TIRANA, July 17 – Private and concession hydropower plants operating in the country saw their income drop by double-digits in 2017 when a prolonged drought almost paralyzed the country’s wholly hydro-dependent domestic electricity generation.
An annual report by Albania’s energy regulator, ERE, shows income generated by more than a hundred small and medium-sized private and concession hydropower plants from electricity sales to state-run OSHEE distribution operator dropped by about a quarter last year as the country faced one of the worst droughts in decades.
The report shows private-run HPPs with a capacity of up to 15 MW generated about 8 billion lek (€62.7 million) in income in 2017, down from 10.6 billion lek (€83.7 million) a year earlier as their production suffered a sharp cut and regulated prices remained unchanged at about 7.5 lek (€0.06)/kWh.
Meanwhile, six larger private-run HPPs with a total capacity of 227 MW produced about 554 MWh in 2017, about half of the total electricity generated by 137 small HPPs with total capacity of 446 MW.
Electricity produced by the six larger HPPs managed by Turkish and Norwegian companies is not sold at regulated prices, but yet often ends up being sold to state-run operators in auctions where the majority of electricity is imported.
With heavy rainfall having significantly improved the country’s hydro situation since late 2017 and new big private HPPs launching, 2018 is set to register record high domestic electricity generation.
In December 2017, Turkey’s Ayen As Energji launched its 74.6 MW “Fang” HPP in what makes it the fourth largest HPP in terms of installed capacity in the country so far after the three state-run HPPs.
Meanwhile, Norway’s Statkraft is set to complete its second and final 182 MW Moglice HPP by the end of 2018 to conclude its major Albania Devoll Hydropower project and turn the largest private hydropower producer in Albania.
In addition, regulated prices for small HPPs with a capacity of up to 15W, which are based on average prices at the Hungarian Power Exchange, have increased by 15 percent to 8.56 lek(€0.067)/kwh for 2018, benefiting about a hundred of HPP investors.
Albania had 144 private and concession HPPs operated by 98 companies with total installed capacity of 698 MW and a generation of 1,608 GWh, down 22 percent compared to 2016, accounting for 35 percent of domestic electricity generation.
The overwhelming majority of HPPs have been built and made operational during the past decade under built-own-operate-transfer deals of up to 35 years with the Albanian government.
The remaining two-thirds of electricity is generated by state-run KESH power utility and its three major HPPs on the northern Albania Drin River cascade built in the 1970s and 80s under communism.
State-run OSHEE distribution operator and power utility KESH imported electricity worth about €200 million in the second half of 2017 in a situation that plunged them into financial straits and paralyzed much-needed investment in the distribution grid.
However, the favorable hydro-situation this year allowed state-run KESH power utility to meet the country’s electricity needs and export electricity worth about €60 million for the first half of this year.
Albania’s wholly hydro-dependent domestic electricity sector often places public finances at risk and uncertainty, especially in case of adverse weather conditions triggering costly imports such as last year.
In a bid to diversify the domestic electricity system, the Albanian government has offered tax incentives on solar and wind plants as well as natural gas fired plants at a time when the major Trans Adriatic Pipeline, a section of which also crosses through Albania, is scheduled to bring first Caspian gas to Europe by 2020.
