TIRANA, March 8 – The Albanian government has revised down electricity prices set for private and concession hydropower plants for the third year in a row, in a situation which the HPP owners says risks taking them to bankruptcy.
Under a decision made last February, Albania’s energy regulator, ERE, revised downward the electricity price state run power corporation KESH buy from private and concession HPPs to 7.448 lek/kWh (€0.052), down from 7.636 lek/kWh (€0.054) in 2015 and 9.37 lek/kWh (€0.06) for the 2013-2014 period. The decision came following a government decision in 2015 which adopted a new formula to calculate electricity prices for private-run HPPs, taking into consideration average prices at the Hungarian stock exchange, a 1.24 coefficient and the average annual euro/lek exchange rate.
The government argued the decision with the huge losses state-run power utility was suffering under the previous rates.
Some 100 private and concession HPPs operate in Albania, accounting for 20 percent of domestic hydro-dependent electricity.
Lorenc Gordani, the legal director of the Albanian Renewable Energy Association, says the government’s price review has curbed investments in new HPPs by favouring electricity imports.
“We are facing huge risk because the electricity purchase price remains unclear and the spirit of our decision-making institutions has focused on reducing the profit margin of these HPPs and taking them to bankruptcy,” Gordani says.
“ None of the decision-making institutions such as the ministry, energy regulator ERE don’t want to recognize that these HPPs were built by us and are a joint public-private property and we as investors enjoy the right to use them for a set period and then transfer them to the government,” he added.
The association has also undertaken a legal battle against energy regulator, ERE, following a decision to revise electricity prices with retroactive effects for the 2013-2014 period.
“We hope the justice system and the rule of law which respects contracts and agreement between parties will provide a solution to our issues,” says Gordani.
Private hydropower plant owners have appealed an earlier decision by energy regulator which revised 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.
Under a decision made in late 2014, the energy regulator ERE, ruled that electricity prices for all existing hydropower plants with an installed capacity of up to 15 MW would be reduced to 7.53 lek/kWh (Euro 0.05), down from 9.37 lek/kWh (Euro 0.06) for the 2013-2014 period.
State-run power corporation KESH spent around 8.1 billion lek (Euro 57.2 million) to purchase electricity from 93 private and concession hydropower plants in 2014, up 23 percent compared to 2013, the energy regulator, ERE, says in an annual report.
Electricity generation by private and concession hydropower plants rose by 14 percent to 1.3 million MWh in 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. Increased production by the Austrian-run Ashta HPP played a major role generating around 28 percent of total electricity by private and concession hydropower plants.
Since 2007, the Albanian government has awarded more than 400 concession contracts to private companies, of which only 70 have already been made operational.
