ENERGY OVERVIEW

Since heating in the building sector is mainly done by electricity, it plays a very important role in the Albanian energy system (about 23.5 per cent of the total primary energy supply). Almost 100 per cent of the electricity produced in Albania is generated by hydropower, but a substantial part of the electricity supply is covered by imported energy (about 48 per cent at present according to the Albanian Power Corporation KESH, the state owned electricity production company). Due to lack of capacity, power cuts in the electricity supply are frequent. (Source: Energy Balance 2007).

Power production (KESH) and transmission (Transmission System Operator (TSO)) remain state owned, while the privatization process of the distribution system was concluded in 2008.

Electricity losses through transmission and distribution, both technical and non-technical, are around 35.7 per cent. One condition in the negotiations on the privatization of the distribution system was to reduce these losses to 16 per cent.

A priority for the Government is to prepare the legal framework and financial environment facilitating private investments also in the energy sector – “everything that could be private should be privatized”.

According to the National Power Law, an independent Electricity Regulatory Authority (ERA) has been established to set rules and tariffs. According to ERA, the principle used today is cost , in future the tariffs will be based on the principle of marginal costs. Electricity prices are still below market value (2008: average 7 euro cents/kWh). However, there has been a price increase and ERA is developing plans to gradually move to full-cost pricing in a way that recognizes social impacts. During the assessment mission the President announced that the electricity tariffs would not be increased in 2009.

There are no district heating systems in operation in Albania, direct electrical heating is the most common, and some buildings and building complexes have their own boilers and water based heating systems (by radiators).

To prepare domestic hot water by solar collectors also seems to be an interesting business for Albania, both to reduce the electricity consumption for this purpose, and to increase the reliability of domestic hot water supply in view of the frequent power cuts that are experienced. This might be one of the reasons why for the time being in Albania, renewable energy sources (RES) seems to have a higher priority than energy efficiency (EE).

KESH earlier carried out a number of end use energy efficiency projects and awareness raising and education activities aimed at reducing energy demand, and thus possibly reducing the power cuts. As the only electricity provider, they felt responsible for informing end users about what they could do to save energy, which could further allow them to increase the tariffs. After the privatization process, KESH will await further initiatives and follow up on the activities from the new Distribution Company.

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FEEI Albania project website
06/09/2011

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