Albania: Power sector and climate changes

Published on 20. March 2015., SEE Energy News

99 percent of electricity production in Albania relies on hydropower. Combined gas power plant of 100 MW, located in Vlora, was built, but it is not yet in commercial use because of technical problems.

The largest part of the existing plant was built in the seventies. Their maintenance and renewal represents a major burden for the country’s finances. EBRD and other financial institutions are currently investing 70 MEUR in the reconstruction of HPP Komani.

Geographic concentration, lack of diversified energy sources and distrust in the climate change, destroy energy security of the state. The biggest challenge for the country is how to diversify the energy mix. Albania is forced to import electricity, worth 90 MEUR per year. Last year, Albania has borrowed 118 MEUR, to help the energy sector and pay for electricity imports from other Balkan countries.

Thanks to its geographical position, Albania has a hot and dry summers and mild winters. This creates significant opportunities for the use of solar energy. By 2012^th, the installed capacity of solar energy was increased by 25 percent.

At this point, Albania does not have any wind farm, but expects new investments in wind farm with capacity of 2,000 MW. Presumably, all produced electricity will be exported to Italy, on the basis of long-term contracts.

Legal regulations in this area provides a feed-in tariffs for small hydro power plants with capacity up to 15 MW, as well as tax incentives in the construction phase, for all renewable sources.

In terms of energy efficiency, some measures were taken in order to achieve target by 2020^th, which is nine percent. The financial benefits of energy savings could adjust the amount of 90 MEUR spent on electricity imports. An additional 26 MEUR could be saved by reducing network losses.

The report concludes that the Government of Albania has taken steps to adopt a legal framework in the sector of renewable energy and energy efficiency. It will take some time to establish a supply chain and to achieve the expected structural and operational impacts.

When it comes to directive on industrial emissions, if Vlora plant becomes operational, financial costs of pollution are estimated at one million EUR per year.