Second Environmental Performance Review of Albania

Chapter 9: Energy and environment125elimination of cross-subsidies, and the introductionof uniform tariffs throughout the country. Theestablishment of a Transmission System Operator hasbeen achieved. It has separated the functions ofgeneration and distribution (retail supply). A bilateralcontract market is being considered for the future.Consistency with EU requirements is a keyconsideration in the development of the Albanianenergy sector. This is due to the formal requirementsunder the Energy Community Treaty covering theSEE electricity system, as well as the longer-termgoal of Albania acceding to the EU. However, toreach this goal, Albania will need to take intoconsideration not only technical and financialconstraints but also the environmental risks thataccompany its energy sector.In the electricity sector, significant improvementscould be developed. The Government signed a loanagreement for a new power plant at Vlora with theWorld Bank, the European Bank for Reconstructionand Development and the European InvestmentBank. These loans have been used to build a new 97MW combined-cycle, diesel-fuelled power and steamplant at Vlora, together with the necessary facilitiesto import the fuel. It will have the possibility ofexpanding capacity up to 435 MW in the future.There are also plans to increase electricity generationcapacity through the construction of new HPPs, butthese are not yet underway and electricity imports arelikely to increase in the short term.9.3 Review of the energy sectorThe total primary energy supply in Albania decreasedfrom a peak of 2.75 million tons of oil equivalent(Mtoe) in 1990 to 1.7 Mtoe in 1995, and thenincreased to 1.94 Mtoe and 2.088 Mtoe in 2003 and2008 respectively. Coal and natural gas were the “biglosers” since economic changes have forced manyindustrial consumers to close down.Supply and consumption of coal has declined fromapproximately 644.5 thousand tons of oil equivalent(ktoe) of primary energy supply in 1990 to 23 ktoe in2008. Natural gas has followed the same trend with aproduction decrease from 206 ktoe in 1990 to 7 ktoein 2008. Table 9.1 represents the national energybalance in 2009, the most up-to-date information. Itshows that the diversity of energy supply, which wasalready low, was concentrated in oil (and oil byproducts),hydropower and biomass (fuel wood).Fossil fuels sectorAlbania possesses many mineral resources, includingfossil fuels. While it has limited domestichydrocarbon reserves, they could be sufficient tomeet national demands. The United States EnergyInformation Administration estimates the country’scoal reserves at about 790 million tons, crude oilproved reserves at 27 million tons and natural gas at840 million m 3 .Photo 9.1: Use of fuel wood