Energy 2019 | Albania

Overview of the current energy mix, and the place in the market of different energy sources

Power

The generation of power in Albania is performed by entities (either private or public) that have been licensed by the Energy Regulatory Authority (ERE). KESH Sh.a. (state-owned) is the main producing entity, with an installed capacity of 1,448 MW. Currently, KESH Sh.a. operates three hydro power plants (HPPs), Fierza HPP, Komani HPP and Vau i Dejës HPP, together with the Vlora thermal power plant (the latter has an installed power capacity of 98 MW but has never been put into operation).

A considerable number of private entities have been licensed by ERE upon stipulation of concession agreements for the construction and operation of HPPs with the Albanian government. According to the Albanian government, currently there are 540 HPPs under concession agreements, out of which 147 (with installed capacity of 833 MW) have started their production, whereas 109 HPPs (with an installed capacity of 557 MW) are in the construction phase, and 284 have not yet commenced construction.

According to ERE, for the year 2017, the power production for public consumption was fully generated by HPPs, in a net production which reached the amount of 4,525,173 MWh, despite one of the main objectives of the National Action Plan for Renewable Energy Sources 2015-2020 being diversification into renewables, to ensure security of production (and supply).

Oil and gas

Similar to the power sector, operations in the oil and gas sector are subject to government agreements, by means of which the contractor is entitled to prospect and produce petroleum in the relevant contract area.

According to the National Agency of Natural Resources (AKBN), oil production in 2016 was 1,055,725.5 tons, a slight decrease on the year 2015, mainly due to the reduction in oil prices. Albpetrol Sh.a. is the state-owned company which is entitled to produce and trade oil and/or gas. Private companies also operate in the sector, with Bankers Petroleum Albania being the largest (having approx. 87.38% of the total annual production of crude oil for the year 2016).

Gas production, on the other hand, is entirely produced as associated gas and used for technological processes in the oil industry. Albania does not possess any natural gas production capacity yet. However, it is part of the corridor involved in the Trans-Adriatic-Pipeline TAP project and will benefit from the TAP project.

To this end, the Albanian parliament ratified the host government agreement entered into with the project investor for the development of the TAP project in 2013. TAP is a large-scale project in the sector, which is expected to contribute to the establishment of the required gas infrastructure.

Changes in the energy situation in the last 12 months which are likely to have an impact on future direction or policy

As noted above, Albania secures its power exclusively from HPPs (in addition to the net imported power, which varies between 30% to 60% of the total consumption needs). Thus, the country is exposed to a considerable degree to the risk of supply insecurity, due to changes of the hydrological conditions. The Albanian government has acknowledged that regardless of the record year of 2016 (in which Albania was a net exporter of energy), the need for diversification of energy sources is urgent. By way of example, in the year 2017 the production of energy was lower than the multi-annual average amount (4,682 GWh).

Therefore, as also outlined in the National Action Plan on Renewable Energy 2018-2020, Albania will continue to support the development of renewable energy sources, including diversification, with a...