TIRANA, Feb. 24 – Albania’s private hydropower plants have called for assurances and clear rules so that their investments in renewable energy estimated at around 500 million euros don’t go bankrupt.
In a hearing with the parliamentary productive activities committee this week, the Association of Renewable Energy representing 70 small and medium-sized hydropower plants, warned the recent cut in electricity prices by the energy regulator based on government decision risks taking them to bankruptcy.
Energy regulator, ERE has recently revised downward the fixed price for the purchase of electricity by state-run KESH power corporation to 7.63 lek/kWh (Euro 0.053) down 19 percent compared to the previous favourable prices, which investors say is far below the required rate for the return of their investment in ten years under the 15-year concession contracts they have signed with government.
“We demand guarantees for the implementation of our 15-year contracts and clear rules for the purchase of electricity in the new draft law on energy,” said Flonia Tashko, a legal representative of the Association of Renewable Energy.
Private and concession HPP investors claim the electricity price set by the energy regulator cannot be lower than 9 lek/kWh (Euro 0.06) and that the current 7.53 lek tariff is even lower compared to the 8 lek/kWh tariff state-run OSHEE distribution operator has paid in recent electricity imports.
“Why should government support electricity imports which don’t bring revenues to the domestic economy at a time when concession hydropower plants will shift into government hands in 15 years,” said an Italian investor.
Private investors are estimated to have invested around 500 million euros in hydropower plants with an installed capacity of 400 MW. Despite environmental concerns, prospects in this sector appear optimistic as Albania’s potential is for an extra 1,000 MW and 1.2 billion euros in investments.
Private HPP owners also complained about their difficult liquidity situation because of delays in payments by cash-strapped KESH power corporation.
The Finance Ministry says state-run KESH power Corporation owes 3.68 billion lek (Euro 25.7 million) to private hydropower plants in unpaid bills for the second half of 2014.
Eduart Shalsi, a ruling Socialist Party MP and head of the parliamentary productive activities committee, said Parliament would continue with the discussion of the bill before taking a final decision.
The Energy Ministry had recently announced private hydropower plant owners have reached a deal on electricity prices charged by state-run KESH power corporation after being offered a 24 percent bonus on the average prices at the Budapest Stock Exchange, which has been set as a benchmark to calculate prices.
Under a deal signed by the Energy Ministry and the Association of Renewable Energy, private and concession hydropower plants will sell electricity to KESH power corporation for 2015 under a formula which takes into consideration average prices at the Hungarian stock exchange, a 1.24 coefficient and the average annual euro/lek exchange rate.
“This methodology is considered to be based on a reasonable rate of return, avoiding as much as possible the transfer of risk from the public sector to the private one,” said the energy ministry in a statement.
Meanwhile, private hydropower plant owners have appealed a decision a decision by energy regulator which revises downward electricity prices for small hydropower plants for the 2013-2014 period, describing the retroactive effects of the late December 2014 decision as illegal and anti-constitutional.
State-run KESH power corporation, which sells the electricity purchased from HPPs almost four times cheaper to the distribution operator, lost around 32 million euros in 2013 from the purchase of electricity at regulated prices from private and concession HPPs with a capacity of up to 15 MW.
The launch of the Ashta hydropower plants in late 2012 and the operation of several new smaller HPPs, has more than doubled electricity generated by private and concession HPPs in Albania, according to a report by energy regulator ERE.
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.
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.
