By Dr Lorenc Gordani*
Albania continues to make progress on sustainable energy, taking ambitious steps to improve governance on energy efficiency, implementation of smart support measures and foster climate action. Our guest author Dr Lorenc Gordani from Euroelektra in Tirana analyses recent developments and the legislation process.
According to the Energy Community Secretariat`s WB6 Sustainability Monitoring Report from June 2017, all West Balkan states have more or less made some progress for more sustainable energy, but they have to take further steps.
The Albanian energy landscape has recently witnessed the introduction of important changes. Parallel to the process of liberalization, the country is working to achieve a future with reduced carbon emissions and sustainable power sources. While maintaining focus on the pillars of the Western Balkans Sustainability Charter, signed in Paris 2016, there is still a lot of work to be done for putting in place the road map targets endorsed in the framework of the 6 Western Balkans (the third step of the Berlin process).
Improved governance on energy efficiency
While progress in the field of efficiency is still limited, a first positive outcome is related to the institutional configuration that was enforced after the political election, and saw the merger to one authority (the Ministry of Infrastructure and Energy) of the previous Ministry of Energy and Industry and the Ministry of Urban Development. Furthermore, at the beginning of December 2017, the country adapted the 2nd and the 3rd Energy Efficiency Action Plan (EEAP).
Lately there was also progress in the first large scale projects in building renovation. While there is already an ongoing project worth 9 million Euros for the renovation of the university campus of Tirana, a grant agreement was signed for 6.5 million Euros between the Albanian public authorities and the German government. Saving energy through improved efficiency is one of the key components promoted by the German government in Albania, brought through the KfW’s investments package of over 15 million Euros.
However, in this stage the speedy adoption of the set of by-laws will be essential to implement the new legislation by Albania, as well as the setting up of a dedicated energy efficiency fund. Nerveless, considering the actual lack of expertise, durable impact can only be achieved through a significant amount of additional technical support and assistance, while the leaders fully embrace the principle ‘energy efficiency first’ as a real beginning of change on the efficiency process.
Implementation of smart support measures
Albania has made particular progress compared to other countries of the region in the field of renewables. First of all, the new RES Law has introduced a substantial change to the support schemes, by substituting the feed-in-tariff scheme (fixed-price FiT payments), with the so-called ‘contracts for difference’ scheme. This means that renewable energy producers will compete for the investment to be made and the support for the energy sold in the market, receiving a variable premium based on the price that will result from the market auction.
Likewise, the adoption of the Net Metering Scheme was a significant step towards ensuring compliance with the Renewable Energy Directive (“RED”) and formulating the policy needed for the deployment of Distribute Renewable Resources (“DER”). More specifically, to meet the requirements repeatedly expressed by the World Bank reports, in particular “Doing Business 2014”, the recent interventions of the Ministry of Energy and the Energy Regulatory Authority have already paved the way for the network to receive energy input produced by businesses and households by distributed generation resources based on a net energy measurement scheme up to 500kW – which is still non- functional.
Furthermore, following the signing on May 2017 of a Memorandum of Understanding between the European Bank for Reconstruction and Development (EBRD) and the Albanian Ministry of Energy and Industry (MEI), the way was opened for the government to decide on methodology and for the Albanian Energy Regulator ERE on the establishment of the regulated tariff for solar projects of up to 2MW and wind projects of up to 3 MW, with 15-year contracts respectively of €100/MWh and €76/MWh. More than 20 projects are under evaluation by the ministry of energy to be granted through the authorisation procedure .
At the same time, the new law on renewables has not overlooked the “existing preferential energy producers” that have concluded concession contracts with the Ministry of Energy before the entry into force of the new law and have completed or are planning to complete their plants by 31 December 2020. They will be subjected at the end of this year to a new agreed methodology for setting the price for the electricity produced along 2017.
Finally, based on the above MoU between MIE-EBRD for developing the regulatory framework for solar power and the subsequent development of solar power projects, the EBRD proceeded at the beginning of January 2018 with a tender call on “Support to the Government for Development of Solar Powered Capacities” to assist in the implementation of a competitive bidding process of up to 100 MW solar PV capacity in Albania.
Foster climate action
In this direction, the proposal for a law on climate change by the Ministry of the Environment is of particular interest. However, this intervention is somehow limited, based on the assessment that it is thought impossible to adopt any trading scheme because of the fact that Albania is not a member country of the EU and is considered as a country with low emission levels.
In fact, Albania as a country that aims to become part of EU, should seek to establish a trading scheme to further align itself with the EU. Moreover, not only within the framework of the WB6 process, but also according to the COP 21 process, it must advance rapidly towards the creation of a transparent and functional framework for issuing and trading green and white credits. It is an approach that connects with the new framework in the renewable energy sector, which already foresees that the construction of new capacities will be made on the basis of auction schemes.
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* Dr Lorenc Gordani is Law Adviser in Energy Policy, Regulation & Infrastructure, at Albania Centre for Energy Regulation & Conservation – Acerc.