Albania has one of the highest percentages of electricity produced
from renewable energy sources (RES) in its electricity mix –
more than 95 % of electricity generated in Albania comes from
hydropower generation. In spite of that (or maybe because of that),
Albania has not had a comprehensive policy on the support of RES in
place to date.
Albania had adopted legislation for the
promotion of RES facilities in 2013. Under this legislation, the
main promotion measure consisted of the implementation of a feed-in
tariff system for electricity generated from RES projects with an
installed capacity not exceeding 15 MW. Such facilities, in theory,
also have right to priority access to the grid. However, this
legislation was not applied in practice due to absence of secondary
legislation. The only exception relates to small hydropower
facilities. Thus, practically, there is no support scheme in place
in Albania for other RES sources, such as solar or wind power
Drafting of the new
However, since Albania has a candidacy status for accession to the
EU, it is obliged to harmonise its laws with EU laws. The Albanian
government has therefore drafted a new Act on Promotion of the Use
of Energy from Renewable Sources ("Draft
Act"), which is partially aligned with EU RES
Directive No 2009/28/EC. The Draft Act was recently adopted by the
Albanian parliament on 2 February 2017.
Proposed support scheme
Under the Draft Act, the main promotional measure is a specific
form of a feed-in tariff called contract for difference
("CfD"). CfD can be characterised as a
sliding feed-in premium system, meaning that renewable energy
producers will sell the electricity in the market and receive the
variable difference between the auction price and the electricity
market price (reference price) as a support measure.
The auction price will be determined within the
scope of a competitive auction, in line with the
Guidelines on State Aid for Environmental Protection
and Energy 2014-2020. The auction will be open to all
producers of electricity from RES, on the basis of clear,
transparent and non-discriminatory criteria. The auction mechanism
will not be used in certain cases, for instance if a competitive
auction is expected to result in higher support levels. Under the
Draft Act, the CfD shall be concluded for a maximum period of 15
years. Notably, the CfD will not apply to small RES facilities, ie
projects with an installed electrical energy capacity up to 2MW
(3MW in case of wind energy) – these projects will be
supported by separate measures.
Interestingly, if prices in the electricity
market go up and are higher than the auction price, the RES
producers will be obliged to pay such difference. Another element
to the support is that it is limited by the total sum of costs of
the facility, to be calculated according to the applicable
The Draft Act provides for further support
guarantee of transmission and distribution of electricity from
priority access to the transmission and distribution grids;
producers receiving a guarantee of origin for their produced
However, the RES producers will not receive
support in the form of an assumption of imbalances responsibility,
as they will be responsible for their own imbalances and will be
required to conclude either a contract with the transmission system
operator or to transfer the balancing responsibility to another
responsible balancing party, thus becoming a member of a balancing
The applicable target for RES share in gross final consumption of
energy in Albania for year 2020 is 38 %. Currently, this share
is at the level of approximately 31 %.
Given the warm climate and fluctuation of
electricity generation from hydropower in the event of low water
levels, Albania has great potential for the construction and
operation of new solar or wind power plants. The new support scheme
under the Draft Act can be a valuable tool for such development.
Also, it may serve as a tool for the construction of modern new
However, the actual implementation of the Draft
Act will highly depend on the factual willingness of the Albanian
government to promote RES. Specific rules on how the auction
process will be organised are still missing, but are essential in
order to evaluate the investment opportunities on a final basis. It
therefore remains to be seen whether the promotion scheme will help
to create a suitable investment environment for RES projects in
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