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1- Present situation of the energy efficiency sector in Albania The Republic of Albania is a small predominantly mountainous country in Southeastern Europe and has a total area of 28,748 km2. To the north-west Albania borders Montenegro, Kosovo to the north-east, to the east with Macedonia, south and south-east with Greece. There are about 3.1 million inhabitants in Albania (July 2016 estimate), with 812,000 living in the capital city, Tirana.

(Source: http://www.ezilon.com/maps/europe/albania-physical-maps.html)

Albania has a high number of climatic regions relative to its landmass. The coastal lowlands have typically Mediterranean climate; the highlands have a Mediterranean continental climate. In both the lowlands and the interior, the weather varies markedly from north to south. The lowlands have mild winters, averaging about 7 °C. Summer temperatures average 24 °C. In the southern lowlands, temperatures average about 5 °C higher throughout the year. The difference is greater than 5 °C during the summer and somewhat less during the winter. Average rainfall is about 1485 mm per annum. About 70% of rainfall is from October to March, peaking in November, and the driest months are July and August. Water resources of Albania are abundant, almost in all the

regions of the country, with an uneven seasonal distribution. The available quantity of surface waters, and to a less extent of groundwater also, strongly decreases during the months of summer. These water resources are mainly used for energy production, irrigation, industry, drinking water etc. Albania is crossed by several rivers. The mean annual discharge of all rivers of Albania is about 1300 m³/s, which corresponds to a specific discharge of 29 l/s.km², one of the highest in Europe. Precipitation is a key factor for national electricity production, because Albania produces most of its electricity from hydropower plants. It is also very important for agriculture.

The Albanian Energy sector is mainly characterized by the dependence of the country to its water

resources - as 95% of domestic’s generation relies on hydropower - by the actual limitation on oil

and coal production, and by legal barriers such as incomplete market structures. The lack of

primary sources of energy, lack of resources and gas networks, limited production capacities and

interconnection, as well as bondage of electricity from water resources are some of the difficulties

that have had their impact, directly and indirectly in the economic life and quality of living

conditions in our country.

The supply of primary energy sources

The supply of primary energy resources for our country, for the year 2010 was 2105.55 ktoe.

Supply sources, for 2010, it is worth noting that hydrocarbons have contributed to 1232.9 ktoe,

or 58.71% against the total, electricity with 584.31 ktoe, or 27.82%, firewood with 213 ktoe, or

9.76%, and the remainder the other consists of resources such as: coal, natural gas and energy

derived from solar panels.

Despite the supply of primary energy products is always growing, our country market requires

improvements in the security of energy supply.

Facing production issues and growing demand, the government has recently recognized that

promoting greater energy efficiency and use of renewable energies should decrease the

dependence on energy imports and brings more balance into the energy system. Consequently, in

the frame of the Albanian National Strategy of Energy (ANSE), the government adopted the

National Energy Efficiency Action Plan (NEEAP) for the period 2010-2018. The NEEAP 2010-

2018 primarily aims to align the Albanian legal system to the EU Acquis, and in particular with

“the Directive 2006/32/EC of April, 5, 2006 on “Energy efficiency end use and energy services”,

the Directive 2002/91/EC on “Energy performance building”, and with the Directive 92/75/EC

also named the “Energy Labeling Directive”. The NEEAP contains a description of measures to

improve the energy efficiency in the country”.

Republic of Albania is a signatory party to the Energy Community Treaty (ECT). In its efforts to

approximate local legislation with EU legislation on energy efficiency, and in conformity with

the requirements set forth by EC Directive 2006/32, the Government of Albania adopted

Administrative Instruction No.2008/15 on Promotion of Utilization of Efficient Energy by Final

Consumers and Energy Services. The summarized target levels within each sector and the

distribution of this intermediate energy saving target by sector, determined in NEEAP, are

provided in the Table 1.

Table 1: National Indicative Energy Savings Targets

National indicative annual energy savings target 2018 (Ktoe)

168

National intermediate indicative annual energy savings target 2012 (Ktoe)

26

Measures to improve energy efficiency planned for achieving the target

annu. energy savings expected by 2012 (ktoe)

annu. energy savings expected by 2018 (ktoe)

annu. CO2 emissions reduction by 2012 (kgCO2/year)

annu. CO2 emissions reduction by 2018 (kgCO2/year)

Package of measures in the residential sector

5 37 2,693 19,925

Package of measures in the tertiary sector

5 32 7,345 47,008

Package of measures in industry

6 42 13,117 91,816

Package of measures in the transport sector

8 52 24,680 160,420

Package of measures in agriculture

2 5 5,448 13,620

Total ESD energy savings expected:

26 168 53,282 332,789

There are currently approved the new laws on:

“Energy efficiency”, No. 124/2015: The main aim of this Law is to reduce the energy

losses throughout its entire cycle; the law contributes to the efficiently use of the energy

sources, minimizing the harmful impact on the environment and of ensuring a sustainable

development of the society.;

“Energy performance in buildings”, No.116/2016,

which are in compliance with the Directive 2012/27/EU of The European Parliament and of The

Council of 25 October 2012 on “Energy efficiency”, and “Directive 2010/31/EU” of The

European Parliament and of The Council of 19 May 2010 on “The energy performance of

buildings”;

The leading sector in electricity consumption is the Residential Sector (49.6%) for 2015 featuring

decrease of 8.4% compared with 2014. Besides high amount of electricity consumption,

Residential Sector consumes as well as high values of fuel wood, 42 % and oil byproducts 10%.

The most important measures to reduce and improve energy use are as follows:

Thermal insulation of existing residential building stock allowing the reduction of electricity

and fuel wood for space heating of building stock;

introduction and penetration of central and district heating schemes for space heating and

domestic hot water, especially in new apartments of multi store buildings (Energy

Community, 2010). No estimations.

Penetration of solar heater systems, for meeting domestic hot water energy demand, which

will reduce the electricity consumption, by which it is expected to lead to annual energy

savings of 3 ktoe (Energy Community, 2010);

Penetration of labelled electric appliances by which it is expected to lead to annual energy

savings of 8 ktoe (Energy Community, 2010);

Higher penetration of efficient bulbs that will reduce the electricity consumed for lighting. No

estimations.

Furthermore, Albania cannot facilitate the development of a natural gas system in short terms

because it has almost negligible endogenous natural gas production and in the same time is not

connected with European Gas Networks. Therefore, as described by the circumstances elaborated

above, almost all energy services (space heating, cooking, and domestic hot water) for the

Residential and Service Sectors is covered either by electricity, fuel wood, and oil by products

and especially LPG.

Renewable energy resources

Albania has undertaken significant steps to implement in its national energy policies, the

requirements of the Directives of the European Union with regard to the rules for the creation and

development of the internal market in energy and the promotion of the production and

consumption of energy from its renewable sources.

The geographical location of the country, with a typical Mediterranean climate, results in

considerable renewable energy. These resources can be used not only to reduce the contribution

of electricity from conventional sources, but for the benefit of other clean energies.

Hydropower is the greatest benefit from renewable resources in our country. Albania ranks in

Europe as a country with significant water resources, with a distribution almost on the entire

territory 2- Present situation of the organisations related to energy efficiency such as ministries,

universities, research institutes, etc. a) MEI - The scope of Ministry of Energy and Industry is to formulate and promote policy

sectors and relevant legal framework, and monitoring their implementation in energy and Industry field. One of their departments is the one of renewable energy and energy efficiency. http://www.energjia.gov.al/

b) AKBN- National Agency of Natural Resources has the object of its activity, to conduct, supervise the rational use of natural resources, according to government policy, and monitoring of their post-exploitation in mining, hydrocarbons and energy sectors. http://www.akbn.gov.al/

c) ERE - Albanian Energy Regulator, ERE is a legal, public entity, independent from the industry interests and government institutions. The mission of Albanian Energy Regulator is: - to guarantee and develop an energy market based on objectivity, transparency and non-discrimination, based on free competition principles, like: - to ensure continuity and security of supply of electricity to final customers ; - to protect the customers’ interest through transparent tariffs based on costs; - to protect the environment and citizens life by exercising its authority in licensing and monitoring of subjects that operate in energy sector; http://www.ere.gov.al/

d) UPT, FIM - Polytechnic University of Tirana, Faculty of Mechanical Engineering, Department of Energy mission is to foster, coordinate and manage the teaching and research activities in energy field, while respecting freedoms of learning and academic staff and the right to exploit its material and financial resources available to the department. http://www.upt.al and http://www.fim.edu.al/

Ministry of Energy and Industry The Energy and Industry Ministry mission is to develop and implement policies aimed at ensuring the country's energy supply, utilization of energy and mineral resources in view of sustainable economic development and public utility, to promote industrial development standards as environmentally friendly. The Ministry has overall policy responsibility for the energy sector in Albania. MEI is responsible for the development and reform of the necessary legislative framework and for draft-enabling

legislation. It supervises the operation of the publicly owned energy utilities and the privatization process, as well as of statutory bodies in the energy sector. Its mission includes the promotion of sustainable economic development through:

- Preparation and periodic revision of the National Energy Strategy; - Providing demand forecasts for different energy sources; - Promotion of EE and RES including SHPPs; - Approving the National Energy Efficiency Action Plan and the National Renewable

Energy Sources Action Plan (assuring the sustainability of the sector and its entities); - Promotion of private investments, domestic or foreign ones in the energy sector,

(creating an attractive environmental climate for these investments). There are specialized sections that deal with electricity, and hydrocarbons and has nal responsibility for the realization of the energy acquis in Albania.

National Agency of Natural Resources AKBN is under the MEI. Today, in addition to its natural resource development functions, AKBN is an advisory body on energy issues for the government. It is also responsible for developing the country’s National Energy Strategy and policy in the eld of renewable energy use and energy conservation. The AKBN renewable energy department has been assigned the responsibility to:

- Prepare the National Energy Strategy and Action Plan and evaluate progress in its implementation;

- Develop scenarios and carry out analyses in energy elds (including energy efficiency) - to inform and guide the sustainable development of the energy sector - Collect and analyze the data dealing with the production, supply and consumption of energy

in the economy, creating a database according to IEA and EUROSTAT standards. - Prepare annual energy balance of the country according to IEA and EUROSTAT formats; - Evaluate the potential for and undertake the promotion of EE and RES, including SHPPs;

proposing appropriate environment norms related to exploitation of energy sources; and - Support MEI within its technical competence, e.g. draft legal acts in the energy sector.

The Albanian Energy Regulator Body The Albanian Energy Regulator (ERE) is a statutory body, independent of industrial interests and government institutions. ERE was established in 1995 with functions and powers according to law no. 9072, May 22, 2003: On Power Sector as Amended and law no. 9946, June 30, 2008: On Natural Gas Sector. The mission of Albanian Energy Regulator is to:

Guarantee and develop an energy market based on objectivity, transparency and non-discrimination based on free competition principles;

Ensure continuity and security of electricity supply to nal customers; Protect the customers’ interest through transparent and cost-re ective tari s; and Protect the environment and personal safety by exercising authority in licensing and

monitoring of subjects that operate in the energy sector. ERE has ve Commissioners who serve for ve-year terms; they have a right to reappointment for one additional term. The Chairman is also the executive administrator of ERE. In addition to the Commissioners, ERE employs 32 technical and non-technical staff members. 3- Current technical problems in energy efficiency field

The 1st Law on Energy Efficiency was adopted in 2005. However, implementation and enforcement has been lacking. The implementation of the first NEEAP in Albania actually is the intermediate phase of the implementation of national energy efficiency policy. Certainly, in this period the remaining gaps

in legislative and institutional framework for EE must be overcome and be eliminated. Some steps and activities must be carried out to address some gaps: • Full transposition and implementation of EU directives into Albanian legislation (adoption

of the legal framework for Energy Efficiency); • Strictly future implementation of the legal framework on Energy Efficiency, EE Action Plan

and Building Codes; • Incentives and financial supports for investments in EE; • ESCO penetration in the domestic market; • Programs in EE; • Awareness campaigns. The Intermediate Indicative Target for Energy Saving adopted could be less than 3% of the average consumption during the three-year period referred, without taking into consideration air transport consumption. The new law on “Energy efficiency” was approved in 2015, No. 138, which determine the national policies of energy efficiency. The national goal for energy saving will be determined by the national for energy efficiency action plan. The Law on Energy Performance in Buildings is already approved. The Ministry of Urban Development and Tourism intends to develop a new building code, implement compliance energy efficiency requirements for all new buildings, and refurbish existing ones. The final energy consumption in Albania in 2015 is equal to 1,994.9 ktoe (2,092.6 at 2014). The contributions on consumption among the sectors are as follows: 26.23% residential (532.3), 43.15% transport (860.7), 15.14% industry (302.1), 9.87% services (196.9), 3.64% agriculture/forestry (72.1). Energy sources are consumed in different economic sectors like Residential, Service in Public and Private, Industry, Transport and Agriculture. But the leading sector in electricity consumption is the Residential Sector, by 49.6% for 2015 featuring decrease of 8.4% compared with 2014. The relation between the economic development of a country and its energy demand is considered a key issue, and it is represented by a closed cycle. Currently, energy intensity in Albania is at a relatively high level from effectiveness. This means that the macroeconomic production, generally reported by the Gross Domestic Product (GDP), has been low compared to total energy consumption. Reasons for this are related to low industrial development of Albania, old technologies and big share of energy consumption goes for Residential Sector, etc. Albania is a crude oil producer, but not to the point of self-sufficiency. The most drastic effects are, however, the structural changes that have taken place as regards the shares of energy sources on the supply side and the final energy consumption by sectors and fuels. Production of oil and gas has declined rapidly due to lack of funds, necessary technical discipline and the natural decline of exploitable sources; Efforts to increase oil production in the existing and new sources through production sharing agreements have not yet been successful; Generation of electricity is dominated by the hydropower output whereas the thermal based generation is zero since 2007 and now although Vlora Thermal Power Plant (TPP), built in 2013 to produce around 800 GWh per year, it is now in conservation. During the period 2010-2013 there was a decline in hydro generation; There are uncertainties about the real cutting rate for fuel woods, but it is believed to be at a level equal to 230,000 – 250,000 toe/year; Supply structure of primary energy sources is becoming less and less diversified due to the increasing role of oil, hydro and fuel wood energy supplies compared to coal and natural gas. The last years situation indicates that the electricity balance is very tight and the Albanian Power cooperation KESH has become a net importer of considerable electricity quantities and in the coming years will continue to import even more to meet the growing demand until construction of new plants. The total installed capacity is 1,895 MW (2015), of which 1,445 MW (87%) is hydropower capacity. At 2015 the total internal generation was 5 865,7 GWh and whole supply was 7150

GWh. 80% of Albanian centralised heat production is used directly by the combined heat and power plants that generate it for their own consumption

Electricity

The installed electricity capacity of 1.8 GW is 95 % hydroelectric, with most of the remainder being produced from diesel power plants. Hydroelectricity is produced by 3 main power plants located in the north of the country on the Drin River: Koman (600 MW), Fierze (500 MW) and Vau i Dejes (250 MW).

Source: www.enerdata.net Power generation is solely depending on hydro levels, ranging between 3,7 TWh (2002) and 7,6 TWh (2010). As the above graphic shows electricity production follows an erratic path since 2010, reaching 7 TWh in 2013 followed by a 49 % drop to 4,7 TWh by 2015.

To cover its needs, Albania is interconnected with Greece, Montenegro and Kosovo and imports electricity from these countries.

Source: www.enerdata.net

Source: www.enerdata.net (http://www.enercee.net/index.php?id=273) Energy Consumption Trends by Sectors

Energy sources

Total installed electricity capacity (2010, Enerdata) : 1,659 MW - Hydroelectricity: 86% - Thermal 14% - Nuclear: 0% - Others: 0% Share of Total primary energy * 1717 kToe: Oil: 53.3% Natural Gas: 0.4% Hydro: 28.2% Biofuels and Waste: 13.4% Geothrmal/ solar/ wind: 0.20% Coal and Peat: 4.4% *Share of TPES excludes electricity trade

Albania use both diesel fuel and hydropower to generate electricity, with the latter being more significant and having a greater potential.

The energy consumption trend for sectors (Figure 2) illustrates the collapse of industry from 1990 and the sustained rise in transport since 1998. In 2009, the TFC accounted for 1,938 ktoe; residential sector and transport were the biggest consumers (25% and 39% of TFC), respectively; followed by the industry sector (14%) and 9% in commercial sector. The final energy consumption in Albania in 2015 is equal to 1,994.9 ktoe (2,092.6 in 2014). The contributions on consumption among the sectors are as follows: 26.23% residential (532.3), 43.15% transport (860.7), 15.14% industry (302.1), 9.87% services (196.9), 3.64% agriculture/forestry (72.1) ) http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tsdpc320&language=en).

Renewable Energy Potential

Albania has significant renewable energy resource potential from hydro, wind, and solar energy. The country currently relies on hydropower for almost all of its electricity, which creates difficulties when water flows are low. The Government of Albania recently adopted new electricity market laws and is undergoing a process of opening that market to competition. An attractive feed-in tariff is already in place for small hydropower, but the Government is still in the process of determining the incentive mechanism for encouraging more near-term investment in renewable energy technologies. Several very large and high-profile wind-farm deals are under development and should provide political pressure to speed the government decision process. The potential areas for follow-on activities to support the expanded use of RES in Albania include support mechanisms and administrative issues. The support mechanism that probably will be chosen by Albanian authorities (green certificates) needs to be developed such that certificates generated in the Albania national market can be sold and traded with the other European countries, especially given the new Italian wind-farm deal. Currently only hydropower makes a significant contribution to the current energy consumption in Albania. However, the country has significant potential for renewable resources in the form of wind, solar and biomass . Hydropower The Albanian hydrographical territory is 44.000 km2 or 57% larger than its geographical territory. The country has eight main rivers: Drini, Buna, Vjosa, Semani, Mati, Shkumbini, Ishmi and Erzeni. The average altitude of the hydrographical territory is about 700 m above the sea level. The total average flow of the rivers is about 1245 m3/sec. Due to the morphological features,

Albania is quite rich in rivers, with more than 152 rivers and torrents forming eight big rivers. They have a southeast-northwest flow, mainly oriented towards the Adriatic coast. The annual combined water flow capacity al Albania’s rivers are about 40billion cubic meters which, is fully exploited, could produce 16 to 18 TWh of electricity. So far, the country has realized one-third of this potential. Currently, there are 83 SHPP (small hydropower plants) in Albania ranging from 0.05-10MW for energy generation. Many of the SHPPs are in poor condition or are effectively inoperable because of outdated technology, lack of spare parts and poor maintenance. Biomass Biomass consists of the main resources (forest residues, urban waste, agricultural residues, and animal waste energy), could be important in Albania’s future. In 2009, Albania used 212 ktoe (Kilo tonne of oil equivalent) of energy produced by biomass, which was about 14% of the TFC (Total Final Consumption). The energy potential of urban wastes from the main Albanian cities was calculated as approximately 1,460 GWh/annum for the year 2010. Biomass can be converted to other usable forms of energy like methane gas or transportation fuels like ethanol and biodiesel. Methane gas is the main ingredient of natural gas. Smelly stuff, like rotting garbage, and agricultural and human waste, release methane gas – also called “landfill gas” or “biogas.” Crops like corn and sugar cane can be fermented to produce the transportation fuel, ethanol. Biodiesel, another transportation fuel, can be produced from left-over food products like vegetable oils and animal fats. People in Albania are trying to develop ways to burn more biomass and less fossil fuels. Using biomass for energy can cut back on waste and support agricultural products grown.

Source: Albania Energy Association

The forests constitute about 36 percent of the total land area, pastures 16 percent, agricultural land 24 percent and other lands 24 percent. The main forest species are oaks, beech, black pine, etc. The country has five forest types: Mediterranean shrub, oak woodland beech forests, Mediterranean fir and alpine zone. There are different sources to provide forest biomass for production of energy:

- Complementary felling in order to increase the supply of bio-energy from forest biomass. This includes stem-wood biomass from thinning and final harvest (annual harvesting possibility).

- Residues from harvesting operations in the forest. This includes stem tops, branches, foliage, stumps and roots that are left during stem-wood removal.

- Various industrial wood residues such as saw-dust. This is very important in the present utilization of woody bio-energy.

- Artificial plantations for energy production with short-rotation. That includes chips from plantations of willow, poplar, eucalyptus planted on land area that was formerly used for agriculture or in bare lands.

- Woody biomass from trees grown outside forests, e.g. horticulture and road side tending. Recycled wood, e.g. demolition wood from old buildings.

Approximately 50 percent of the country’s population is living in rural settlements (ten years ago this figure was 70 percent). This has created very strong relations between the community and forests. For several years, forests have been the main source of their employment and income. But at the same time, this has put a very high pressure on forests that in many cases have suffered unlimited use and degradation. Also, the difficult socioeconomic conditions of populations in these areas are another factor that has contributed to such degradation. The potential of energy derived from our forest resources is estimated as follows: Solar The territory of Albania is located in the western part of the Balkan Peninsula, at the eastern coast of Adriatic and Ionian seas. It is situated between latitudes 39o38’ - 42o38’ and longitudes 19o16’ – 21004’ east. Thanks to this geographical position, Albania belongs to Mediterranean climate zone with hot dry summer, with long days of sunshine and mild winter with abundant rainfall, possessing in this way a considerable solar potential energy: most areas of Albania are exposed to more than 1500 kWh/m2 per year varying from 1185 to 1690 kWh/m per year. Active exploitation of solar energy is achieved in systems that absorb this energy through flat collectors. Hot water can be used for space heating, when its temperature is high, but it is used largely for Domestic Hot Water (DHW) needs. Solar water heaters are proven technologies to supply domestic hot water to the service sector (e.g. hospitals, hotels), industry and households. However, low electricity prices and non-payments are obstacles. Nevertheless, solar panels have already been available on the market and significant volumes have been installed. In 2010, a total of 10,700 m2 were installed (60% by services, 40% by households), bringing total installations to 52,000 m2 (equivalent to around 70 GWh/y or 1% of electricity consumed by households in 2009). UNDP is supporting a programed (2011-2015) to install 50 thousand m2 of solar panels based on grants and fiscal incentives. Map shows average quantity of sunshine in the territory of Albania (3 zones) Map 1 and 2 shows the average daily solar radiation in the territory of Albania. Wind energy There are major plans for developing wind energy in Albania in the next few years with significant investment in a proposed 2000MW new generation capacity from wind. It is an ambitious goal, because at present there are no wind projects in the country. Albania is also proposing to become a wind power exporter agreeing to export surplus wind energy to Italy via a planned undersea power cable. According to the estimates, Albania shows an excellent wind potential, with wind speed values exceeding 8-9 m/s in many areas. A number of interesting areas, especially along the coast and on the ridges of the mountains, with particularly strong winds in the southern part of the Country, have been identified. Their overall exploitable wind potential has been estimated taking into account the main constraints preventing the development of wind power plants (i.e. distance from roads, power lines, protected areas, etc.). Geothermal energy Results of geothermal studies have been shown in the maps and geothermal sections. Temperature maps have been collected in different level up to 5000m depth. Also have been created geothermal gradient maps and hot flow density for Albania in general as well as in main parts of Korca in particular. In the following, author has prepared three important maps which are the basic parameters of geothermal energy for Albania in general and for Korca in particular. There are a lot of thermal wells and sources with low enthalpy in Albania in general as well as in main parts of Korca in particular. The temperature of the water goes up to 60°C. The water of these sources contains salt, bromium jodur, absorbed gas and some organic substances. In most

of oil and gas wells there are several thermal water sources which come out with a temperature of interval of 32-65.5°C.