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A short discussion on the electricity and gas sector in Albania

Albania performs reasonably well overall with respect to the quality of its energy (electricity and natural gas) sector. A recent EBRD energy law reform assessment, for example, shows that the country’s regulatory independence remains strong although private sector participation and market framework are the key weaknesses.

Within the electricity sector, Albania has a regulatory framework in place that is relatively compliant with EU requirements, with partial market opening. Major challenges remain the country’s singular dependence on, aside from imports, hydro power generation, resulting in volatile supply both seasonally and from year to year. Potential development of power projects in biomass, coal and wind could address some volatility issues and improve security of supply could alleviate the issue but much still remains to be done in green energy.

With respect to the gas sector, limited transmission infrastructure precludes any meaningful gas import. The regulatory framework for the sector, however, including mechanisms for promoting investment in infrastructure, is in the process of development, with primary legislation in place.

Although, the tariff methodology for gas are not yet developed, Albania’s law on gas does require that gas tariffs and tariff methodologies are non-discriminatory, transparent, take into account the need for system integrity and reflect efficiently incurred costs, including an appropriate return on investments. Albania does regulate third-party access and sets forth mechanisms for disputes as to access. Dispute resolution and other institutional authorities parallel those found in the electricity sector. All relevant codes and secondary legislation in the gas sector have yet to be adopted.

With respect to regulatory structure, all consumers of natural gas in a specified geographic service territory within Albania are entitled to access to the reliable, safe, quality and uninterrupted dispatch and supply of gas. Wholesale traders and the natural gas transmission operator are responsible for ensuring security of supply, with service standards reflected in the transmission grid code.