Latest Developments in Albania Energy Market

Part of Report: Third Energy Package  and Organise Market in Albania

Published: Lorenc Gordani | Thursday, August 06, 2015

Albania is at a crucial point of development of its energy sector, which has been seriously neglected over the last years. The settlement at the end of 2014 of the investment dispute with CEZ and the selection of Trans Adriatic Pipeline (TAP) as the pipeline opening the Southern Corridor are two important milestones, which could and should turn into real game-changers. The potential arrival of gas and the abundance of renewable energy make Albania an interesting destination in terms of energy.

In order to take advantage of that, the sector needs to be completely rebooted. This, in turn, requires designing a compliant legal framework essentially from scratch, improving the financial situation of the state-owned companies, curbing the unsustainably high share of unpaid electricity and establishing truly independent and proactive enforcement authorities.

Referring to the most important millstone for each sector can summary:

-Electricity June 2015: The new Power Sector Law compliant with the Third Energy Package enters into force.

-Electricity May 2015: Under the umbrella CAO SEE, daily auctions on Albanian-Montenegro border started successfully on 30th of April for delivery day 1st of May 2015.

-Renewable Energy March 2015: Albania submitted the Secretariat the Progress Report on the Renewable Energy Directive 2009/28/EC.

-Gas December 2014: The Ministry of Energy and Industry's Working Group developed draft Gas Law, based on the Secretariat’s initial version.

-Energy Efficiency December 2014: Secretariat submitted a draft law on energy efficiency of buildings to the Albanian Ministry. If adopted, the law would transpose the Buildings Directive.

-Competition October 2014: The Albanian Competition Authority (ACA) adopted a Recommendation for increasing competition in the market for procurement of electricity to cover losses in the distribution network

Attracting of the investment is the rationale behind many of the here above measures and actions taken. However, the private investment has remained far below the levels hoped. Nerveless in October 2013, “The Ministerial Council adopted the list of Projects of Energy Community interest (PECls) and called on the Contracting Parties to take necessary actions to facilitate their timely and effective implementation.

An Implementation Report in 2014 concluded that the implementation needs a much stronger and better-coordinated efforts from all parties involved: public companies and governments, IFIs, private investors, the European Commission, as well as the Secretariat. In the European Union a new financial instrument, Connecting Europe Facility, was developed to support the implementation of Projects of Common Interest.

In the Energy Community as a regional context of reference for Albania, there is limited specific funding available to support these projects at a cost of capital that could be borne by the energy consumers.  In the current moment in the WBs countries are bracing themselves for the next summit to be held in Vienna this August, seeing as a crucial, in order to encourage foreign private investment in power generation, cross-border interconnectors, and more significant use of renewable energy and efficiency measure, etc.

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