The document discusses Albania's hydropower capacity and renewable energy market perspectives given EU policies through 2030. It covers Albania's regulations on promoting renewables, current renewable energy implementation levels, hydropower deployment scenarios, and financial projections. Albania aims to reach a 38% renewable energy target by 2020 as required by the EU, focusing on expanding its hydropower which currently dominates renewable production but has further potential for growth. Scenarios estimate hydropower capacity could reach 3.9 GW by 2030.

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. 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

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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. 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. 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. 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.

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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.

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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. 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.

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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.

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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. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030
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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.

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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%.

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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).

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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. AlbanianHydroCapacityandMarketPerspectiveswithinEUPoliciesof2020and2030
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ACERC network of the partners, supporters and sponsors include among others