Albania, openness towards electricity trading options

Albania, openness towards electricity trading options

Analysis by Dr Lorenc Gordani,

Legal Advisor in Albanian Energy Market,

Professor in the Department of Justice at the UMB

Edited by Irsida Sheshi, M.A. in Public Administration

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In the last few months, Tirana hosted the International Energy Charter Forum under the Albanian Chairmanship of the Energy Charter Conference. The high-level activity presided by Urban Rusnák‏, Sec. Gen. EnCharter focused on topics such as interconnections and regional integration, linking efficiency and renewable energy to sociological-economic benefits, regional shared prosperity, etc.

Going back to the early ‘90’s, Albania has seen in the Energy Charter one of the first institutional drives for the reforms with an aim to open up its energy sector. This is a process that has recognized in the last year — based on the need of regional integration, — an acceleration toward the national liberalization and regional development of physical strengthening of the interconnection in the vast internal energy market (IEM) of the European Union.

Among others, the coming close of the commission of high voltage interconnection between Montenegro and Italy, and the establishment of the Montenegro Belen PX on April 1, 2019 is followed up with the domino effect that also brought forth the launch of the Albanian Apex on May 16, 2019, as well as the launch and empowerment in the rest of the region like Macedonia, Bulgaria, Serbia, etc.

Specifically, Albania is going ahead with the implementation of soft measures on reforms by removing legal and regulatory obstacles. This deep structural reform in the energy sector has already brought a radical game change on the investments in renewable and efficiency.

On the above perspective, the new law on the promotion of energy use from renewable sources at the beginning of 2017 brought changes by first boosting plans for new big hydropower (HPP) in Albania, in the cascade of Drin River, seeing among other options for common hydropower projects with Kosovo such as those in Zhur, Dragash, etc.

And now, the fall of technology costs and the build of the main infrastructure to the country’s significant renewable energy potential for wind and solar photovoltaic (PV), has created the conditions for these projects to be deployed cost-effectively. Field tests have already past with positive outcome by the first auction for a 50 MW solar PV plant in August 2018, organized with the support of Energy Community Secretariat (ECS) and European Bank for Reconstruction and Development (EBRD).

Further on, the country as a non-Annex-I party to the United Nations Framework Convention on Climate Change (UNFCCC) and signatory to the Paris Agreement in November 2016 is committed to reduce CO2 emissions by 11.5% compared to a baseline scenario in the period 2016-2030 (for a forecast reduction by 708 kt CO2 in 2030).

Nevertheless, the electricity system continues to rely on a trading base of around 35% with imports that may go up to 60% in the dry years. Specifically, based on the Annual Report of the Albanian Energy Authority (ERE), the net domestic production for 2018 continues to still have the main weight of domestic production for KESH sh.a.

Last July 2018’s meeting of the Council of Ministers adopted a new strategy for the energy sector by 2030. The drafting of this report is the result of a process that has lasted several years, based on two main pillars: the development of reforms on foster market liberalization, and huge investment needed for the regional integration driven by participation in the Energy Community.

The energy strategy 2018-2030 came after a period of dynamic changes for the economy as a whole and in particular for the energy sector. This transition is experiencing important structural changes based on a new set of laws, normative and regulatory acts. Its approval is now open to the possibility of pursuing the country’s strategic objectives to allow full integration into the European energy infrastructure.

This is also a framework that will serve as a basis for the development of the Integrated Energy and Climate Plan in 2019. A framework all to be built in a package that will addresses and adapts to the Albanian context the five dimensions of the Energy Union Strategy, in accordance with the preparation of accession negotiations process and in any case aim to lead to a higher level of energy security, sustainability, competitiveness, and various other benefits.

Then, the coming period is of fundamental importance. In particular, the continuation of the commitments to the national path based in the deregulation plan of the renewable energy sector and the infrastructure investment prioritization under the connectivity agenda. This implementation of the framework for reform that finds further allies in the strengthening of institutional relations within the International Energy Charter Forum.

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

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