A heterogeneous situation, among the EU hydropower regimes that is inevitable not to be reflected also in the institutional framework implied to the hydropower in the WBs. The all, mainly to technical potential and economic related differences, as well as the social and political development stage in which find the specific countries, that definitely makes the hydropower remains still of national in scope.

A framework, that determine for what we are here in considering, the type of rights for the granting of HPPs also in Albania. Then in the country, there are basically in all three available type of procedures, for a granting rights of the hydropower sources. A different regime, that strongly influence the applicable set of laws and regulations on hydropower usage, with a relevant economic impact through the legal procedures.

1.1 Granting through the authorization

Then by first, the authorisation procedure is followed for the project up to 2 MW, conceived as small investment basically of interest for local investors. A framework based on the principle that leave a major load (or risk) of the work to be follow by the investor. However, by the other part, due to its approve by ministry is perceived as faster track. In specific, the investors has to assure in advance: the approval of the connection to network, permits, licenses and preliminary environmental authorizations, legal documentation, which proves the long-term relationship with the property to be used, the opinion on the priority and quantity of water to be used, etc.

1.2 PPP to support the foreigner investors

Then, the most relevant project, consider the level of difficulty and depend on risk nature of hydro, are based in the regime of Public Private Partnership (PPP). The subjects and rights of PPP are clearly identified and the law contains provisions that reassure a fair and transparent procedure for seeking proposals. Provision that makes them seems formally “a little bit” excessively long and in last rise (in total but not in unite of measure compared to smaller project) the cost due to several evaluation needed – however in any case this are preliminary expenses needed.

However, the above need to be read as a framework build to protect the investment and mitigate the impact of different variables occurring on time. Therefore, what is need, from the framework already in place, is a qualified expertise on the skilful reflection of all the rights recognise by law to the contract among parties, based on the fact that: the provisions in law governing the contract of the project provide clear guidance on key issues that will be covered, and allowing parties to freely negotiate the flexible terms of concessionary agreement.

Under the contract terms for HPP up to 15 MW, the sale of power generated by the operator is guaranteed through the Power Purchase Agreements (PPA) for a period of 15 years, signed with the operator charged with the public service obligation with tariffs regulated by energy authority using the “feed-in” scheme. The construction of hydropower plants is subject from 15 up to 20 complex permits and licenses from various regulatory bodies, but assure and facilitate on the issue of all the above documents standing as a co-responsibility among the private and public authorities.

1.3 Innovation of tender for capacity

Lately, Ministry of Energy has opened the tender for capacity for the selection of the bidder for the construction of the photovoltaic plant above 50 MW in the area of Akerni. A first pure project based to principle of tender for capacity that it has been apply partially in the last 2-3 years in many HPP project given. Then, it represents a large-scale innovation for the advantages and opportunities offered, where everything is prepared in the package by the public authority, thus giving maximum support to investors interested. A practice thought to serve as model for the further concession in HPP.

2 Main aspects on the preparation of the project proposal

2.1 Relative importance of the legal framework

Despite the multi-importance for the economy, energy investments traditionally has presented a complex challenges in their deployment in practice, which have had request a continued review with aim of improve of legal framework in force. These investments are built to operate above 30-40 years, which make their profitability to be influenced by many variables. Notwithstanding, the importance of legal and regulatory framework in a given period, the HPP investments core based to the accurate technical studies. In more, their preparation by the early stage is fundamental also for getting access to the financial system with affordable rate of interest.

2.2 Technical studies on energy infrastructure

Then, fundamental become the developing a sound technical studies, well above the minimum of the criteria request. Normally their breadth and depth varies according to the relevance of project such may be a project given with net scheme, authorization, direct contracting, public private partnership, strategic investment, etc. In any case, independently of the technology used, including HPP, solar, wind, or other, or even the form of investment as unsolicited proposal or tender for capacities, the studies should provide sufficient technical, economic and financial reliability, as well as assurances in its environmental and social impact.

3 Relevant aspects on acquisition of greenfield project

In last, consider the high number of projects warded but still not build, notwithstanding the continue interest on acquisition, the actual situation shows all the complexity of this process. The factors are different: by first, the legal procedure request the consensus of the public authorities, in the same form given for their approve. In second the problem stand in the wrong approach of the developers, faraway to a company that offers to manage renewable asset. Further, a problem is the reliability of projects, consider that a good one is sold by itself.  In last, it cost more in financial terms as well as time and energy, because need to remake evaluation along all the chain.

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 “”.

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