Strategic Reform Plan of Energy Sector in Albania

Strategic Reform Plan of Energy Sector in Albania

Analysis by Dr Lorenc Gordani

Legal Advisor in Albanian Energy Market,

Professor in the Department of Justice at the UMB

strategic reform plan of energy reform plan of energy sector energy sector in albania albania by dr lorenc gordani reform plan of energy

Albania is in the process of strong restructure of the regulatory environment in the energy sector. The new legal and regulatory framework seeks to address a wide range of issues, including institutional reforms, promotion and increased energy efficiency and renewable energy generation capacity, the establishment of a new electricity tariffs, the development of an organized electricity market as well as the integration within the broader regional electricity ones and, finally, the EU’s internal electricity market.

The reform effort began in 2006 with the membership in the Energy Community was finalised with the adoption of a new law on the electricity sector in 2015. While the reform has slowed down a little over the past two years, in the recent months, the Council of Ministers and key stakeholders have found new impetus under the impulse of the European integration process to continue with sectorial reform. Process materialise with approve of the strategic plan for reforming the energy sector in Albania on December 2018.

Today, the country is on the verge of implementing the steps of reforms, which include, among other the fully unbundling of OSHEE, the creation of energy power exchange (APEX) and the gradual opening of the retail market along with the creation of a competitive wholesale market. The liberalisation of the wholesale market alongside bilateral trade (OTC) and forward trading, include the day-ahead and day-to-day markets, such as the balanced electricity market, where the formation of prices is expected to be freely formed based on scarcity signals, competition and investment needs.

On above, it is essential the mention that the strategic document came as part of the loan-based instrument of reform policy. The politically based loan (PBL) is a tool in which funds from an international financial institution are lent to a public market operator based on the implementation of the specific policy reforms listed in the strategic plan of energy (PRE). Furthermore, it should be noted that the strategic plan reviews and implements Albania’s international commitments, particularly concerning the accession process in the Energy Community and the EU.

In general, the strategic plan includes a comprehensive set of measures and represents a significant reform for the energy sector with multiple targets, such as: structural, operational and financial. The PRE aims to create an organised market-based in the EU model, which is guided by the principles of being transparent, non-discriminatory and sustainable over a long period of time, based on the free-price formation through competition.

The key efforts contained in this reform can be summarized as the creation of transparent and non-discriminatory access and tariffs, the bust of the role of independent regulator, competitive and transparent prices set, fair support schemes with minimum-risk for vulnerable categories, transparent and non-discriminatory support scheme for the produces companies of renewable energy, etc.

The benefits of this radical changes are expected to bring to a creation of a market that produces, transmits and consumes electricity efficiently, as well as an environment that offers possibilities to invests with the highest profitability. However, in short the main benefit of reform is the creation of a market added value to energy assets and public money, it is also essential the recognise and the address of all the risks associated with the not fully or rightly implementation of this strategic reform.

Disclaimer: 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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