National Action Plan for Renewable Energy Resources in Albania 2015-2020 Albania, as a Contractual Party in the Treaty of Energy Community September 2015 (PASSED in January 2016) [1] Table of content EXECUTIVE SUMMARY 4 1. RES GENERAL SITUATION IN ALBANIA 6 1.1 Introduction and historic overview 6 2. RENAP FOR THE FULLFILLMEN OF THE OBJECTIVE FOR RES IN ALBANIA 10 2.1 Summary of the policy for renewable enrgey in Albania 10 2.2 Indicating objectives for renewable energy 10 3. MEASURES for the fulfilment of specific OBJECTIVES in the SECTORS 13 3.1 Summary of the policies and of the measures for the enhancement to use energy from renewable resources 13 3.1.1 Current supporting schemes for energy production from Renewable Resources 13 3.1.2 Supporting promoting schemes of RES in energy market. 14 3.2 Supporting schemes for the promotion of energy use from renewable resources of heating and cooling (RER-H&C). 14 3.3 Supporting schemes for the promotion of the use of energy from renewable resources in transport (RER-T) 15 3.3.1 Specific measures for the promotion of the exploitation of energy from biomass 17 1.1.1.1.1 Supply with biomass: domestically and abroad 17 3.3.2 Measures to increase biomass availability taking into consideration the other users of biomass (agriculture and other sectors based on the forests) 20 1.1.1.2 Mobilization of the new biomass resources 20 1.1.1.3 Influence on other schemes 21 3.4 Specific measures to meet the requirements under articles 13, 14, 16 and articles 17 to 21 of the Directive 2009/28/EC 24 3.4.1 Administrative procedures and spatial planning 24 3.4.2 Buildings 33 3.4.3 Informative provisions 34 3.4.4 Electricity infrastructure development 35 3.4.5 Grid operation 39 3.4.6 Development of regional heating and cooling infrastructure 40 3.4.7 Bio-fuels and other bio-liquids-sustainability criteria and cHPPking of compliance 40 3.5 Intended use of statistical transfers between Member States and planned participation in joint projects with other member states and third countries 43 3.5.1 Procedural aspects 43 1.1.1.4 Certificate of origin warranty 43 1.1.1.5 Monitoring procedure 44 1.1.1.6 Monitoring procedure and prohibition of multiple sales 44 1.1.1.7 International cooperation for origin guarantees 45 1.1.1.8 Calculated surplus of the production of renewable energies that may be transferred to other member states compared to the indicative trajectory 46 [2] 1.1.1.8.1 Potential calculated for joint projects 46 3.6 Assessment of the available potential for the development of local renewable energy resources.48 3.6.1 Potential of hydropower plants (HPP) 48 3.6.2 Concessions for SHPPs 48 1.1.1.9 Operational SHPP: old rehabilitated units and new units 49 1.1.1.10 SHPPs under construction 49 3.7 Energy potential from biomass 49 3.7.1 Solar energy potential 56 3.7.2 Wind energy potential 58 3.7.3 5.1.8 Geothermal energy reserves 60 3.7.9 RER input to power generation 61 ANNEX I: ENERGY BALANCE SHEET (2009/IN KTOE) BASED ON NET CALORIFIC VALUES 64 ANNEX II: energy balance sheet (2014/in ktoe) based on net calorific values 65 ANNEX III: FEED-IN TARIFFS FOR WIND-POWER PLANT TECHNOLOGIES AND PHOTOVOLTAIC PLANTS IN DIFFERENT COUNTRIES 66 Feed-in tariffs for wind power plants 66 Feed-in tariffs for PV plants 67 Acronyms NANR National Agency of Natural Resources RER Renewable Energy Resources RER-H&C Renewable Energy Resources in Heating and Cooling RER-E Renewable Energy Resources in Electrical Energy RER-T Renewable Energy Resources in Transport EE Energy Efficiency ERE Energy Regulatory Entity EUROSTAT European Statistics HPP Hydro Power Station SHPP Small Hydropower Plant CM Council of Ministers EGFC Energy Gross Final Consumption ktoe Kilo ton oil equivalent MARDWA Ministry of Agriculture, Rural Development and Water Administration MEI Ministry of Energy and Industry ME Ministry of Environment WHSP Water Heating with Solar Power GDP Gross Domestic Product NAPEE National Action Plan for Energy Efficiency NREAP National Action Plan for Renewable Energies IAE Influence Assessment on Environment UNFCCC United Nations Framework Convention on Climate Changes [3] EXECUTIVE SUMMARY Albania as one of the Contractual Parties of the Energy Community Treaty is obliged to transpose and to be in compliance with the EU Directive 2009/28/EC “On the enhancement of the use of energy from renewable resources”. One of the requests of the law 138/2013 “On Renewable Energy Resources” and of this Directive is the preparation and the approval of the National Action Plan for Renewable Energy (NREAP), which establishes national objectives of renewable energies in the final total domestic consumption as well as the supporting measures to achieve them. Also, Albanian Government considers the promotion of renewable energies implementation as an important means of energy policies to increase the security for energy supply, economic development, energy sector sustainability and environment protection. Even though Albania ensures over 90% of the power from the hydropower stations, a considerable part of the energy is imported. This part varies – depending on the annual conditions- between 30% and 60%^ of the Total Supply with Prime Energy. Renewable energies might be a solution for the reduction of this dependence from the imports and it might improve not only the security for the supply with energy, but even the macroeconomic and political security of the country decreasing the country budget deficit. Based on these facts, which offer the context for potential increase of the EREs role in the current situation of energy and economy in Albania, and based upon the principles of energy and the added domestic economic value, the potential objectives of EREs policies have been passed: I. Consumption of renewable energy resources at the measure of 38% in 2020; II. Desertification of domestic renewable resources, not only from the water resources but even from wind, sun, biomass and geothermal energy; the use of domestic energy resources, especially in the remote areas providing vacancies and improving the living standards. III. The increase of the contribution of bio-fuels and other burning materials from renewable resources with 10% in the total of fuel consumption in transport sector until 2020. The increase of the use of EREs technologies is an essential step in general towards a more sustainable society and in particular it brings considerable benefits for Albanian industry. ERE’s 38% objective was passed in the Decision of the Council of Ministers of Energy Community 2012/04/MC- EnC. General National Objective The year 2009 will be the starting point in the National Objective for ERE. In this year the EGFC was 2,104 ktoe and ERE percentage in consumption terms was 31.2%. Implementing the approach determined in the Directive, pursuant to technologies, the basic data are provided for ERE promotion. Renewable energy for ERE-T transport sector: In order for the ERE consumption National Objective of 38% to be accomplished in 2020, the consumption of 3% for the Albanian territory of EGFC has been predicted. Otherwise, the mixture up to the measure of 10% in the volume of fuels of the renewable burning materials (FAME), consumed in the Transport sector, has been predicted. This amount is equal with at least 75 ktoe FAME for the transport sector in 2020. This amount of the renewable part in biofuels takes into consideration the increase with 60 ktoe in 2020 compared to 2014. Renewable energy for heating and cooling sector ERE-H&C: in order for the ERE consumption National Objective of 38% to be accomplished in 2020, it is necessary that the consumption of 10% of EGFC in the Albanian territory, which has to be consumed in the Heating and Cooling system, ERE-H&C, is consumed. This amount means an additional increase of the heat with at least 800 GWh/year in 2020 or an annual consumption of ERE-H&C of 2/9 ktoe heat from wood/industrial/waste and heating pumps biomass. Renewable energy for energy sector, ERE-E: In order for ERE consumption National Objective of 38% in 2020, it is necessary that the amount of 29% of EGFC, used in energy sector, ERE-E, in the Albanian territory is consumed. This amount means an additional increase of at least 270 ktoe (3,140 GWh) until 2020. Also, this means an average increase of energy generators from renewable resources in the amount of 830 MW (20-35% capacity factor) which are proposed to be divided according to the summarizing table: [4] Table 1 – Summarizing table of ERE for Heating/Cooling, Transport and Energy which will be added to the Final Gross Energy Consumption in Albania after 2015 until 2020. Quantity Generation Instalatyion ERE additional technology 2015-2020 ktoe GWh MW SHPP up to 10 MW (SHPP) 200 2,326 750 Eolic (Wind) 30 233 30 1. ERE-E Photovoltaic (PV) 40 582 50 Total 1 270ktoe 3,140 830 % in EGFC 25% Biomass 52 800th - 2. ERE- Total 2 52ktoe H&C % in EGFC 10% Biofuel FAME 75 - 3. ERE-T Total 3 75ktoe % in EGFC 3% 397 ktoe Total 1+2+3 from the total 1,017 ERE ktoe % in EGFC 38% Table 1/2 – The remaining percentage 2014-2020 for the accomplishment of EREs national objective A EREs part consumed compared to EGFC during 2009-2014 % 31.2% B ERE objective which will be consumed in EGFC in 2020 % 38.0% C ERE quantity consumed in average in EGFC during 2009-2014 ktoe 666.7 D EGFC for Albania during 2009-2014 ktoe 2,281.5 E Expected EGFC for Albania in 2020 (with EE) ktoe 2,678.5 F ERE additional annual quantity to achieve the objective in 2020 ktoe 397.0 G ERE total annual quantity to be consumed in 2020 ktoe 1,017.2 [5] 1. RES ACTUAL SITUATION IN ALBANIA 1.1 Introduction and historic overview The supply with prime energy in Albania has been dominated by fuel, hydropower plants and biomass. Domestic energy sector has been supported by energy imports, especially by fuel products and energy imports. Historically, energy needs have been accomplished almost exclusively by the hydropower plants. The total installed energy capacity in Albania reaches up to 1.8 GW, dominated by hydropower plants. Water resources are the most important natural resources in Albania and the general hydropower potential is assessed up to 4.500 MW. Today, the country has exploited only 35% of the hydropower stations potential. The hydropower stations established and linked on the cascade on the river Drin represent about 80% of the total energy production. The changes in power production might be attributed to the unstable production from the hydropower plants. Furthermore, the country suffers from significant transmission and delivery losses – which are technical and non-technical – which were assessed up to 44.96% in 2012, according to ERE, and due to the tough and active measures undertaken by the Albanian Government, they fell up to 29% in the first six months of 2015. As the water conditions change year after year, the country is compelled to support on energy export at a large measure. The increasing requests for energy have increased even the support of Albania in energy import. Especially, during the first decade (2001-2010), energy final request increased with an annual average norm of 4.8%. On the other side, energy generating capacity increased by an annual norm of 0.6%. The country has changed from an energy exporter into an importer. For this reason, the generating capacity extension is one of the main priorities of energy policies sector in Albania. The future development of energy capacity has been planned mainly along the rivers Mat, Vjosa, Devoll and Bistrica. Apart from this, the Albanian government has been focused on the diversification of its supply with energy and the promotion of other renewable energy resources, such as biomass, solar energy and wind energy. Albania has a considerable potential of RER. Its solar power potential has been assessed in 1,500-1,700 kWh/m2 per year. The country has also unexploited potentials of wind power, especially along the Adriatic coastline. According to the Albanian Agency of Investment Developments a series of zones have been identified with high potential of wind energy, with an average annual wind speed of 6-8 m/s and with energy density of 250-600 W/m2. Albania has also considerable potential of biomass from agricultural waste, which is assessed approximately about 2,300 GWh/year. The heat from renewable resources, which is being offered from the inefficient use of firewood, is promoted mainly through the implementation of solar systems for water heating, industrial biomass and agricultural biomass. As long as energy production system is concerned, despite the hydropower stations, which is the main RES technology, it is expected to expand considerably up to the year 2020. The other RES technologies such as wind, biomass ore solar power are expected to play a limited role, even though considerable potential exists. The developments in energy final consumption indicate the domination of fuel products. From 1990 up to 2013, a considerable decrease might be noticed in the contribution of solid combustibles, that means coal and natural gas. In 2013, transport sector was the greatest energy consumer, with about 40% of the final total consumption, followed by the residential sector (27%), industry (17%), service sector (9%) and at the end agriculture (5%). Albania as one of the Contractual Parties of Energy Community Treaty is compelled to transpose and to be in compliance with the EU Directive 2009/28/EC “On the enhancement of energy use from renewable resources and it must amend and then abrogate Directives 2001/77/EC and 2003/30/EC”. This comes even as a request of Law 138/2013 “On Energy Renewable Resources”. One of the requests of law and of this Directive is the preparation and the approval of the National Action Plan for Renewable Energy (NREAP), which would stipulate the national objectives on renewable energies in the [6] final consumption of domestic energy. On the other hand, Albanian government has considered the promotion of renewable energy use as an important tool of energy policies for the increase of the security for energy supply, economic development, energy sector sustainability and environment protection. Even though, in Albania, more than 95% of energy and 20-23% of primary total resources have been provided by hydropower stations, the objectives of Albanian Government energy policy intend to increase further more the use of RER. In the last decade all over the world, the greatest part of the debate in relation to the encouragement for the implementation of renewable resources has been focused on the financial support schemes and the improvement of the conditions in network connection for renewable energy. There is no doubt that these are the main issues which continue to remain in the centre of the policy-makers’ attention today and in the future. Albania is a special case because domestic energy production is realized mostly by the use of big and medium hydropower plants. Also, about 10-13% of the Total Energy Primary Resources (TEPR) in the country – including the imports – is ensured by biomass, and especially from the firewood. On the other hand, Albania carries out important imports of energy which according to the annual conditions, change from 30-60% of the TEPR. Renewable energy might t be the solution for the decrease of this strategic dependence on the imports and the improvement not only of the security for energy supply but even of the macroeconomic and political security of the country decreasing the domestic budget deficit. Based on these facts which offer the context for the potential increase of the role of RES in the current energy and economy condition in Albania, based even on the energy security principles and on the added domestic economic value, the potential objectives of RES policies have been approved. The increase of the use of technologies RESis a step of special importance in general towards a more sustainable society and in particular it brings considerable benefits for Albanian industry. The argument of added value in domestic economy shall be used in the decision-making process for the new supporting schemes towards RES. The support of RES installations might offer an opportunity of importance for the development of local areas which are relatively poor. 1.2 OFFER and DEMAND for energy Based on Energy National Balance 2009, where the general net consumption of the primary energy resources is 2100.93 ktoe, where just 449.82 was produced ny the hydropower stations, 210 ktoe is the contribution from biomass, solar power is 6.65 ktoe and in total all the RES are 666.47 ktoe (equal to 31.2% of energy final consumption in 2009). Meanwhile, according to the last energy balance for Albania issued by the Natural Resources National Centre (NRNC) in 2013, from a general net consumption of energy primary resources of 2345.90 ktoe, just 592.72 ktoe are from the hydropower plants, biomass contribution is 201.50 ktoe, solar power is 11,92 ktoe, non fuels 35 ktoe, and in total all the RES are equal to 846.63 (equal to 33.20% of energy gross final consumption in 2013). Historically, Albania has gone through a high abnormal increase of energy consumption. A considerable part of this increase has been encouraged artificially by the extraordinary levels of energy theft, the failure to pay the energy bills and in some cases by the tariffs under cost. The high consumption of energy in the sector of buildings, especially to heat the buildings, has caused that a valuable resource is removed by the trade and industrial use which otherwise would create vacancies and would contribute in the economic growth. The measure taken by the Albanian Government recently for the prevention of energy non- payment (reduced from 52% in 2013 to about 29,8% for the first six months of 2015) have removed one of the main obstacles for the introduction of RES and the energy efficient measures for both sides of Albanian energy system: the request and the supply. 2. OBJECTIVE FOR RES IN ALBANIA 2.1 National Objective for RES [7] The main intention of the new EU Directive for renewable energy (Directive 2009/28) is the determination of mandatory objectives for the use of energy for renewable resources. The Directive stipulates a general objective of 20% for EU and individual objectives for the Member States based on their current renewable energy level and their economic development level. Within the general objective for RES, there is a specific obligation that 10% of the energy that is used in the transport sector is provided from the renewable resources. The same approach, but with another base year (2009 instead of 2005) has been applied to calculate the individual objectives of each Contractual Party in Energy Community, exactly for Albania, there is an Objective of 38% and the specific obligation within this Objective to fulfill 10% of the energy used in transport by renewable resources. The objective of 38% from RES has been adopted in the Decision of the Council of Ministers 2012/04/MC-EnC, when the Directive of RES was approved for the Energy Community. In table 1 below, there are all the predicted figures of the final energy gross consumption of all the kinds of energy (from both the renewable as well as the conventional resources), in the period until 2020. These calculations have taken into consideration even the expected effects of the measures for energy efficiency and saving which will be introduced over the period. Under the title “reference scenario”, a scenario has been introduced taking into consideration only the measures of the efficiency of energy and savings. It is very important to emphasize the fact that as it was mentioned above, these savings have been almost inconsiderable, as the RENAP was passed officially in September 2011. Under the title “Additional Scenario for Energy Efficiency”, a scenario has been introduced taking into consideration all the measures that will be undertaken in order to achieve the RENAP objective of 9% in 2018. Pursuant to article 5 (6) of the Directive 2009/28/EC, with the intention to measure the compatibility with the indicative objective 2020 and the temporary trajectory, the amount of energy consumed in aviation must be considered not to be higher than 6,18% of the general consumption of the Contractual Party energy. Energy consumption in aviation for Albania during 2009 and 2010 was 0.97% and 1.07% respectively of the general consumption of final gross energy. Therefore, there is no need for regulation as these values are lower than 6.18% (in continuation table 1). [8] Energy currents in 2009 2010 2011 2012 2013 2014 the national Base year Reference RE Reference RE Reference RE Reference RE Reference RE balance. Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario (1) heating/cooling1 511.89 587.66 587.66 610.56 610.56 529.20 526.69 679.66 669.93 649.34 630.67 (2) power2 619.20 632.96 632.96 634.59 634.59 649.47 646.38 662.29 652.80 670.23 650.97 (3) transport3 754.44 759.44 759.44 767.00 767.00 736.73 733.23 801.86 790.37 788.80 766.13 (4) Gross Energy 1,885.53 1,980.06 1,980.06 2,012.15 2,012.15 1,915.41 1,906.30 2,143.81 2,113.10 2,108.37 2,047.77 Final Consumption4 Energy currents in 2015 2016 2017 2018 2019 2020 the national Reference RE Reference RE Reference RE Reference RE Reference RE Reference RE balance. Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario (1) heating/cooling 719.17 687.40 786.48 739.56 822.43 763.78 875.12 799.04 916.68 832.45 949.02 857.09 (2) power 687.50 657.13 704.80 662.75 722.10 670.60 739.40 675.12 756.70 687.17 774.00 699.02 (3)transport 828.30 791.71 842.00 791.77 869.70 807.67 884.10 807.24 913.20 829.29 955.26 862.72 (4) Gross Energy 2,234.97 2,136.24 2,333.28 2,194.08 2,414.23 2,242.05 2,498.62 2,281.39 2,586.58 2,348.90 2,678.28 2,418.82 Final Consumption Table 1: Final gross consumption predicted in Albania for heating-cooling and transport until 2020, taking into consideration energy efficiency efefcts and teh measures for energy saving52009-2020 (ktoe) 1 Is the final energy consumption for all the energy commodities apart from power for other purposes apart from transport, (EU/OJ L304 of 14.11.2008) 2 Energy gross consumption is taken from the internal gross production of energy, including autoproduction, plus the import, minus the export.. 3 Consumption in transport is provided for in Article 3(4)a) of the Directive 2009/28/EC. Energy from RERs in road transport for this parametre shall be multiplied with the factor 2,5 as it is described in Article 3(4)c) of the Directive 2009/28/EC 4 According to the provision in Article (2)f of the Directive 2009/28/EC. It inscludes the final consumption of energy plus the losses in the network and the use of heat for internal needs and energy in energy and heat production plants. 5 These predictions on energy efficiency and the savings of energy in compliance with the RENAP. [9] 2. NREAP-THE FULFILLMENTS OF THE OBJECTIVES ON RES 2.1 Summary of the policy for renewable energy in Albania In the recent years, the Albanian Government has been trying to improve the legal and the regulatory framework for energy. In this direction, it made several attempts to change the existing laws and to encourage a competing climate for energy productions in general and the RES in particular. Along with a series of legal improvements, four key laws have been passed: the law for concessions, for energy sector (passed by the Parliament of Albania in May 2015), for renewable energy (passed by the Parliament of Albania in May 2015, but is being reviewed and is going to be ready for approval at the end of 2015), for the efficiency of energy in the buildings (the draft law was passed the previous year. It was prepared in line with the EU Directive). The purpose of these laws is the liberalization of energy market, competition increase, encouragement of renewable resources development and the attraction of the foreign investments in energy sector and ensuring a sustainable reform in the field of energy. With regard to the development of the projects for renewable energy, the licensing process has been improved. The establishment of one-stop-shop office for the licenses is a big step ahead made by the Albanian Government from 2009. However, with regard to its functioning, it needs further improvements. 2.2 Indicating objectives for renewable energy Pursuant to article 4 (1) of the Directive 2009/28/EC, the Contractual Parties in the EC Treaty were asked to have the following indicating objectives with regard to the part of the energy with renewable resources in 2020:  Heating and cooling;  Energy, and  Transport. The calculation of specific objectives of these three sectors converted in the predicts energy values (ktoe) must be at least as big as the energy amount expected from renewable resources which correspond with the general objective of RES for Albania in 2020, as it is reported in the final cell of the table 6b). Furthermore, the specific objective for transport shall be in compliance with the requests of article 3 (4) of the Directive 2009/28/EC for a level of 10% of the part covered by renewable energies in transport sector. From oil products, only diesel and diesel fuel are calculated for the nominator. This means that “Jet” fuel used in aviation as well as the fuel used for the ships is not calculated. Biofuels from the rubbish, the waste, cellulose non-food material and the lignocellulose material are calculated double regarding the nominator; General National Objective for energy from renewable resources in the final energy gross production in 2009 and 2020 (data taken from Appendix 1, Part A of Directive 2009/28/EC) has been presented in Table 2. Table 2: General National Objective A EREs part consumed compared to EGFC during 2009-2014 % 31.2% B ERE objective which will be consumed in EGFC in 2020 % 38.0% C ERE quantity consumed in average in EGFC during 2009-2014 ktoe 666.7 D EGFC for Albania during 2009-2014 ktoe 2,281.5 E Expected EGFC for Albania in 2020 (with EE) ktoe 2,678.5 F ERE additional annual quantity to achieve the objective in 2020 ktoe 397.0 G ERE total annual quantity to be consumed in 2020 ktoe 1,017.2 Tables 2a dhe 2b have been filled in for both specific objectives and the energy trajectory assessed by renewable resources for heating, cooling and air conditioning, energy and transport. The calculation of [10]