Electricity prices for private HPPs revised downward

TIRANA, Nov. 26 – The Albanian government has revised downward the electricity prices set for private and concession hydropower plants considering that their regulated tariffs at an estimated 10 percent higher than imported electricity cause the state-run KESH power corporation an estimated loss of around 32 million euros annually.
“We are finding a solution with private hydropower plants so that the electricity purchased from them turns into a real contribution and not a burden for consumers,” said Energy Minister Damian Gjiknuri speaking at the parliamentary economy committee on the 2015 budget.
Government has proposed a new formula which is based on the average electricity prices at the Hungarian Stock Exchange which would bring down electricity prices for new HPPs from an average of 9.3 lek kWh (Euro 0.065) currently to 6.4 lek/kWh. HPPs connected to the distribution grid will get a 10 percent bonus.
The Albanian Energy Association representing several small hydropower plants had warned a reduction in the regulated electricity prices risks taking these investments toward bankruptcy.
The state run power utility buys electricity from small and medium-sized HPPs at an average price of up to 9.37 lek/kWh and sells it to CEZ distribution operator at regulated prices of 2.2 lek/ kWh, which is four times lower compared to the purchase price.
The situation has further aggravated the finances of KESH which owes around Euro 11 million only to private and concession HPPs, not to mention hundreds of millions of Euros it owes to commercial banks for electricity imports.
Currently, KESH purchases electricity from 88 hydropower plants with installed capacity at 223 MW but the amount of electricity is projected to increase due to new HPPs expected to be made operational.
Electricity sold by new hydropower plants rose to 9.3 lek/kWh in 2012, up 35 percent compared to 2011 but remained unchanged in 2013 because of the stimulating government policy calculating them on electricity import prices, says energy regulator ERE in its 2013 report. Power prices for older private or concession contracts remained unchanged at 7.77 lek kWh in 2013, up from 7.57 lek kWh in 2011 based on the average household tariffs.
Since 2007, the Albanian government has awarded more than 400 concession contracts to private companies, of which only 70 have already been made operational.
Electricity generation by private and concession hydropower plants rose by 8.2 percent to 783.604 MWh in the first half of 2014 after Turkey’s Kurum acquired four small and medium-sized HPPs and several new HPPs launched operations, accounting for one-third of domestic electricity generation.
The launch of the Ashta hydropower plants in late 2012 and the operation of several new smaller HPPs, more than doubled electricity generated by private and concession HPPs in Albania, according to a report by energy regulator ERE.
Some 80 private and concession HPPs were involved in electricity generation in 2013 with total installed capacity of 240 MW, of which 40 MW by new HPPs in 2013. Total electricity generation from these HPPs in 2013 reached 759 GWh or 11.1 percent of total domestic generation in 2013, up from 7 percent in 2012.
The Ashta HPP which in 2013 generated around 211 GWh or 28 percent of the total had a major contribution to the total electricity generation in 2013.