AREA: Government breaches contract with SHPPs

A recent decision by the government in Tirana to obligate local and foreign companies in the field of renewable energy to accept new contracts concluded with the Albanian Power Corporation (KESH sh.a.) jeopardizes the rights acquired by concession deals, based on which they have made investments of millions of euros, Albanian Association of Renewable Energy (AREA) said.

The Albanian Energy Regulatory Entity (ERE) moved to abolish the agreements for the purchase of the energy produced by small hydropower plants (SHPPs) by the state-controlled utility. Changes are still in the pipeline, the statement adds. The investors’ group said the government decided independent producers of electricity and suppliers of renewable energy are to become balancing responsible party (BRP) according to the market model. AREA considers the move a circumvention of law 138/2013 on renewable energy, “against every principle of the rule of law and private property.”

The purchaser will not be KESH, but the Electricity Power Distribution System Operator (Oshee sh.a.) contrary to the law, renewable energy producers said. “Investors have entered in the concession tender to guarantee the energy production and its delivery to the Albanian state, and not to trade it directly. Indeed, investors, under the existing contracts, have the role of energy producers, putting all in the energetic system, with guaranteed purchase by KESH,” the press release adds and notes ERE gives them the role of energy traders. The new contract means submission to a market mode, according to AREA. Oshee refuses to bill the energy produced, openly violating the law, although it has sold the power to final consumers, companies said and underscored the investments in small hydro stations are EUR 350 million.

AREA considers the move a circumvention of law 138/2013 on renewable energy, “against every principle of the rule of law and private property.”

Albanian authorities as a founder party of the Energy Community (EnC) have the obligation to adopt supportive policies in the sector of renewable energies and therefore to take regulatory measures that create a sustainable framework able to attract investments and increase the security of supply through the exploitation of renewable energy resources, AREA’s legal head Lorenc Gordani stated. The function given to Oshee is not only in violation of the law but is also inconsistent with the Third Regulatory Package of Energy of the European Union, in his words.

The new draft law on renewables, differently from what was referred to the Energy Community Secretariat, does not include feed-in tariffs for existing power plants of up to 15 MW, but it imposes transition from a power purchase agreement (PPA) regime to a market one, with contracts for difference (CfD), Gordani explained.