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Albanian Hydro by Dr. Lorenc Gordani


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Albanian Hydro by Dr. Lorenc Gordani

  1. 1. ALBANIAN HYDRO CAPACITY AND MARKET PERSPECTIVES WITHIN EU POLICIES OF 2020 AND 2030 ALBANIAN RENEWABLE ENERGY ASSOCIATION - AREA Key Note Speech kept at HydroTech Albania 2016 DR LORENC GORDANI Director of Legal Office AREA and Professor at Polis University
  2. 2. Albanian Hydro Capacity and Market Perspectives within EU Policies of 2020 and 2030 Key Note Speech THE MAIN BULLET POINTS COVER: I. Regulation on the Promotion of Res in Albania II. State of Implementation of Renewable Resources III. Hydropower Deployment Scenarios in Albania IV. Financial Effort Scenarios Run by Type of Technology V. Revenues allocation form hydro-energy sector in State Budget VI. Forecast on the Res-E Sector of Renewable Resource
  3. 3. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 1 INTRODUCTION ON ALBANIAN RENEWABLE ENERGY ASSOCIATION - AREA AREA is the main professional non-profit association, dedicate to the development of the renewable energy sector in Albania. Our association brings together the producers of energy from renewable sources build by concession up to 15 MW in Albania. The Area members represent more than 200 MW installed capacities with more than 400 Million Euro investments and the numbers is in grow cause of new memberships. AREA mission aim to promote and develop the renewable energy sector in Albania. The here purpose would help to reduce the pressure on the finite energy sources, providing a basis for meeting future energy demand, stabilizing of energy prices, and combating climate change as well as increasing the energy security. In the here above aim our focus look forward the integrate of Albanian energy sector in the regional and European market of energy. For more visit the Official Website of ACERC | Shoqata Shqiptare e Energjisë se Rinovueshme – AREA Group in LinkedIn CONTACT INFORMATION ALBANIAN RENEWABLE ENERGY ASSOCIATION - AREA POST ADDRESS | PJETER BOGDANI, P. TEUTA KATI 2, AP. 11, TIRANA (TR) ALBANIA MOB | +355 699532443 PHONE | +355 42245199 E-MAIL | INFO@ALBANIAENERGY.ORG WEB | WWW.AREA-AL.ORG
  4. 4. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 2 ALBANIAN HYDRO CAPACITY AND MARKET PERSPECTIVES WITHIN EU POLICIES OF 2020 AND 2030 KEY NOTE SPEECH KEPT 2ND HYDROTECH ALBANIA CONFERENCE AND EXHIBITION ON 10-11 FEBRUARY 2016 IN TIRANA BUSINESS PARK “AREA mission aim to promote and develop the renewable energy sector in Albania”
  5. 5. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 3 Abstract The purpose to get an overview on the development of today renewable energy sector makes inevitable the in-depth analyses and projections of the hydropower resources. In the last period, the strategic development of sector is rising up a complex interdisciplinary debate. This time it corresponds to the upcoming choices – that have to keep in eyes the paradigm of the climate goal and the reaching of the renewables national target – within the long-time effect of the strategic development of the Albanian energy market in the WBs. In summary the here paper is part of overall research study that search to offer an general outlook of the regulatory framework and the contemplation of the national projections target regard the use of renewable resources in the energy production (RES-E), heating and cooling (RES-R&R) and transportation (RES-T) in Albania. The all following up with presentation of the scenarios of the new installed capacity of electricity from water sources, solar, wind, and biomass within 2020, 2025 and 2030. In regard, followed with quantitative estimation, using a Levelised Cost of Electricity - LCOE per unit of energy produced, of the public budget as well as the economic burdens for each end-user consumer. An analyses completed with a summary of the measures foreseen, to be introduced, as a part also of the process of EU integration, in the pursue of the specific objectives putted by the progress of the Action Plan on RES, in the comply with the efforts of the Directive 2009/28/EU to achieve the objectives of the national consumption by 38% within 2020. The here paper is part of a wide research work, overtake within the objectives of working programme of the AREA with purpose to give a qualified contribute to the market liberalisation and regional integration as well as the build-up of sustainable model of the energy market. It is becoming part of presentation in many national and international seminars, workshops and conferences. In regard, all the interest parties to the directly involvement with analyses or any other form of support and partnership, are welcome to contact.
  6. 6. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 4 Introduction on the promotion of the investments in the Energy Markets The offering of an overview about the future of Albanian energy market and investments capacity in HPP makes inevitable the analyses on the risks and the perspectives of the market of reference. Then, guided by an economic approach, it is necessary to remind that generally the prediction on the energy sector stand among the dilemmas about the costs of own production and the imports of electricity. In more, Albania depend on completely sui generis causes, such as that of the strong volatility of the influx of annual rainfalls. An "uncertainty” that have to enter to a certain target goals of Res set by international commitments such as those related to the EU Policies of 2020 and 2030. I. Regulation on the Promotion of Renewable Resources in Albania The Secretariat of the Energy Community (ECS) following the Decision 2012/04/MC-EnC started the transposition of Directive 2009/28/EU at the national level for all the Contracting Parties (CP). Directive imposed all members the required targets on the implementation of renewable resources to be reached by 2020. In this regard, Albania has been committed to a binding target of 38% energy from renewable sources in gross final energy consumption (GFEC) within 2020, starting by 29.8% of 2009.
  7. 7. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 5 The Directive 2009/28/UE was adopted in May 2013 through the enacted of the Law 138/2013 on Renewable Energy. The focus of the intervention stands at the adopted mechanism of promotional tariffs (called feed in tariff [FIT]). The new regulation, up to now has consider only the support schemes (feed-in) for new and existing small hydropower plants with a capacity up to 15 MW. However, not only the missing of support schemes for the others Res other than hydro, but a lot of problems raised regard the determination of the tariff methodology, has made evident the problems post by the partially transposition of the RED. II. State of Implementation of Renewable Resources Notwithstanding the partial implementation of Law 138/2013, a high interest for the investments in energy sector has been focused in small hydro plants. Nerveless, the upgrade overtake in the sector of hydropower production there is still a lot of potential to be deployment in the way to come at a satisfactory results regard the objectives of sustainable development in charge of RES, as referred by the table built on the Instat data, which takes as starting point for the national target the 2009 with a share of renewable energy amounted to 29.8%, where the GFEC was 2,104 ktoe.
  8. 8. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 6 Table 1 - State of Implementation of Renewable Resources (RES) ktoe 2009 2010 2011 2012 2013 2014 Res-R&R 219.7 211.7 219.7 218.3 213.4 205.3 Res-E 408.0 413.6 337.6 406.3 598.2 390.5 Res-T - - - - 8.1 10.5 Res Total 627.6 625.3 557.3 624.6 819.7 606.3 GFEC 2,103.9 2,105.5 2,161.8 2,014.2 2,345.9 2,339.8 Res % 29.8% 29.7% 25.8% 31.0% 34.9% 25.9% Source: INSTAT A calculation of the national objective that over the years 2009-2014 has been rather unstable, passing from the minimum values of 25.8% (2011) to the maximum values 34.9% of 2013 with an average of Res 29,5%. These figures, apparently contradictory for who do not have familiarity with the Albanian market, is due to the fact of the structure of the market mainly based on hydroelectricity, whose the variable production transfer all its impact to the volatility of the national renewables targets of energy. However, there is evident that despite the progress in increasing of the newly added generation capacities of the last years, the data shows a remained non-complaints uptake of energy from renewable sources. III. Hydropower Deployment Scenarios in Albania Despite the drawbacks verified among the end of years 2013 and the 2014, the adoption of the Law on Energy Sector in April 2015, it has been consider from many to be a turning point for the renewable sector with the adoption of
  9. 9. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 7 measures necessary (through NREAP). Indeed, a National Renewable Energy Action Plan (NREAP) required for the setting out of the necessary measures to reach the target of 38%, presented to the Energy Community Secretariat (ECS) since December 2014, has been adopted only recently, at the end of the January 2016. Then, now for the period 2012-2030, it can refer not only to the most recent studies but also to the now adopted NREAP projections. However, here in this brief presentation it is chosen in particular the Support for Low-Emission Development in South East Europe (SLED). The SLED assessments based for modelling up to period 2020 to the NREAP and for the rest a study of USAID on Assessment of Energy Developments in Albania 2015. A study that present three scenarios called scenery of Reference - REF, Currently Planned Policies - CPP and Ambitious Scenario - AMB. Table 2 - Prevision on New RES-E by Ambitious Scenario - AMB (MW) AMB Scenario 2015 2016 2017 2018 2019 2020 2025 2030 Hydro* 1 801 1 894 1 941 1 991 2 264 2 324 3 179 3 869 Pumped storage 0 0 0 0 0 0 0 0 Geothermal 0 0 0 0 0 0 0 0 Solar 2 5 10 16 24 32 120 220 Wind 0 0 4 10 20 30 160 310 Biomass 5 5 5 5 5 5 80 80 Source: Sled In all the three scenarios, hydroelectric production is dominant: growing quite significantly (more than double of the 2015 level) in the AMB scenario of 2030. Apart of massive hydro capacity expansion, the interest for the other renewable resources assumes only a moderate increase. It remains below 20% of the total of Res even in the most ambitious scenario. Instead, in the two other scenarios reach respectively the 50%, and 25% of ambitious scenario.
  10. 10. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 8 IV. Financial Effort Scenarios Run by Type of Technology The explanation of above result can be find in only one simple key data that of the economical fundaments. Indeed the final costs of each technology used by EEMM model runs by Sled, based on Levelised Cost of Electricity (LCOE), per unit of energy give the following benchmark:  55 €/MWh for energy production from hydro;  90 €/MWh for energy production from wind;  105 €/MWh for energy production from solar PV;  110 €/MWh for energy production from biomass. Fig 1 - Annual budget for the support of RES (m€) Source: Sled In this regard, as seen in the above picture, the FIT effort of support level for new hydro capacities will be minimal to cover hydro technology. Instead, for the other RES technologies, the effort of support level FIT rise significantly up to the double of the reference price of import. In more, the peak of the support budget will be around 2020 for the REF and CPP scenarios, after the financing becomes less costly in overall terms. A similar trend of the overall RES-E budget applies to the fees that each end user has to pay to their consumption.
  11. 11. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 9 V. Revenues allocation form the hydro-energy sector in the State Budget The Albanian Government receives its share of the value created from the extractive industry through: taxation of activities, tariffs and fees and dividends or profit from direct domestic investments in hydropower sector. In specific the main revenue streams contributed by the hydropower sector are regroup in three categories: I. Income from concessions, investments and privatizations In regard, the more relevant of the first category are the Concession fee paid to the contracting authority as a percentage of the value of annual power output generated from the HPP. Other incomes came from the penalties for non- compliance with concession and PPP agreement as well as income from investments and the eventually privatization of state-owned companies. II. Fiscal revenue regime Tax on profit: Up to December 2013, charged at 10% on net profit. Starting from 1 January 2014 profit tax rate increased to 15% of the company’s net profit. Value added tax (VAT) applies at 20% of the power supply and services related to power transmission and distribution. Tax on infrastructure impact: according to law on infrastructure impact is applied at the rate from 2 to 4 percent of the value of the new investment for constructions in Tirana and from 1 to 3 percent for constructions in other districts. Taxes on occupation of public spaces: according to law the municipal council decides on the level of fee for the use of public space for business purposes.
  12. 12. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 10 Other taxes are that of local government units in accordance with law on the local tax system. In more the social insurance and personal income tax III. Other tariffs derived from services and regulation of the sector Tariffs for licensing and regulation of the power sector in the amount of Lek 10,000. Penalties for non-compliance with ERE rules and guidelines range from 0.1% to 3% of annual income. Service tariffs for technical evaluation: AKBN collects fees for the technical evaluation services on the study fees for the design, supervision and acceptance of construction works. Tariffs for ATRAKO’s services: until February of 2012, a fee ranging from 1% to 2% of the investment value. VI. Forecast on the hydropower of the Res-E sector As reported, notwithstanding the adequate support mechanisms for energy from renewable sources like wind, biomass, solar PV as well as for energy from renewable sources used for heating and cooling and transport are foreseen to be adopted by ERE within the implementation process of the revised law on renewable energy, and the economic reason facilitate the until now the matured technologies to the production of electricity from hydropower plants.
  13. 13. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 11 Table 3 - NREAP Prevision for Each Sector of RES 2015 - 2020 Additional RES According to Technology 2015-2020 Quantity Generation Installation ktoe GWh MW RES-E SHPP up 10 MW 200 2,326 744.3 Wind 20 233 97.7 PV 50 582 116.3 Total 1 270 3,140 958 % ne GFEC 29% RES-N&F Biomass 52 800 279 Total 2 52 % GFEC 10% RES-T Biofuel (FAME) 85 - Total 3 85 % ne GFEC 3% RES Total 1+2+3 634 % GFEC 38% Source: MEI In these regard, bearing in mind the provisions settle by the Directive 2009/28/EU, in specific for the reaching of the indications of 38% on the GFEC within 2020, there are foreseen the intervention regard renewable energy for electricity generation (RES-E) to provide the consumption needs at least 29%. It means a further increase in the amount of electricity consumed from renewable sources by at least 270 ktoe (3,140 GWh). This means an increase in the average size of the generation of electricity from renewable sources than as it is expected mostly from hydro to 958 MW installed capacity with the factor of 20-35%.
  14. 14. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 12 Conclusion In the here conclusion it is useful to be remind again that there is a need of smart regulatory framework that facilitate the most profitable investments and the contemplation with the Directive 2009/28/EU in the efforts to achieves the objectives of the national consumption of 38%. In regard, we see as fundamental that NREAP drew choices guided by thinking with quantitative estimation, using a Levelised Cost of Electricity - LCOE to get the less economic impact for the public budget and the burdens for each consumer in Albania. In the here above interest as AREA we remain confident that both the Albanian Government and the independent institutions that regulate the energy sector will cooperate successfully to the support the investments made and the further development of the sector, encouraging the implementation of methods that guide to the support schemes related to the EU policies of 2020 and 2030 and other international treaties accepted by our country (Albania).
  15. 15. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 13 Dr Lorenc Gordani Director of Legal Office AREA Professor at Polis University The main activities areas covers the legal strategic expertise, the applied research and the academic didactics in EU and Albania energy law and policy for government, international institution, industry and interest groups with particular focus on market design and related policy issues, concerning the promotion of a sustainable integration of energy market in the Western Balkans. The education has taken place in Italy, Germany, France, as well as Netherlands, Belgium, Sweden, Poland, etc., and has seen the reaches of a PhD level with topic on market liberalisation and regional integration. In above framework it has worked as researcher and professor of the Labour Law, Roman Private Law, Public Economic Law, Administrative Law, EU Law, Public and Regional Law, Environmental Law, etc., in several universities in Albania and abroad and as expert and trainer at national and international institutions and engagement as leader legal advisor to several international companies and organisations. The intense activity has been accompanied with publication of an extensively bibliography on acquis implementation and particularly on energy law and policy. Activity accompanied with frequent participation as speaker at international high-level meetings and conferences. An activity that has been accompany also with the involvement as a consultant to several different working groups of national public authorities and international institution. For more find at the Official Website of ACERC | Lorenc Gordani in LinkedIn
  16. 16. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030 14 ACERC network of the partners, supporters and sponsors include among others