Albania launches tender for Euro 100 Million Solar Park

Albania launches tender for Euro 100 Million Solar Park

Analysis by Dr Lorenc Gordani

Professor at the Tirana Business University – TBU

Albania tender; 100 Million Solar Park; complete restructuring process; power exchange (APEX); An entirely “radical” game of change; capacity available by 738 MW; base to alternative renewable; wind and the photovoltaic sources: profound renovation; development of photovoltaic projects; current capacity of photovoltaic implementation; national production.

Introduction

The Albanian energy market is undergoing a complete restructuring process that is thought to be finalized soon also with the launch of the power exchange (APEX). A new framework that tends to foster more and more its entering now into active development of renewable energy, with different options of use of photovoltaic included the self-consumption (DER), increased trades and above all opportunities for alternative suppliers, the deployment of the fleet of electric cars, etc.

An entirely “radical” game of change approach regarding renewable energies, similar to developments in the rest of the Balkans, which aims to create a more efficiently mix of energy production. A trend that was finalized with the approval in August and entry into force in September of the new Consolidated National Action Plan on Renewable Energy Sources 2019-2020. An action plan, already in power by the 19 September 2019, which rises the support capacity available by 738 MW, mostly base to alternative renewable in the wind and the photovoltaic sources.

The most notable aspect of this profound renovation consists in the development of photovoltaic projects, which are not only being implemented by various innovative companies but also are increasingly embraced by all the most prestigious ones operating in Albania. Making than the current capacity of photovoltaic implementation for electricity has already reached around 30 MW, and their concrete contribution by October 2019 reached 0.45% of national production.

I. Announcement of the Karavasta solar tender by 140 MW

Recently the ministry of energy in Albania has open the international call for tender for the construction of a 140 MW solar power plant in the Karavasta area. The project is forecast to get 122 ha in the Divjaka municipality, in Remas area, and on a further 76 ha in the Fier municipality of Libofsha. Construction will steer clear of the neighbouring Karavasta lagoon, part of a national park. Designers have “tried to stay as far away as possible” from the protected area, said Minister Balluku.

As in the previous large-scale PV tender, half the energy generated by the plant will earn a solar tariff and the other half earmarked for free market sales. The offer that has not to pass the ceiling price tag at 55 Euro/MWh (US$61/MWh). The regulated price will be granted for 15 years and will certainly be purchased by the energy distribution operator.

Therefore, the through deep reforms, after a long time is taken, and many improvements are done, nowadays are making possible the open of the auction for the construction of a photovoltaic park. A project by 140 MW, in the Karavasta area, that is identified as a priority for 2020 earlier in the meeting of Council of Ministry and has seen already the approval of the National Territorial Development Council (KKRT).

The set of procedures to be followed for this auction has been assessed by Minister Balluku as a model package, which has received the support of strategic partners. According to her, the transparency provided through these procedures will guarantee greater participation and competition from foreign investors.

This auction marks a new milestone in terms of procedures organized by the Albanian Government. This is a model package, built step by step with all EBRD assistance, support and consultancy. We have fully adhered to their advice, which has been well documented and has been the result of best practices in other European countries for the same procedures ”, stressed the Minister of Infrastructure and Energy.

Investors interested in submitting bids up to now has been relevant with more than 40 companies interested, notwithstanding the still remaining time up to 16 March 2020. Minister of Infrastructure and Energy, Belinda Balluku said that the investment value of this project is estimated at over 100 Mln/Euro.

II. Updates on Albanian Photovoltaic Developments

The changes in the alternative renewables in Albania are very strong. In regard, even the innovative project of the Karavasta ground-mount project emerges after Albania was identified as the location for a 2 MW floating PV project, which Norwegian firm Ocean Sun will build for utility giant Statkraft. Then, here in the following will be introduced only an overall panorama of the most significant recent developments from the PV landscape in Albanian.

a) The maturation of the large utility-scale

The procurement of the Karavasta project is the second tender for large scale solar in Albania. Then, along August 2018, there was the open of the first international auction call in Western Balkans for a power plant up to 50 MW. The previous auction, for a 100 MW solar park, was won by India Power Corporation, in November 2018. Half of that project was awarded with a 15-year tariff of €59.9/MWh, and the rest to be sold on the market.

Projects thought by the begin to be like a teaser for seeing the possibility to further organise, with the support of EBRD, well bigger rounds, aiming a total up to 200 MW (for a total final summary above 200 MW).

b) Feed-in tariffs for the Solar Park up to 2 MW

In the meanwhile, the installations of the first photovoltaic parks by 2 MW have already taken place. Actual capacity already build has reached 24 MW, getting the tariffs by 100 Eur/MWh. An outcome which has been accelerated with the approve the new NREAP 2019-2020 in August and enter in force in the period of September that rises the PV capacity planned form 120 MW to 490 MW. Each company could follow more than one project for a total of 290 MW.

c) Distributed-generation and off-grid PV

Another important aspect of this renovation is the legal provisions on self-consumption (in net metering) up to 500kV, for connection of the solar photovoltaic power plant distribution system, adopted in July 2019. A net metering scheme in which is recognized a full “stored” energy on the grid without paying any cost for its use (which in this case serves as a “giant” battery). Instead, for the off-grid PV, there is not any obstacle at all.

III. Background of historical developments of the PV sector

The Karavasta Photovoltaic Park comes as a long-awaited project and a logical consequence after the ground-breaking auction of the project of Akerni PVPP. In fact, this approach toward photovoltaic energy has been prepared in ongoing by the now last 3-4 years. It started with the 2016 Action Plan (DCM No. 27) which provides for the first time incentive measures (in addition to those for hydropower). A development that was further complemented by the provisions of the 2017 renewable energy law, and a broad legal and sub-legal framework which, inter alia, enables the trading of electricity produced through the electricity power exchange, which is expected to be launched in the following upcoming days.

IV. Advantages of developing PV projects

The use of this emerging technology throughout the world is an innovation with incomparable advantages. First of all, due to its geographical position with the optimum level of radiation. In any case, the all should be considered also in relation to the possibility of better diversification of the production resources, the efficiency created by their distribution, and homogenization throughout the whole territory of the country, and the competitive dynamics created within the opening of the energy market and being part of common regional and European ones.

V. Influence on competition and energy prices

The effects related to the competition will be particularly valuable. This is also based on the fact that the outcome of the Akerni project “rejected” the paradigm that the cheapest electricity in Albania can only be produced from hydro sources. Even, if we want to have this effect reinforced, such competitions must be opened simultaneously with other technologies such as wind energy, biomass, etc., for which our country has an extremely valuable potential.

VI. The energy transition opens to alternative resources

The more evident aspect of the actual deep renovation has to do with approving of the measures for the connection to the distribution system of the photovoltaic installation for the householders and enterprise up to 500 kW. However, it opens the door also to other alternative resources in Albania.

a) Energy transition based even on contributions of the wind

A shred of factual evidence toward alternative renewables that it is also confirmed by the last month’s updates notices, dominated by the presentations at the Ministry of the Infrastructure and Energy of new proposes in wind projects. A tendency that was driven by the rise of new target approved with the NREAP up to 2020 that passed the wind-planned capacity from 70 MW to 150 MW within 2020.

b) Starting period of valorisation of the local particularities

In more, the energy market deep renovation on the renewable energies is seeing even the turning attention also toward the local peculiarities. A change of approach on the renewable that aims the diversification similar to the development in the rest of Balkan. A tendency that was finalized in the ambitious new NREAP that see the rise of the support for the biomass passing from 8 MW to 41 MW within 2020.

c) First interventions in the vast potential sector of transport

Last but not least important regard the transport there is a new law initiative, in process of approve, that establish 5% of the amount of fuel consumed for transportation in-country should consist of biofuels, while by 2020, this amount should get up 10% of the total, which opens the way for the first time to the production and use of biofuels, with the aim of achieving the 38% target by 2020.

d) Open toward diversification and the end of the era of SHPP

A change of approach about the renewable that aims towards diversification, which has made the Albanian, takes already a big step away from the intensive use of the small hydropower (SHPPs) with a capacity below 2 MW. Then, now more than never does not remain that to find the way to accommodate all these above options.

VII. Recommendations by lessons learned related to PV Karavasta

The PV Karavasta project based on the experience created with the development of the Akerni PvPP. However, particular attention should be made that such projects do not remain “hostage” to lengthy negotiations with private companies. Something like this would completely “denaturalize” and lose the effectiveness of the envisaged financial support measures itself. The energy obtained today from a project with an incentive at a certain level “x level” is something different from the same that could be taken to a completely different scenario after 2-3 years.

To enable the development of which it is also necessary to proceed as soon as possible with the launch of the power exchange APEX by the TSO/TO. At the same time, in order not to hamper market opening, and even they do not weigh on the consumer bill, it should be complemented, as soon as possible, by the provision of a specific renewable energy fund to support these projects. How this last can be made, and what could be its sources, of course, is a matter that requires its further discussion.

For more, in regard, it can find the interview kept in the same day of the launch of the project, as well as the here article “The energy transition opens to alternative resources in Albania” and the here related video presentation. However, all those mentioned above is made by many phases that makes it essential that any provided consultancy on related topics came thought the specific technical and legal professional to any above stage.

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