Privatized energy in Albania
Privatized energy in Albania refers to the transition of the country’s energy sector from state control to a more market-oriented model following the collapse of communism in the early 1990s. As of now, Albania's energy landscape is characterized by a mix of state, private, and joint-venture utilities, with significant reliance on hydropower, which accounts for approximately 98% of its electricity production. The privatization process has included major entities like the Albania Power Corporation (KESH), which underwent reforms to enhance efficiency and accessibility. The country has also signed the Energy Community Treaty, facilitating cooperation with neighboring states and international energy initiatives.
In addition to hydropower, Albania is actively working to diversify its energy sources, exploring fossil fuels such as oil and natural gas, as well as expanding renewable energy avenues, particularly solar and geothermal power. The privatization of the oil and gas markets has seen the emergence of three main joint-stock companies, with international partnerships aiming to boost production and improve infrastructure. Despite the progress made, challenges remain, including environmental concerns related to hydropower and the sustainability of traditional energy sources like wood, which are still prevalent in rural areas. Overall, Albania's energy sector is evolving amidst efforts to enhance reliability and reduce dependence on a limited range of resources.
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Privatized energy in Albania
Official Name: Republic of Albania.
Summary: Albania is a European country whose energy demand exceeds production. Its own production is dominated by hydropower, and the country shows significant potential for other renewable energy resources such as solar power and geothermal power. Traditional energy sources such as wood also remain important in some areas. Reform efforts since the end of communist rule have made progress in modernizing the energy sector.
Albania began to open and privatize its energy markets as part of larger economic reform efforts following the 1992 collapse of communism. Albania was a signatory to the Energy Community Treaty in 2005. Examples included the state-controlled electric utility Albania Power Corporation (KESH), whose electric distribution system underwent privatization in 2009, and its subsidiary TEC-Vlora. Utilities now include state, private, and mixed ventures. Energy reform projects, including a major World Bank-financed program, have sought to improve electricity accessibility and reliability. A 2015 agreement with an international energy consortium explored the potential of a major undersea power connector to Italy.
According to the US International Trade Administration, in 2020, Albania's electricity production from privately owned companies reached approximately 1,058 megawatts (MW) while state owned operations provided 1,448 MW, for a total installed capacity of 2,506 MW. The vast majority of the country's overall capacity is from hydropower, which accounts for as much as 98 percent of annual domestic electricity production. The country’s main hydropower plants are located along the Drin River. Albania is seeking to diversify its energy production through fossil fuels such as oil, coal, and especially natural gas, as well as through renewable resources.
Oil and Gas
Albania’s oil and gas markets have also undergone privatization efforts since the collapse of communism. There are three primary joint-stock companies in operation: Albpetrol, ARMO, and SERVCOM. Albpetrol (Albanian State Oil and Gas Production Company) was a state-controlled company, privatized in 1995. Albpetrol monopolized the oil and gas markets in Albania until international corporations were allowed into the national market in 1993.
State-run Albpetrol oversees several oil and gas fields in Albania, including in Saranda, Vlora, Mallakaster, Fier, Lushnja, and Kucova. The formerly state-controlled Albanian State Refinery and Marketing of Oil (ARMO) dominated the oil refining and distribution markets; a majority of the company's shares were sold to an international group in 2008. In 2017 ARMO halted operations due to a shortage in supplies of crude oil. Service Company of Oil and Gas (SERVCOM) dominated oil field development and drilling. Studies show the potential capacity to increase Albania’s oil production through improved equipment and extraction techniques exists.
Albania is also involved in several international projects to expand the region’s oil and gas markets. Albania is part of the larger Trans Adriatic Pipeline (TAP) project, designed to connect Greece, Albania, and Italy in order to transport gas from the Caspian region to the south, as well as the proposed Greece–Albania gas pipeline and TPP (combined cycle power plant) in the Korca Region.
Albania was a signatory to a 2004 Memorandum of Understanding, along with Bulgaria and Macedonia and the private United States corporation AMBO, to construct an oil pipeline connecting Russia, Azerbaijan, Turkmenistan, and Kazakhstan to western Europe. The pipeline would run from the Bulgarian port city of Bourgas on the Black Sea to the Albanian port city of Vlore on the Adriatic Sea. Potential capacity was estimated at 750,000 barrels per day. However, by the late 2010s the AMBO project was stalled indefinitely.
Renewable Energies
Albania’s geography, terrain, and natural resources provide favorable conditions for the development of energy production based on such renewable sources as solar, geothermal, and hydropower. The Albanian climate is favorable for solar power, as evidenced by the experience of neighboring countries such as Greece. The national Ministry of Energy planned several solar panel installation program.
Geothermal springs and wells are potential energy sources, while water sources, such as the Drin River, are being further tapped for their hydropower. Renewable energy can become an important component in the country’s energy diversification efforts. Although hydropower currently drives most energy production, the hydropower market has been privatized for a limited period and hydropower’s potential has yet to be fully explored. Hydropower also faces challenges, including climate change and criticism from some environmentalists. The burning of wood for fuel is a traditional energy source still used in Albania in some cases, especially among residential households in the countryside and mountainous areas, as well as in some small businesses. Wood use has been considered at risk of becoming unsustainable, but has been offset by increasing urbanization and improved energy infrastructure.
Bibliography
"Albania." International Energy Agency (IEA), 2018, www.iea.org/countries/albania/. Accessed 29 July 2024.
"Albania." US Energy Information Administration, 2018, www.eia.gov/beta/international/country.php?iso=ALB. Accessed 29 July 2024.
"Albania - Country Commercial Guide." International Trade Administration, 8 Oct. 2021, www.trade.gov/country-commercial-guides/albania-energy-sector. Accessed 29 July 2024.
CEE Bankwatch. "Balkan Energy Future." http://bankwatch.org/balkan‗energy/ref.html. Accessed 29 July 2024.