TIRANA, Aug. 22 – The Albanian government is offering incentives to private investors as it plans to set up the country’s first major solar power plant in a bid to diversify the country’s current wholly hydro-dependent domestic electricity generation system that often puts the country’s public finances in troubles in cases of prolonged droughts.
The energy ministry says it is inviting bids for 50 MW solar power plant expected to be built in Vlora, southern Albania, under private investment in return for support to buying electricity for 15 years at competitive prices.
In its Sept. 17 tender announcement, the government says it is also seeking bids for additional solar energy capacity of 20 MW to 50 MW that will not receive support, allowing investors to freely trade electricity, and apparently pave the way for the Albanian energy market and the establishment of the long-awaited power exchange.
The major solar power plant is expected to be built at the Akerni salty lands of Vlora, some 130 km south of Tirana, where Albania’s second operational airport is projected to be constructed if ongoing contract negotiations with a Turkish consortium conclude and plans materialize.
The project follows a mid-2017 deal between the Albanian government and London-based European Bank for Reconstruction and Development in developing and implementing a framework for the allocation, through a competitive bidding process for private investors in the building, owning and operating of solar power projects in Albania with a total combined capacity of 50 MW.
“In our first step we chose to promote 50 MW of solar energy which could be a small amount at the beginning, but enough and sustainable for the tariffs currently in force,” Energy Minister Damian Gjiknuri has earlier said.
The Albanian energy regulator, ERE, has set a €100/MWh price on the electricity produced by small solar energy plants of up to 2 MW and €76/MWh tariff on wind energy plants with a capacity of up to 3 MW for new projects initiated in 2017.
The Albanian government already offers support to more than a 100 small and medium-sized hydropower plants built under concession contracts, purchasing electricity at regulated prices based on the Hungarian Power Exchange average prices.
State-run power utility KESH says it is also planning to build the country’s first floating solar power plant on the northern Drin River cascade where it generates about two-thirds of the country’s domestic electricity from three hydropower plants built in the 1970s and 80s under communism.
KESH says the more efficient plant will be an 118,000m2 floating system with a capacity of 12.9 MWp that will be built on the Vau i Dejes reservoir where the country’s third largest hydropower plant is situated.
With domestic electricity generation currently wholly reliant on hydroelectricity, Albania has large untapped wind and solar energy potential that can be cost-competitive, experts say.
“Due to the very good solar resource and relatively satisfactory wind speeds (3.3-9.6 m/s), there is high, untapped potential for the deployment of solar PV (up to 1.9 GW) and wind (987-2 153 MW),” says UAE-based International Renewable Energy Agency (IRENA) in a South East Europe report.
Much cheaper Caspian natural gas expected to flow by 2020 from the under construction Trans Adriatic Pipeline is another opportunity to diversify Albania’s domestic electricity generation and reactivate the Vlora thermal power plant, a new 2011 investment that has been unavailable for use due to high costs of operating on fuel, problems in its cooling system and a legal dispute with an Italian company that built it.
A prolonged drought cost the Albanian government about €200 million in costly electricity imports in 2017 when Albania faced one of the worst droughts in decades, putting public finances at risk.
