Power sector infrastructure development in

Agim Nashi Advisor to ERE Board Historical data on power sector in Albania

‡ Power production and power supply of ‡ Production capacity of HPP varies residential and industrial consumers from 3.5-4.8 bl. kWh to 7 bl. kWh, started in 1923 by using diesel remote respectively, for the hydrological power plants with operational voltage security of 90%, 50% and 25% of 0.4, 3.6 and 16 kV ‡ Production capacity of TPP was 1.2 bl. ‡ In 1951, first power plants and kWh but actually all these power plants transmission facilities with operational are closed voltage of 35 kV were introduced ‡ 83 small HPP produce around 55 ‡ Year 1957 represents the creation of million kWh, their contribution in Albanian Power System and domestic production is not operational voltage of 110 kV is considerable, their importance is introduced mainly for rural areas where they are ‡ Nowadays, Albanian Power System located operates with high voltage of 220 kV ‡ Recently, ERE licensed a and 400 kV company for construction of an ‡ Until 1990, there were 20 power plants offshore wind farm with installed with installed capacity of 1,670 MW, of capacity of 150 MW which ‡ Also, an application is under review for „ 11 HPP (1,446 MW) granting a construction license to an Italian company for an offshore wind „ 9 TPP (224 MW) farm with installed capacity of 500 MW ‡ There are also some other projects under construction: TPP Vlore, HPP Kalivac, HPP Sasaj and some other small HPP. Energy sources Generation, hydro energy reserves Energy sources Generation, hydro energy reserves Energy sources Hydro Generation

‡ Albanian Power System is insufficient and cannot secure a continued and qualitative supply for all consumers ‡ 99 % of production is from HPP, three of them are in the Drini River Cascade and provide 86% of total domestic production ‡ In a normal year, total production is about 4,160 GWh but this is insufficient to cover growing consumer needs

HPP stations Installed capacity (MW) Actual capacity (MW) Gjenerimi Mesatar (GWh/a)

HEC Fierze 500.0 152 1,328

HEC Koman 600.0 171 1,500

HEC Vau i Dejes 250.0 100 880

Kaskada e Drinit 1,350.0 423 3,708

HEC Ulzes 27.0 14 120

HEC Shkopetit 25.0 10 90

Kaskada e Matit 52.0 24 210

HEC Bistrica 1 23.0 19 165

HEC Bistrica 2 5.5 4 35

Kaskada e Bistrices 28.5 23 200

HEC e Vegjel 20.0 2 20

TEC 159.0 10 76

Gjithsej 1,609.5 482 4,214 Energy sources Generation, hydro energy reserves

‡ Even though 98% of domestic production is from hydro resources, it is a fact that only 35% of hydro potential has been exploited so far

‡ Total reserves are estimated to be around 4,500 MW and potential annual production can reach 10-12 TWh

‡ Considering the fact that 95 % of HPP are located in the north of Albania, the attention is concentrated in construction of new facilities in south of Albania - on the Vjose and the rivers

‡ Most recent analyses prepared by national and international institutions emphasized that:

„ Available generation capacity is insufficient and cannot cover the demand growth even when hydrologic conditions are favorable „ Available generation capacity is insufficient and cannot cover the demand during the peak time of the day/week/month/year „ For a better management of hydro reserves, it is necessary to improve production structure and to diversify it by constructing thermal power sources Energetic sources Generation, TPP

‡ As mentioned above, 9 TPPs have been decommissioned ‡ The below table presents main features of these power plants Energetic sources Generation, hydro energetic reserve of SHPP

‡ Until 1988, there were 83 small HPP constructed with installed capacity of between 30 - 5000 kW each

‡ The total installed capacity is about 14 MW and there are possibilities for increasing their capacity up to 25 MW by better exploitation of river flow

‡ Some studies are underway in order to identify possibilities for construction of other small HPP and increase of capacity for existing power plants and elimination of some deficiencies mainly in:

„ Incomplete exploitation of hydro energy capacity „ Lack of frequency stability and voltage stability during load changes „ Frequent interruption of power plants from network „ Relatively high costs of equipment rehabilitation of small HPP

‡ The estimates have been made for about 41 new small HPP with installed capacity of 0.5–10 MW each to be constructed in the future

‡ Total capacity of these power plants will be about 140-150 MW and their annual production will be 600-680 GWh Energy sources Generation, alternative energy reserves

‡ Active exploitation of solar energy - If Albania develops photovoltaic and thermal panels for hot water production, equivalent energy spared will be 1000 GWhthermal (or 125 MWthermal installed capacity)

‡ Wind energy - Preliminary estimates show that areas with highest wind potential are located on the west coast where can be constructed 20 EC to be used for supplying 20 pump stations used for protection of land from flooding. It is expected that by 2020, domestic production from wind farms will be 400 GWh/year. With recent projects being licensed by ERE, these are very ambitious projections

‡ Potential for exploiting urban waste - Energy reserves of urban waste are considerable and in increasing tendency but production of energy with this kind of combustible has a high cost compared with other traditional fuels

‡ Geothermal sources - Albania has a lot of geothermal sources but these sources cannot be used for power production because their thermal potential is low (20-330C)

‡ Biomass is another source with a high spread in Albania. For the moment, it is not used efficiently and a lot of forests are damaged. It is mainly used in industry and for residential heating and there are as of yet no applications for power production. Biomass from agriculture is mainly used as food for livestock. Energy sources Generation from HPP, Perspectives

‡ Below table presents a construction schedule according to national strategy for energy ‡ Taking into consideration plans for installing 150 MW of small HPP to be installed every year - approximately 10.7 MW by 2020 ‡ Additional tables present power production and investments for each year and reflect entry of new facilities into operation

Centralet 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total SHPP 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 150

HEC-i Devolli 1 koha e marrjes se koncesionit dhe ndertimit 75 75

HEC-i Vjosa 1 koha e marrjes se koncesionit dhe ndertimit 80 80 HEC-i Drini1 koha e marrjes se koncesionit dhe ndertimit 84 84 Total 10.7 10.7 10.7 10.7 90.7 169.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 10.7 389

Gjenerimi 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 GWh SHPP 102 143 185 226 268 309 351 392 434 475 517 558 600 HEC e reja 0 0 0 350 966 966 966 966 966 966 966 966 966 HEC ekzistuese 4047 4115 4149 4149 4149 4149 4149 4149 4149 4149 4149 4149 4149 Total 4149 4258 4334 4725 5383 5424 5466 5507 5549 5590 5632 5673 5715

Investimet 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Milion Euro SHPP 1.5 6.0 11.4 11.8 12.1 12.5 12.9 13.2 13.6 14.0 14.5 14.9 15.4 15.8 16.3 185.9 HEC- Devolli 1 6.0 18.0 42.0 30.0 24.0 120 HEC-i Vjosa 1 3.0 24.0 61.0 40.0 32.0 160 HEC-i Drini 1 23.4 62.4 39.0 31.2 156 Total 4.5 36 113.8 156.2 113.1 67.7 12.9 13.2 13.6 14.0 14.5 14.9 15.4 15.8 16.3 621.9 Energy sources Generation from HPP, Perspectives

‡ It is foreseen that concessions will be granted for rehabilitation of Fier TPP (Phase I 72 MW and Phase II 128 MW) ‡ It is foreseen that Vlora TPP (97 MW) will be operational by 2010 ‡ It is necessary to install 640 MW in form of TPP by 2020 in order to cover the demand and diversify production structure ‡ In the first years of exploitation, this TPP will use diesel fuel, because connection of Albania with international gas pipelines will be possible only after 2010

Centralet 2007 2008 2009 2010 2011 2012 2013 - 2020 Total TEC i Fierit (faza e pare) koha e marrjes se koncesionit dhe rehabilitimit 72 72 TEC i Vlores koha e marrjes se koncesionit e ndertimit 97 97 TEC-et CCGT me distilat nafte ose gaz atyror Studim projektim dhe koha e marrjes me koncesion 435 435 Total 72 169 435 604

Gjenerimi Total 2009 2010 2011 2012 2013 – 2020

TEC i Fierit 390 390 390 390 390

TEC-et CCGT me distilat nafte ose gaz natyror 675.3 675.3 675.3 3263

Gjenerimi Total 390 1065.3 1065.3 1065.3 3653

Investimet 2007 2008 2009 2010 2011 2012 Total Milion Euro Rehabilitimi i TEC-i Fierit 5.5 10.6 16.1 TEC-et CCGT me distilat nafte dhe gaz natyror 25 67 40 62.0 115.0 68.0 377 Total 30.5 77.6 40 62 115 68 393.1 Situation in transmission network

Transmission network in Albanian Power System is composed of

‡ Overhead lines 400 kV 120.2 km ‡ Overhead lines 220 kV 1102.3 km ‡ Overhead lines 150 kV 34.4 km ‡ Overhead lines 110 kV 1232.1 km ‡ Power stations 220 kV 11

‡ Main problems facing TSO include:

„ Lack of possibility to operate the network in optimal manner and high imbalance between production and demand

„ Limited interconnection facilities

„ Control system is very depreciated and communication equipment is not efficient, many times leading to loss of system stability and security Situation in transmission network (continued)

‡ In order to improve the transmission network and increase the importing ability, the World Bank and other organizations have financed a project for rehabilitation of transmission network

‡ Objectives being realized in the framework of this project are:

„ Improvement of all standards, quality and efficiency of transmission system

„ Optimal operation and reduction of technical losses

„ Support and development of transmission facilities

„ Construction of dispatching center which will improve operation in high voltage network

„ Improvement and enhancement of exchange in an efficient way with neighboring countries, especially when growth of demand leads to growth of import Regional Transmission Network and Generation Structure 14% 30% 56% 4

Hydro Power Plants Coal Power Plants Heavy Fuel Oil Power Plants Natural Gas Power plants Albanian Power System

PRIZREN PODGORICE

B.CURRI

FIERZE

KOMAN RENC GJEGJAN 1 F.ARREZ KALIMASH SHKODER 2 V.DEJES

BUSHAT

SPAÇ

RUBIK LEZHE

SHKOPET SHUTRI

2 ULZE F.KUQE 1 LAÇ VOJNIK

SUÇ VRUTOK FUSHE KRUJE

BULQIZE 220

SHKOZET DURRES SELITE U.TRAKT.

IB E

FIBER ELB.220 PRENJAS K.METAL. ELB.400

CERRIK

OHER GURI I KUQ 2 KAJAN LUSHNJE

KUÇOVE MARINAS

FIER ZEM LAK UZNOVE

BALLSH KAFARAJ KORÇE DRENOVE

SELENICE

VLORE KARDHJA BISTRICE

MEMALIAJ ERSEKE

KRAHES KELCYRE

PERMET

GJIROKASTER

LEGEND

1 POW ER PLANT 2 BISTRICE SUBSTATION LINE 400kV LINE 220kV LINE 110kV

NEW INTERCONECTION LINES IG U M E N IC E Transmission network Master plan for the period 2007 - 2020

‡ The master plan aims to cover all necessary interventions with minimal costs, quality and in compliance with plans of network enhancement in order to fulfill technical requirements for a secure operation and integration into the UCTE

‡ The master plan foresees reductions in transmission losses to be around 2%

‡ Priority Projects are: „ 400 kV overhead line -Kashar-Podgorica (2009) „ National dispatching center (2009) „ 400/220/110 kV substation in Kashar, equipped with tow 300 MVA transformers (2009) „ 400 kV overhead line with Prishtina, Kosovo (2010) „ Intersystem overhead line 400 kV Macedonia-Albania-Italy (after year 2011)

‡ In total, it is foreseen that: „ In period 2007-2020,17 new overhead lines of 110 kV voltage, 1 overhead line of 220 kV, and 3 overhead lines of 400 kV will be constructed „ 10 existing overhead lines of 110 kV will be reinforced „ During this period, 4 new substations of 220/110 kV will be constructed and installed capacity for 4 existing substations will be increased. In total, the installed capacity in power system will be increased to 850 MVA Situation in distribution network

‡ Distribution network has these features

„ Substations 110/35 kV 326 „ Medium Voltage distribution lines 13,502 km (6/10/20/35 kV) „ Transformation cabins MV/LV 17,879 „ Low Voltage distribution lines 24,393 km „ Costumers 971,500 (of which 855,812 are residential)

‡ Equipments are mainly of Russian and Chinese technology and very much depreciated, causing a lot of technical losses (4-5 times higher then normal standards) ‡ There is a considerable number of consumers without metering equipment and some others use the distribution network illegally

‡ Use of electrical energy for heating and cooking causes damage to the distribution network, especially in main urban areas Distribution network Master plan for the period 2007 - 2020

‡ This program includes:

„ Installation of metering equipment for all consumers without meters

„ Elimination of illegal connections

„ Gradual phasing out of 35/10-6kV network and substitution with 110/20 kV network as well as introduction of 20 kV network in main urban areas

„ Reduction of technical losses to 6-7.3% in urban areas

„ Construction of 6,800 transformation cabins in rural areas with standard characteristics 20/0.4 kV, 100 kVA, and reduction of losses from 9.8 to 7.3 % and rehabilitation of rural network of LV (12,156 km)

„ Detailed plan of maintenance costs, new metering costs and costs of rehabilitation

„ Expected reduction of losses to 6% by 2020 Energy balance and security of supply

‡ Some problems facing Albania with respect to power supply are:

„ Demand growth for power supply is higher than for all other energy sources

„ Available generation capacity is insufficient and cannot cover the demand during the peak time of the day/week/month/year

„ Over-consumption of energy and mainly in LV has lead to high level of technical losses, overload and other damages

„ Production structure is based only in HPP and there is an imminent need for diversification

„ Limited interconnection facilities and actual generation capacity have caused insufficient supply to consumers

„ Securing interconnection capacities to transmit energy till in Albanian border has become very difficult and price of interconnection capacities and price of energy has increased very fast Energy balance and security of supply

‡ Annual growth in number of customers has been 5%, and in 2006 reached 8% ‡ Annual consumption of residential consumers in 1991 was 8% of total consumption, actualy it is 51% ‡ Annual growth of supply with energy has increased from 1992 with 4.3% per year

Konsumi Familjar Kundrejt Konsumit Total ne vite 6,121 5,945 5,933 5,900 5,742 5,739 5,431 5,430

7,000 5,067 70.00 5,054 4,872

6,000 60.00 4,317

5,000 3,719 50.00 Konsumi Total Vjetor 3,475 3,403.0 3,377 3,316 3,304 Konsumi Familjar 3,116.0 3,095.0 3073 3,072 3,023.1

4,000 2,967.0 40.00 2,949 2,921.1 2,910 2,840.0 2,814.0 2,790

2,702.9 % ndaj konsumit total 2,668.0 2,575.0 2,575 3,000 30.00 2,240.0 Konsumi (GWh) Konsumi

2,000 1,734.0 20.00 1,286.0 1,000 10.00 % e konsum familjar ndaj it total atij 552.0 367.0 250.0 270.4

0 233.0 0.00 214.0 193.0 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 Energy balance and security of supply

‡ Growth of demand has surpassed growth of billing of energy sales because of increase of non-technical losses from illegal connections ‡ Amount of non-metered consumption is estimated to be in a higher level compared with real consumption ‡ Estimates show that losses in total are around 40% since 2003 ‡ This means that for any 1 kWh produced, a utility is able to bill only 0.6 kWh

GWh/year 2002 2003 2004 2005 2006 2007 2008 2009

Demand 6200 6408 6428 6640 6465 6659 6855 7061

Growth in % -- 3.24 0.31 3.19 -3 3 3 3

Interruptions 851 662 556 760 412 958 0 0

Supplied energy 5349 5746 5872 5881 6056 5701 6855 7061

Production 3038 4748 5394 5357 5451 3813 4254 4867

Import 2226 916 478 524 2450 1888 2600 2194 Merchant lines, Legal framework

‡ Amendments of “Power Sector Law”

„ Merchant lines are considered only those lines which connect two national power systems constructed by third parties

„ Construction of these lines requires approval of Council of Ministers

„ 20% of line capacity will be used for public utilization from TSO

„ TSO and ERE give suggestions to Council of Ministers before approval of an application for construction of a merchant line

„ Private investor can use line for 20 years, at the end of this period the ownership of this line devolves to TSO Merchant lines, Legal framework

‡ Decision of Council of Ministers for approval of criteria and procedures for granting permissions for construction of merchant lines

„ Describes area of application and general dispositions

„ Criteria for granting construction permissions for DC interconnection lines

„ Criteria for granting construction permissions for AC interconnection lines Merchant lines, Approved projects

MONCADA srl ASG Power srl Enpower Albania shpk Investment cost 350 million $ 190 million € Point of connection Fier 220 kV – Foggia 380 kV Babica 220 kV – Brindisi 380 kV Line length 340 km 155 km Max profoundness 800 m 264-825 m Operational voltage 400 kV DC 400 kV DC Capacity 1000 MW 500 MW THANK YOU FOR YOUR ATTENTION