TIRANA, Jan. 19 – A decision by the energy regulator to revise downward electricity prices for small hydropower plants for the 2013-2014 period has further angered these producers who describe the retroactive effects of the late December 2014 decision as illegal and anti-constitutional.
Under a decision made on December 26, 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.
The energy regulator also ruled that state-run KESH power corporation will pay 9.73 lek/kWh to new HPPs for 2013 and 7.95 lek kWh for 2014.
HPP owners say they will take the ERE decision to court describing its retroactive effects as unacceptable.
Gjergji Bojaxhi, an energy expert, says government should abide by the concession agreements on hydropower plants.
“If government encourages foreign investors to invest in Albania and after a certain period of time wants to start over, there is no seriousness, and this reduces Albania’s reliability among foreign investors,” he told local media.
Albanian and foreign companies which have invested in small private and concession hydropower plants had warned the reduction of electricity prices under an earlier unilateral government decision last December risks taking them to bankruptcy.
In a reaction to the government decision which cut by 30 percent the electricity prices that the state-run KESH power corporation charges on small HPPs, the Association of Renewable Energy, warned the decision affected 70 small HPPs worth Euro 200 million.
Under a decision taken in late 2014, the government proposed a new formula which is based on the average electricity prices at the Budapest Stock Exchange. The new methodology 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 are expected to get a 10 percent bonus.
“The damage incurred to these producers could be a 30 to 35 decline in income which means we are going to sell electricity below cost,” says Eugen Lici, the head of the Albanian Association for Renewable Energy.
The Energy Ministry said the new measures were meant to guarantee liquidity in the energy sector and ease the burden of KESH power corporation as part of a reform which targets liberalizing 30 percent of the market by lifting regulated prices for businesses linked to the mid-voltage grid.
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.
Some 164 concession contracts were signed by the previous government on the construction of 435 HPPs.
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, has 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 HPfPs 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.
