Albania, with a population of around 2.85 million, is almost entirely dependent on hydropower for its electricity supply. This gives it an advantage in decarbonising its electricity sector but also makes it highly vulnerable to the changing climate. Massively fluctuating hydropower generation means that despite the addition of hundreds of megawatts in new plants in recent years, the country has to import electricity most years, as shown on the graph below.
Electricity generation 2010-2020
Source: IEA Statistics
Albania also has a 98 MW gas/oil fired power plant at Vlora, financed by the World Bank, EBRD and EIB, which has never operated due to technical faults. Plans exist to convert it to gas and start operating it.
Albania is one of the few Balkan countries producing oil. The state-owned Albpetrol is active in the development, production and trade of crude oil, while the largest oil producer is Bankers’ Petroleum, previously supported by the EBRD and IFC and now Chinese-owned.
Albania is not connected to international gas networks at the moment, though the controversial Trans-Adriatic Pipeline has been built on its territory. The country produces a small amount of gas, mostly used in oil production and the refining industry. It also has an outdated pipeline network of 498 km, which is mostly not operational.
Under the Energy Community Treaty, Albania committed to increase the share of renewable energy to 38 per cent of gross final energy consumption by 2020. In reality it managed 45 per cent. This was mainly due to hydropower and the use of wood biomass in some households.
Until 2017 Albania only offered renewable energy incentives for hydropower and as a result solar PV and wind have remained underdeveloped, with only 23 MW of solar installed by the end of 2021 – though plenty of plans exist. At the same time, uncontrolled hydropower development has caused increasing discontent and damage to protected areas.
Albania is the only country in the Western Balkans to have completed new large hydropower plants in the last decade and as of the end of 2021 it had at least 25 operational hydropower plants of more than 10 MW, as well as countless smaller ones (see Regulator’s report). Even for the larger plants, financing is often impossible to trace, but known sources include the IFC, EBRD, Raiffeisen and other commercial banks.
Despite its over-dependence on hydropower, Albania still plans to build the Skavica hydropower plant, potentially with financing from the US Development Finance Corporation. The project faces heavy local opposition and could endanger a crucial corridor for the critically endangered Balkan lynx.
Unfortunately Albania also plans to develop a gas sector, despite having signed onto the Sofia Declaration on the Green Agenda for the Western Balkans and thus pledging to decarbonise by 2050. In March 2021, US companies Excelerate Energy L.P. and ExxonMobil LNG Market Development Inc. signed a Memorandum of Understanding with the Albanian government to conduct a feasibility study for the potential development of a liquefied natural gas project in Vlora, consisting of an LNG import terminal, conversion or expansion of the existing Vlora thermal power plant, and establishing small scale LNG distribution.
Albania has promising potential for wind and solar, but as with all the countries in the region, different sources put the exact figures at quite different levels, depending among other things on whether they use sustainability criteria.
REmap 2030 scenario
Additional cost-competitive potential up to 2050
Decarbonisation scenario 2050
EU Road scenario 2050
Albania, like all the Western Balkans countries, has significant potential for energy efficiency, especially with regard to its high distribution losses which totalled 20.6 per cent in 2021. Better insulating houses and using heat pumps instead of old-style electrical heaters would also help to decrease unnecessary demand, while increasing comfort levels.
For a more in-depth look at barriers to a sustainable energy transition in Albania and our proposals for how to overcome them, see our 2021 study with the Friedrich Ebert Stiftung: The Political Economy of Energy Transition in Southeast Europe – Barriers and Obstacles.
More on coal in the Balkans
Yesterday the Federation of Bosnia and Herzegovina’s Parliament voted to extend the lifetime of the antiquated Tuzla 4 and Kakanj 5 coal units, in clear breach of the Energy Community Treaty. The move condemns the public to yet more lethal air pollution.
This year we are marking five years since Bankwatch engaged in air pollution work in the Balkans. Throughout these years, there was one constant in the work – the environmental dust monitor. It has become the hero of many communities and is known to every organisation in the region that works for cleaner air.