Albania (2012)

Degree of reliance on imported energy: 

<p>
Since 1998, Albania has been transformed from an exporter to an importer of electrical power.<br />
<br />
The imports/export balance (primary production) by energy source in 2009 was as follows (all units ktoe):<br />
<br />
Crude oil: 0.00/ 211<br />
Oil products: 1284/ 40.36<br />
Natural gas: 0.00/0.00<br />
Electricity: 114.74/0.00<br />
Biomass: 0.00/0.00<br />
Heat: 0.00/0.00<br />
Solid fuels: 2.98/0.00<br />
<br />
In 2007, the country imported 2.94 billion kWh, amounting to over 70% of the total electricity consumption (3.95 billion kWh) of the country. By 2009, mainly due to improvements in hydro-power, imports of electricity had fallen to just 11% of total consumption.</p>

Main sources of Energy: 

<p>
Total installed electricity capacity (2010, Enerdata) : 1,659 MW<br />
- Hydroelectricity: 86%<br />
- Thermal 14%<br />
- Nuclear: 0%<br />
- Others: 0%<br />
<br />
Share of Total primary energy * 1717 kToe:<br />
Oil: 53.3%<br />
Natural Gas: 0.4%<br />
Hydro: 28.2%<br />
Biofuels and Waste: 13.4%<br />
Geothrmal/ solar/ wind: 0.20%<br />
Coal and Peat: 4.4%<br />
*Share of TPES excludes electricity trade<br />
<br />
Albania utilises both diesel fuel and hydropower to generate electricity, with the latter being more significant and having a greater potential.<br />
&nbsp;<br />
Hydropower therefore provides the majority of the country&rsquo;s domestic power generation. Hydroelectricity is produced by three main power plants located in the north of the country: Koman (600 MW), Fierze (500 MW) and Vau Dejes (250 MW). The 97 MW Vlora oil-fired power plant was commissioned in December 2009.<br />
<br />
Electricity production is almost entirely hydro-electric. In 2009 it accounted for 99.8% of production, with thermal (ex-oil) accounting 0.2%. (source: Enerdata)</p>

Country: 

Albania

Extent of the network: 

<p>
Population access to electricity (1998, Government of Albania):<br />
Rural: ~100%<br />
Urban: ~100%<br />
<br />
The electrification of rural and urban areas in Albania was accelerated in the 1950s and was was essentially completed by 1970.<br />
<br />
Rehabilitation of the transport-distribution networks has led to a significant reduction in energy efficiency. Electricity losses decreased from an average of 50% up to 2001 to around 35% since then. In 2010, the cost of distribution losses reached 28% of the retail price of electricity, down from 45% in 2008.<br />
<br />
The overall transmission network is 2,500 km long, including 120 km of 400 kV lines, 1128 km of 220 kV lines, 35 km of 150 kV lines and 1216 km of 110 kV lines, as of 2009.</p>

Capacity concerns: 

<p>
In 2007, the energy deficit of Albania was 40,828 TJ. The annual electricity deficit was estimated to be 2.5 million kWh in 2011.<br />
<br />
Since nearly all domestic production comes from hydropower plants, the power system is vulnerable to variations in rainfall.&nbsp; Lack of rainfall caused a power crisis characterized by severe load shedding from 2000 to 2002 and a second crisis from late 2006 through 2007. Seasonal variances in river flow volumes also affect the country&rsquo;s electricity generation, with August and September historically being &ldquo;dry&rdquo; months. The recent crisis was exacerbated by a steep increase in the price of imported electricity. Average daily electricity outages amounted to 3.7 hours in 2007, with a daily shortfall of approximately 2.5 GW.<br />
<br />
In addition, there has been, for a period, no new investment in electricity generation in Albania &ndash; debilitating in any country &ndash; let alone in Albania where supply has fallen as demand is rising exponentially. Import capacity is also severely hampered by an ageing international transmission network, which is in need of rehabilitation.<br />
<br />
Albania is also prone to distribution losses, with nearly 9% of the gross energy production of the country lost in transmission.</p>

Potential for Renewable Energy: 

<p>
<u>Hydropower</u><br />
Albania is known for its enormous hydropower potential. So far, the country has exploited only 35 percent of the total potential. The average output from hydropower is 4,169 GWh. Total hydropower reserves are estimated at around 2,000 MW. Potential annual generation may reach up to 10 TWh. New plants in the southern part of Albania (Vjosa and Devoll) have been successful in exploiting nearby rivers. With an average annual rainfall of 1,500 mm, and an average available head of 600 m, the potential for further large hydropower development is substantial.<br />
<br />
Apart from the large and medium sized HPPs, there are 83 small hydropower plants (SHPPs) in Albania (owned by KESH) ranging from 0.05 to 1.2 MW. Their utilisation scheme is often incorporated for electricity generation and irrigation. Most of them are connected to the national grid. In reality, these SHPPs are generally in poor working conditions or inoperative because of outdated technology, a lack of spare parts and poor maintenance.<br />
<br />
<u>Solar energy</u><br />
As regards the potential, the climate of Albania is typically Mediterranean, with hot and dry summers. Albania has good solar potential in the western portion of the country, with a Direct Normal Irradiation (DNI) value of 7.22 kWh/m2/day and a Global Horizontal Irradiation (GHI) value of 5.4 kWh/m2/day.The annual radiation varies, between 3.2 kWh/m&sup2;/day in the north-eastern part of Albania, and 6 kWh/m&sup2;/day in Fier, with a country average of 4 kWh/m&sup2;/day, indicating a promising country-wide potential. The Ministry of Energy plans to install solar panels that will provide about 2,6 PJ of energy by 2015. Domestic solar panels are available on the market, and the UNDP is supporting a national program to install 50,000 m2 of new solar panelling from 2007 to 2012, through a system of grants and fiscal incentives. Solar thermal also holds a good potential in the country, particularly for providing hot water in the services sector.<br />
<br />
<u>Geothermal power</u><br />
There are many thermal springs and wells in Albania, which represent a real potential for geothermal energy. The most important resources explored until now are located in the northern part of the Kruja geothermal area, from Lixha Elbasan in the south to Ishmi north of Tirana. The values of the specific reserves vary between 38.5 and 39.6 GJ/m&sup2;. The southern part of the Kruja area has resources of 20.63 GJ/m&sup2;. In the Ardenica geothermal area, the specific reserves amount to 0.39 GJ/m&sup2;. Geothermal resources in the Peshkopia area, situated in the north-eastern region of the country, have been estimated to be similar to those of the northern half of the Kruja geothermal area.<br />
<br />
<u>Biomass energy</u><br />
Biomass energy could be important in the future, consisting of the following four main resources:<br />
- Urban wastes potential of the main Albanian cities (approx. 406 ktoe of potential, estimated for 2010),<br />
- Energy potential of agricultural residues (approx. 43,004 GJ, assessed in 1995),<br />
- Forestry biomass resources (approx. 460 million GJ, assessed in 1995),<br />
- Energy potential of animal residues (approx. 12,740 GJ, assessed in 1995, with a trend increase in the future).<br />
<br />
<u>Wind energy</u><br />
Studies show that the construction of 20 windmills nearby to 20 pumping stations along the Adriatic coast is feasible. Expected capacity of this implementation is 400 GWh/year of electricity by year 2020, providing roughly 4% of annual electricity demand. Average windspeeds at 10m are 4-6 m/s throughout the country, with an average annual energy density of 150 W/m2. Major plans are in place to develop wind energy in Albania, with a proposed capacity of 1300 MW to be developed in the coming years, including the capacity to export surplus energy from the new wind capacity to Italy via undersea transmission lines.</p>

Potential for Energy Efficiency: 

<p>
According to Albania&rsquo;s Energy Strategy, specifically the Passive Scenario, energy savings are expected to be around 22.5% of the total energy consumption by 2015.<br />
<br />
The target for energy savings&nbsp; of&nbsp; 3% in&nbsp; 2012 and 9% 2018 are adopted.&nbsp; The contribution of energy saving targets by sectors according to the National Energy Efficiency Action Plan 2010-2018 are:<br />
Residential 22%<br />
Services 19%<br />
Industry 25%<br />
Transport 31%<br />
Agriculture&nbsp; 3%<br />
Total Saving Potential 100%<br />
<br />
According to the Active Scenario, a number of measures can be implemented to further improve energy efficiency.<br />
<br />
The residential sector consumes over 60% of electricity production. Most heating systems are powered by electricity. Through insulation of buildings, and the implementation of solar energy use for space heating and hot water, about one third of energy for heating could be saved. Centralised heating systems, for example district heating, have also been proposed in conjunction with an increase in small-scale combined heat and power plants.<br />
<br />
Efficient irrigation schemes are also being investigated, with the potential to reduce agricultural energy use by up to 50%.<br />
<br />
Numerous programs are also being run through the Albania-EU Energy Efficiency Centre to assess the potential for energy savings in Albanian municipalities, build capacity for the creation of energy efficiency legislation, and assess the potential of marginal territories in the coastal regions of the country for the generation of renewable energy.</p>

Ownership: 

<p>
<u>Electricity</u><br />
The Albanian Power Corporation (KESH) is a state-owned monopoly. It was responsible for production, transportation, and distribution of electricity in most of the country.&nbsp; The unbundling of this state-owned electricity utility is almost complete. Privatisation process of the distribution network took place in 2007-2009.<br />
<a href="http://www.kesh.com.al">http://www.kesh.com.al</a><br />
<br />
<u>Liquid fuel market</u><br />
The Albanian Petroleum Corporation (APC) is the main group in the market. APC is a public company which supervises three companies undergoing privatisation. Viz.&nbsp; Albpetrol (production, <a href="http://www.alb-petrol.com/">http://www.alb-petrol.com/</a>), Armo (refinery, <a href="http://armorefinery.com/">http://armorefinery.com/</a>) and Servcom (distribution).<br />
<br />
<u>Coal market</u><br />
The coal industry was reduced from 19 to 5 mines between 1990 and 1997.<br />
In 2005, the capacities of coal mines were, at their minimum, producing around 12,000 tons compared to 2 million tons produced in the 1990s. Ownership of the coal mines was passed on from the Albanian government to private enterprises with long-term contracts.<br />
<br />
<u>Natural Gas</u><br />
The production and transportation of natural gas in Albania is overseen by Albpetrol. As gas consumption remains marginal (9 mcm in 2009), the legal framework on gas matters is limited (with no transmission system operator, and no plan in place for the further development of gas infrastructure). In June 2008, the law &#39;On the Natural Gas Sector&#39; was passed to begin regulation of the natural gas market in Albania.</p>

Structure / extent of competition: 

<p>
The sector is partially privatised. The state retains majority shareholding in the generation sector. Small Power Producers (SPP) are fully privatised which compose 1.5% of the generation market.<br />
<br />
The process of restructuring the Albanian Power Corporation (KESH), which involves the transformation of KESH from a vertically-integrated company into an unbundled one with three independent entities, is almost complete.<br />
<br />
The unbundling of the Transmission System Operator was completed in June 2006, and the unbundling of the Distribution System Operator finalized in March 11, 2009 when the Albania&#39;s Minister of Economy, Trade, and Energy, Genc Ruli and CEZ representative, signed a $102 million strategic partnership agreement, privatizing 76% of the shares of Albania&#39;s energy distributor. The generation division (KESH Gen) remains under public ownership as a Wholesale Public Supplier.</p>

Existence of an energy framework and programmes to promote sustainable energy: 

<p>
The updated National Energy Strategy (NES) 2006-2020 aims to develop a safe energy sector to meet the energy requirements of consumers with minimal cost, relying on market principles, taking into consideration certainty of supply, protection of the environment and improvement of the wellbeing of the population.&nbsp;<br />
<br />
Among the most important objectives of this Strategy are:<br />
<br />
- Boosting security of supply through the diversification of energy sources and construction of new generation plants and inter-connection lines.<br />
<br />
- Incentivising the use of renewable energy sources (solar, wind, biomass) in order to maximise the use of local resources.<br />
<br />
On April 27, 2005 the Albanian Parliament passed an Energy Efficiency Law that:<br />
<br />
&middot;&nbsp;Creates the legal framework required for the promotion and improvement of the efficient use of energy, throughout the whole of its energy cycle.<br />
&middot;&nbsp;Establishes the economical use of energy sources, the establishment of more reliable energy supply conditions, as well as the minimization of environmental impact.<br />
&middot;&nbsp;Establishes an Energy Efficiency Fund and Financing of the Fund.<br />
<br />
Directives set in motion by the EU in recent years have set a 20% target for Renewable Energy Sources (RES) across the EU, with specific country targets based on the current and projected levels of uptake. Albania has set a target of 36% of energy production from RES by 2020.</p>

Current energy debates or legislation: 

<p>
A new law on the reform of the power sector, with particular reference to enhancing economic effectiveness and the quality of service in the sphere of generation, transmission and distribution of electricity is under preparation for 2011, based on the EU Third Energy Package. Amendments made to this law in 2009 also require all producers of electricity over 50 MW to utilise renewable resources, compared to the previous 2003 version of the law, which only required producers over 100 MW to utilise renewables.</p>

Major energy studies: 

<p>
In&nbsp;2007,&nbsp;Albania&nbsp;received EUR&nbsp;9&nbsp;million&nbsp;(in&nbsp;the form&nbsp;of&nbsp;a&nbsp;bank&nbsp;guarantee for&nbsp;investment&nbsp;loans)&nbsp;and technical&nbsp;assistance&nbsp;from Ireditanstaltfur Wiederaufbau (KfW, Germany)&nbsp;for&nbsp;a programme entitled &ldquo;Promotion&nbsp;of&nbsp;Renewable Energy&nbsp;and&nbsp;Energy Efficiency&rdquo;,&nbsp;the&nbsp;aim&nbsp;of which&nbsp;is&nbsp;to&nbsp;prepare feasibility&nbsp;studies&nbsp;for energy&nbsp;efficiency&nbsp;projects at&nbsp;end-users&nbsp;and&nbsp;small hydropower&nbsp;plants.<br />
<a href="http://www.wbif.eu/KfW+Entwicklungsbank/">http://www.wbif.eu/KfW+Entwick... />
<br />
Another&nbsp;project,&nbsp;financed&nbsp;by&nbsp;UNDP&nbsp;and&nbsp;the&nbsp;Global&nbsp;Environment&nbsp;Facility&nbsp;(GEF),&nbsp;on the installation&nbsp;of&nbsp;50&nbsp;thousand&nbsp;m2&nbsp;solar&nbsp;panels for&nbsp;hot&nbsp;water&nbsp;using, for&nbsp;5&nbsp;years&nbsp;in&nbsp;the&nbsp;future,&nbsp;is&nbsp;in&nbsp;the&nbsp;phase&nbsp;of&nbsp;beginning.</p>

Role of government: 

<p>
<i><b>The Ministry of Economy, Trade and Energy</b></i> (METE) is in charge of the whole energy sector, and also for the preparation of its energy policy in line with the EU Energy Directive.<br />
<a href="http://www.mete.gov.al/mat.php?idm=496&amp;l=e">http://www.mete.gov.al/m... />
<br />
<i><b>The Ministry of Environment </b></i>(MOE, <a href="http://www.moe.gov.al/">http://www.moe.gov.al/</a>) is responsible for the implementation of the state policy in the field of nature protection, rational use of natural resources, and ecological, nuclear, and radioactive safety.<br />
<br />
<i><b>The Ministry of Industry and Energy</b></i> (MIE) is in charge of the energy sector. It will continue to be the responsible institution for making medium and long-term energy policy decisions, as well as the preparation of the whole Albanian Energy System and National Strategy of Energy.<br />
<br />
<i><b>The National Oil Agency </b></i>was created in 1993 and regulates the oil and gas industries. It was established within the framework of the Synergy Program.<br />
<br />
<i><b>The Electricity Regulatory Authority</b></i> (ERE) ERE was set up in September 1999 in charge of the regulation of tariffs. Five commissioners, appointed by the government, form the governing body of the agency. The ERE is responsible for approval of tariff and price, licensing of companies in electrical energy sector and monitoring of their activity. It is financed&nbsp; from the licensing fees.</p>

Government agencies in sustainable energy: 

<p>
<i><b>The EU-Energy Efficiency Centre</b></i> (EEC) is collaborating with other countries to promote and improve the energy efficiency of the Albanian economy, promote the use of renewable energy resources, and to protect the environment.<br />
<a href="http://www.eec.org.al/">http://www.eec.org.al/</a><br />
<br />
<i><b>The National Agency of Energy</b></i> (NAE), established in 1998, prepares and defines the action plans for the implementation of the National Strategy of Energy together with General Directorates.<br />
<br />
<i><b>The Energy Study Application Institute</b></i>, established in 2003, advises on specific energy issues, energy auditing and energy efficiency.<br />
<br />
<i><b>The Institute of Study of the Hydro Techniques Units</b></i> which is an institute functioning as subordinated of the Ministry of Territory and Tourism Regulatory.&nbsp; This institute has undertaken studies regarding the possibilities of exploitation and construction of new hydro energy capacities. In November 2006, this Institute merged into the National Resource Energy as one of its departments with the same tasks.<br />
<br />
<i><b>The Albanian Energy Association</b></i> (AEA, <a href="http://aea-al.org/">http://aea-al.org/</a>) was established in 2011, and seeks to act as a facilitating agency for the uptake of renewable energies throughout the Albanian power sector, liaising between generators, project developers, fuel and power suppliers, equipment producers and service providers. The AEA&rsquo;s main objectives are to secure the best legislative and regulatory framework for expanding sustainable and renewable energy production in Albania, through policy development and co-operation with government departments, regulators and other actors.<br />
<br />
<i><b>Energy Study Application Institute </b></i>advises on specific energy issues, energy auditing and energy efficiency.&nbsp;</p>

Energy planning procedures: 

<p>
According to EU Directive 2003/54, and Albania&#39;s obligations under the Energy Community Treaty of 2005, an objective of the National Energy Strategy is to support the integration of the Albanian energy sector with the Southeast Europe Regional Electricity Market. This will support the development of the Albanian energy market. The construction of a number of 400 kV OVHL transmission lines is underway, pursuant to the improvement of the regional electricity market, including lines connecting Albania, Montenegro, the former Yugoslav Republic of Macedonia and Italy.</p>

Energy regulator Date of creation: 

<p>
The Electricity Regulatory Commission (ERE) is the regulatory authority in charge of the tariff regulation (approval of tariffs and price, licensing of companies in the electrical energy sector, and monitoring of their activity). The Commission was created in September 1999.</p>

Degree of independence: 

<p>
The Government appoints all five commissioners of the Electricity Regulatory Commission, based on Law No. 9072, date 22.05.2003. The chairman is appointed for five years, 2 commissioners for 4 years and the other 2 for 3 years. The ERE is exclusively financed through fees and its board members are appointed by the Parliament without Government involvement.</p>

Regulatory framework for sustainable energy: 

<p>
The National Energy Strategy provides limited support for sustainable energy in the form of promotion of minimal environmental impact energy sources, but there is no direct regulatory framework, nor policy, for renewable energy.</p>

Regulatory roles: 

<p>
The key tasks and duties of ERE are:</p>
<ul>
<li>
Setting the rules and requirements for granting, modifying and revoking licenses to companies for generation, transmission, distribution, supply, export and import of electricity power.</li>
<li>
Setting, reviewing and regulating of wholesale and retail tariffs and the terms and conditions of service of electric energy proposed by a licensee or reviewing them according to circumstances.</li>
<li>
Assuring that Investment Programs and Power Purchasing Agreements are consistent with least cost planning principles.</li>
<li>
Protecting the energy consumers from abusive tariffs.</li>
<li>
Promoting electric energy efficiency and improving the quality of service in the electric power sector.</li>
<li>
Makes sure that licensees comply with the terms established in their licenses as well as any regulation approved by the ERE.</li>
<li>
Approves the Grid Operation Code and Distribution Operation Code and other codes that regulate the licensees&rsquo; activities and their relationship with customers.</li>
</ul>

Role of government department in energy regulation: 

<p>
The National Oil Agency regulates the oil and gas industries, and is established within the framework of the Synergy Program. Tariffs for generation, transmission, distribution, and wholesale/retail public supply, are all set by the ERE.</p>

Regulatory barriers: 

<p>
Primarily, Albania lacks a cohesive national renewable energy policy. The National Energy Strategy promotes minimising the environmental impact of energy generation, but does not provide guarantees for the uptake of renewable energy. Also, the current lack of a regulatory framework for renewable energy hampers uptake of the technologies available, although the legislative process of forming a framework for renewable energies is underway, with qualification procedures and rules for electricity generation from renewable energy having already been drafted.</p>

References: 

IEA Energy Statistics (2011). Available at:&nbsp;<a href="http://www.iea.org/countries/non-membercountries/albania/">http://www.ie... [Accessed 15th September 2013]<br />
<br />
Austrian Energy Agency Country Profile: Albania. Available at: <a href="http://www.enercee.net/countries/country-selection/albania.html">http://... [Accessed 15th September 2013]<br />
<br />
UN (1997) Social Aspects of Sustainable Development in Albania. Available at: <a href="http://www.un.org/esa/agenda21/natlinfo/countr/albania/social.htm">http:... [Accessed 15th September 2013]<br />
<br />
EBRD Renewable Energy Initiative (2007) Albania Country Profile. Available at: <a href="http://ws2-23.myloadspring.com/sites/renew/countries/Albania/profile.asp... [Accessed 15th September 2013]<br />
<br />
Gener2 Ltd. (2011) On the Construction and Management of Qarrishta HPP-s. Available at: <a href="http://www.iccim.ir/fa/images/stories/DATA/International/Announcement/90... [Accessed 15th September 2013]<br />
<br />
Albania-EU Energy Efficiency Centre (c2012) List of Projects the Albania-EU Energy Efficiency Centre has Implemented alone or in Partnership with other Organizations. Available at: <a href="http://www.eec.org.al/Projects.html">http://www.eec.org.al/Projects.html... [Accessed 15th September 2013]<br />
<br />
Government of Albania (2008) Model for Approval of Electricity Market. Available at:v <a href="http://www.kesh.com.al/skedare/vkm_nr.338_date_19.03.2008.pdf">http://ww... [Accessed 15th September 2013] [Albania version]<br />
<br />
Kalo Associates (2011) Albania and Kosovo Legal Newsletter, Spring 2011. Available at: <a href="http://www.kalo-attorneys.com/upload/documents/news_archive/NEWSLETTER%2... [Accessed 15th September 2013]<br />
<br />
Albanian Energy Association website. <a href="http://aea-al.org/">http://aea-al.org/</a> [Accessed 15th September 2013]<br />
<br />
Energy Community Secretariat (c2010) Electricity Investments. Available at: <a href="http://www.energy-community.org/portal/page/portal/ENC_HOME/AREAS_OF_WOR... [Accessed 15th September 2013]<br />
<br />
Enti Rregullator i Energjise website. <a href="http://www.ere.gov.al/">http://www.ere.gov.al/</a> [Accessed 15th September 2013]<br />
<br />
ARGES. Renewable Energy Country Profile Version 0.6b. Available at: <a href="http://ws2-23.myloadspring.com/sites/renew/Shared%20Documents/Country%20... [Accessed 15th September 2013]<br />
<br />
Albania Embassy in the UK (2010) Investing in Albania Report<br />
<br />
EBRD Renewable Development Initiative Website. Albania Country Profile. Available at: <a href="http://ebrdrenewables.com/sites/renew/countries/Albania/profile.aspx">ht... [Accessed 15th September 2013]<br />