Energy

Albania ranked very low in the indicator of ease of obtaining an electricity connection for the new businesses. According to the World Bank, in Albania it takes six procedures and 177 days for obtaining electricity connection (almost six months). Compared to previous year, this indicator has been deteriorating because the cost of connection has increased substantially. Last year(2014), the payment for obtaining new electricity connection was equal to 474 per cent of GDP per capita while this year(2015), the cost has been increased to 492 per cent.

Water resources are a national asset for Albania. About 98 percent of Albania’s energy is generated from hydropower. The river Drin generates about 90% of the electricity used by Albania’s local industry and households. High dependence on hydropower brings challenges. Currently, Albania relies almost entirely on hydropower generation to meet its rising electricity demand (comprising 98 percent of the total energy production), making it quite vulnerable to climate changes. Government should diversify energy system by fostering the development of renewable energy generation asset (such as solar, small hydropower plants, wind and biomass) and thermal power plants through new investments. Climate   change   will   likely   have   an adverse effect on hydropower production:   by   2050,   annual   average electricity output from Albania’s large hydropower   plants   could   reduce   by about 15% and from small hydropower plants by around 20%. In February 2015, the Government prepared a Power Sector Financial Recovery Plan, the   implementation   of which is supported by the World Bank.

During the past years there have been important investments in energy sector by local and foreign investors through concession contracts for the construction and operation of hydroelectric power plants. The main challenges for such investments is to incorporate the produced energy within the national system through a sustainable trade model that optimizes private and public interests. The strengthened legislative framework and technical know-how based on international best practice will attract investments in the hydropower and wind energy sector as well as assisting Albania meet its obligations under the Energy Community Treaty for the development of renewable energy.

The main challenge for the country is to become self-sufficient, be able to fulfill all of its energy needs, by improving the transmission and distribution network and decrease the losses in the distribution network. Eventually, the mid-term goal is to turn Albania into an important player in the regional energy market by exporting excess capacities.

 

Investment Council is supported by the Ministry of Economic Development, Tourism, Trade and Entrepreneurship and EBRD – Italian Technical Cooperation Fund.

EBRD