«Pure competition means compensation to those who provide the best goods at the lowest price. It provides an immediate and natural reward that a crowd of rivals is anxious to opt, and acts with greater effectiveness of a distant punishment, from which each anyone can hope to escape. » Adam Smith, Wealth of Nations, 1776
A l b a n i a n E l e c t r i c i t y M a r k e t a t a C r o s s r o a d s : L a t e s t D e v e l o p m e n t o n t h e L i b e r a l i z a t i o n P r o c e s s Adv. Lorenc Gordani, PhD Director of Legal Office AREA
Albanian Electricity Market at a Crossroad: Latest Development on Liberalization Process T h e m a i n b u l l e t p o i n t s c o v e r e d : I. EU Forward Looking to the Renewables Investments II. Assessment on the state of art in the RE in Albania III. Legislation in the Promotion of Renewable in Albania IV. Projection on RES Deployment Policy in Albania V. AREA Position on the New Legal Framework
EU Forward Looking to the Renewables Investments “ Our challenge ahead is to make Europe number one in renewables. We must prepare for an energy system in which more than half of electricity consumption is powered by renewables. ” Miguel Arias Cañete In this new world, the core question is “ which is the right design to our electricity market? ”
Assessment on the state of art in the RE in Albania Law on Renewable Energy adopted in May 2013 Legal obligation to issues by-laws within six months Failure to submit the NREAP by 30 June 2013 Suspended March 2014 Secretariat case against Albania to MC 15th October 2015
Albanian Res Development of the GFEC Source: Energy Community, 2015
Expected renewable energy share in 2020 Source: Energy Community, 2015
Assessment on the state of art in the RE in Albania Albania's NREAP on 21 Mar 2016: Without public consultation as required by law no. 146/2014 of 30 October 2014 Concerns on the verifies of the data reported 10 year moratorium on forest protection 10% GFEC ECS evaluate the adequacy of the measures envisaged (Article 3(2)) Enter to the Eurostat statistics (Regulation (EC) No 1099/2008)
Legislation in the Promotion of RES in Albania Source: Energy Community, March 2016
Violations of the Legal Biding Procedure of Law No 138/2013 "On Renewable Energy Sources" Albanian Albanian Council of Energy Energy Methodology Ministers shall Regulator Regulator a) Allows ROE Approve (ERE) (ERE) b) Cap & Methodology Floor; c) Social and Decide Tariffs Consulting economic Arbitrary Decision Prepared Opinion impact Methodology d) Inflation index ALL/Euros ERE Tariffs e) Formula of based in the Fee for Economic HubX Methodology end-users Reason (ROE) Interest Parties Fig. Source Area The establishing the electricity Feed-In Tariffs to be paid to Priority Producers for all specified types of installations that use renewable energy sources for generation of electricity
Projection on Deployment Policy of RES MEI of the new draft law on RES (Recast of 138/2013): PPA concluded before get fixed feed in tariff and the right to switch 6.31 € /MWh to 5 MW per company 5.54 € /MWh to 10 MW per company 5.34 € /MWh per kilowatt-hour 15 MW per company Forgotten that tariffs applying for capacity: 12.5 € /MWh under 0.5 MW per company 8.25 € /MWh. 0.5 - 2 MW to MW per company The financial support for a 20-year duration period
AREA Position on the New Legal Framework (i) the historical price formula PU = PI * 1.1 * REX considered elements of market price for an "all-in" resulted to All 9,3/kWh (approximately c € 6.6/kWh). (ii) the implementation of an power exchange price for the which reflects conventional power generation prices in a market other than Albania (which would lead to a breach of the investment protection criteria). Existing hydro installations: fixed historical price to ALL 9.3/kWh for PPAs timeframe (for a period of 15-20 years) and no use of system, transmission loss and imbalance charges on PVE. New Small Producers ROE
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