Albania is almost totally dependent on hydropower for electricity generation; nearly 100 per cent of the country’s domestically produced electricity comes from hydropower.
The mountainous nation is home to eight major river systems. The Drin river, located in northern Albania, is the largest river in the country and hosts three hydropower stations: Fierzë (500 MW), Komani (600 MW) and Vau I Dejës (250 MW).
This 1,350 MW cascade represents more than three-quarters of the country’s total electricity capacity and 90 per cent of domestic electricity production. The remaining 430 MW of installed capacity is distributed over some 90 stations.
Albania was once a net exporter of electricity, but it has recently been forced to import power due to rising demand and a stagnation of new capacity installations since the transition from a centrally planned economy to an open market in the late 1980s.
This has led, as recently as 2011, to power shortages during dry periods, and even blackouts during prolonged droughts.
Energy demand is expected to increase by 60 per cent in 2020, and there is a clear need for Albania to strengthen its energy security. While efforts to develop new thermal, wind and solar capacity are ongoing, hydropower remains the nation’s largest energy resource.
Estimates show that only 30 to 35 per cent of Albania’s hydropower potential has been developed so far. Delays due to social and environmental concerns have been a deterrent to major projects.
Instead, the government has focused on constructing smaller hydropower plants (less than 100 MW capacity) and passing fiscal incentives. For example, investments in renewable energy sources are exempt from customs duties on imported machinery and equipment.
Due to these favourable legal and regulatory frameworks, Albania’s hydropower sector remains attractive to foreign and private investors.
In 2013, foreign direct investments in privatisations across the domestic hydropower sector made up almost 9 per cent of GDP, and accounted for approximately half of the capacity under construction.
Most of the new capacity installations are aimed at strengthening power supply to the south of the country, and to complete the planned cascade of projects on the Drin River. Ashta (53 MW), commissioned in 2012, was the largest hydropower project to be completed in Albania since the 1990s.
Another major project is the EUR 535 million Devoll River cascade, which will consist of two hydropower stations, Banja and Moglicë. With a total installed capacity of 256 MW, these two stations will produce around 729 GWh each year, increasing Albania’s electricity production by nearly 17 per cent.
Investment for a third plant in the cascade will be considered once these two are completed. Both are expected to begin commercial operation by 2018.
Albania’s mid-term goal is to once again become a net importer of electricity by developing its significant hydropower potential. In this way, Albania could increase its influence in the regional energy market while simultaneously bolstering its own energy security.
For example, in 2014, Albania and Kosovo signed an agreement to build a 400 kV transmission line linking their energy grids to maximise Albania’s hydropower and Kosovo’s coal-fired electricity. In July 2015, the EU announced funding for another 400 kV interconnection line between Albania and Macedonia.
Albania is also exploring options for an undersea electricity interconnection to export excess power to Italy.
You can find all our latest country profiles and regional overviews in the 2017 Hydropower Status Report, which you can download here.
This profile was last updated in August 2015.