Grid losses slightly recover to 25% as domestic electricity generation suffers
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- Domestic electricity production represented by both state-run power utility KESH and private and concession hydropower plants met only 60 percent of the country’s needs, hitting a five-year low, according to a report published by the country’s state statistical institute, INSTAT
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TIRANA, March 8 – The prolonged drought that Albania experienced during the second half of 2017 cut the country’s hydro-dependent domestic electricity generation by more than a third, triggering costly imports of about €200 million to meet the country’s needs.
A report published by the country’s state statistical institute, INSTAT, shows domestic electricity production represented by both state-run power utility KESH and private and concession hydropower plants met only 60 percent of the country’s needs, hitting a five-year low.
State-run KESH power utility, which manages the country’s three biggest hydropower plants situated in the northern Drin River cascade, saw its electricity production almost halve and account for two-thirds of domestic electricity generation, down from about three-quarters in the record high 2016 production triggered by heavy rainfall.
KESH’s smaller share in the domestic electricity production is a result of rising production by more than a hundred private and concession HPPs which in 2017 produced 1,608 GWh, down 22 percent compared to 2016. The concession HPP share is set to further increase by the end of this year as Norway’s Statkraft launches its second bigger Moglice HPP as part of its major Devoll Hydropower project in Albania.
The Banja and Moglice HPPs, part of the €535 million Devoll Hydropower project, are being built on the Devoll River, about 70 km southeast of Tirana.
A net electricity importer, Albania exported only 488 GWh in 2017, four times less than in 2016.
Albania’s electricity consumption rose by 9 percent to about 5,563 GWh in 2017. Meanwhile grid losses, involving thefts and technical losses due to the dilapidated distribution grid, slightly dropped to 1,876 GWh, accounting for 25 percent of total electricity fed into the grid, down from 28 percent in 2016.
Albania grid losses hit a record high of 45 percent in mid-2014 when the distribution operator was nationalized following a failed short-term privatization by Czech Republic’s CEZ.
The World Bank, which is financing a power recovery project in Albania, has expressed its concern over grid losses being far from the mid-2019 target of 14 percent.
As a five-year $150 million World Bank supported power recovery project nears completion by late 2019, the Washington-based lender has downgraded Albania’s overall implementation progress to moderately unsatisfactory from a previous satisfactory.
Heavy rainfall during the past three months has lifted Albania’s hydro-dependent electricity system out of crisis with state-run KESH power utility now meeting domestic consumption needs and even regularly exporting small quantities.
The situation has also relieved public finances of a huge burden after a prolonged drought in 2017 forced the country to make costly electricity imports of about €200 million in the second half of the year, temporarily ranking the wholly hydro-dependent domestic electricity generation as the key threat facing the 2018 budget.
The improving hydro-situation and the resumption of exports also marks a turning point for state-run OSHEE distribution operator which in late 2017 was unable to meet the country’s huge needs of electricity imports and needed government financial support to handle them.
The new circumstances mean OSHEE can now continue with much-needed investment in distribution grid and reduce declining but still high level of electricity losses.
Albania’s domestic electricity generation is currently wholly hydro-dependent triggering the government to offer incentives for liquid gas-fired thermal power plants as the major Trans Adriatic Pipeline bringing Caspian gas nears completion.
In a bid to diversify domestic resources, the government has also urged investors to consider untapped potentials in solar and wind energy following a boom in the construction of small and medium-sized hydropower plants built under concession contracts in the past decade, placing them at risk of adverse weather conditions such as last year’s prolonged drought.
Meanwhile, a dispute between Serbia and its former breakaway province of Kosovo over a long-standing electricity transmission issue continues to hold back a newly built German-funded Albania-Kosovo interconnection line which has been available for use since mid-2016.
The deadlock, which Germany is trying to mediate, has also halted Albania-Kosovo plans to set up a joint energy market and a power exchange helping Kosovo’s lignite-fired power plants and Albania’s hydro-dependent electricity system exchange electricity during their peak production levels, reducing dependency on costly imports.
