Albania’s power utility KESH to seek multiyear contracts for electricity imports

State-owned power producer KESH revealed it is working on a plan for covering Albania’s electricity deficit through import contracts of one to three years, or even five years.

Albania’s state finances are under extreme pressure. The country produces almost all of its electricity in hydropower plants, but record-breaking droughts have drastically tightened the maneuvering space for government-controlled power utility KESH. Even in the best conditions, it can cover just 75% of domestic demand.

Furthermore, a year and a half into the energy crisis, high prices of imported electricity have crippled the budget in one of Europe’s poorest nations. KESH is preparing a change in strategy, according to its administrator Ergys Verdho. Speaking on Vision TV, he said the hydropower plant operator is in talks with foreign suppliers on signing contracts of one to three or even five years for electricity purchases.

Electricity price volatility first needs to be reduced, KESH’s head Ergys Verdho pointed out

The plan could be implemented by early next year, Verdho revealed. However, he said the situation in the markets first needs to stabilize. The official clarified that it isn’t about the price level but that volatility is still too high.

Verdho stressed that Albania is determined to prevent the possibility of having to impose rolling blackouts.

Albania is expecting EUR 80 million early in energy crisis aid next year from the European Commission

Of note, the government was about to introduce a much higher tariff for electricity consumption in households above 800 kWh per month, but favorable weather conditions prompted it to delay the move. In the meantime, Albania is continuing with projects that would diversify its electricity supply, with a focus on solar power.

The European Commission recently approved EUR 80 million in energy crisis aid to the government in Tirana for 2023, which will make its job substantially easier.