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View from Brussels: Albania embraces a new energy dawn

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Albania has started construction on a solar power plant that will be the biggest in the region once completed. It will help the Western Balkan country manage its immense hydropower resources, which are becoming more unreliable due to climate change.

Most of Albania’s electricity is produced using hydropower generated by the network of dams along its mountainous rivers. The rest of the power comes from wind, solar and imported electrons.

The statistics for overall energy are far less impressive though, as more than 60 per cent of demand is met by fossil fuels like oil and gas. But the current government has big plans to change that, partly prompted by ongoing price spikes and Russia’s war on Ukraine.

Albania enjoys the most sunshine hours of any country in Europe, so is ideally placed to exploit the power of the sun. Last week, Prime Minister Edi Rama laid the foundation stone for a new 140 megawatt solar power plant.

French firm Voltalia – which has installed more than 1 gigawatt of clean energy across 20 different countries, with 10GW more in the pipeline – is building the plant and plans to hook it up to the Albanian grid by 2023.

The solar panels will be able to generate enough power for 220,000 homes – significant for a country of just 2.8 million people – and the clean electrons will save nearly 100,000 tonnes of CO2 every year. That is about 10 per cent of Albania’s industrial emissions.

But perhaps more crucially than that, the new plant will help Albania solve a major flaw with its existing clean energy system and the weaknesses built into its hydropower resources.

Albania is on a literal hot streak of dry years, where rainfall has been below the levels needed to replenish the reservoirs that sit behind its dams. Energy-generating capacity has fallen by around 10 per cent as a result.

That is why the government is planning a new 210MW dam to add to its existing 1,350MW of hydropower. The half-billion-euro project will not only add extra capacity but also be able to manage the water levels of the rest of the network.

It means that Albania will be able to store up its water supply for use when it is most needed, during peak summer months when there is less rainfall and power demand increases due to air conditioning.

More dams can only do so much though. If climate change continues to disrupt energy- generating norms, as has been in the case in France where its nuclear fleet has been impacted by lack of cooling water, other options will be needed.

This is where the new solar plant will slot into Albania’s energy mix very comfortably. Another plant – also built by Voltalia – is due to come online in 2024 and inject 100MW of additional power into the grid.

Not only is Albania trying to leverage its natural resources to combat price spikes, energy dependence and scheduled blackouts, it is trying to get the management of the power generated by these resources running efficiently.

That is why under the terms of the deal with Voltalia, the lion’s share of the electricity produced by both facilities will be bought up by Albania’s public operator and the rest will be sold to the private sectors under long-term contracts.

If construction goes as planned then this kind of arrangement could create a virtuous circle of clean energy projects. In a region where average wages are much lower, cheap energy is nothing to be sniffed at.

Solar power will also help balance Albania’s hydropower ambitions with its environmental obligations. Green campaigners want the government to rely less on dams, because of their impact on river ecosystems.

Given its dependence on hydro, most of the dams will remain but along one river at least, that will not be the case. In June, Rama’s government announced that the Vjosa river would become a natural park, in effect blocking any future dam development.

As part of a team-up with US outdoor clothing company Patagonia, Albania will transform the river – considered to be one of Europe’s last true wild waterways – into a protected area. Campaigners hope that it can be replicated on other rivers in Europe.

Dams already exist on some of the Vjosa’s tributaries and there are some tentative plans in place to develop hydropower on the river. The government has not yet clarified what will happen to those particular projects.

Albania does not have a huge budget to play with as it is one of the poorest countries in Europe but there is now a small glimmer of hope on the horizon: EU membership.

Talks with Brussels about joining the club – and tapping into the financial rewards that come with membership – have not started because Albania’s fortunes have been tied to those of neighbouring North Macedonia.

Macedonian hopes have been dashed so far by Bulgaria, which has objected to certain parts of its neighbour’s constitution, citing historical disputes as reason to wield its veto. But a new compromise penned by France may soon unlock those negotiations for both nations.

Full membership is still likely to be years away but progress will breed certainty, which will attract investment. If that is tagged with government reforms then that will accelerate the accession process.

Albania’s bet on solar may yet pay off in a big way.

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