April 23, 2026

by AEA in News

Albania’s Green Finance Push: A Strategic Step Toward Energy Transition and Financial Stability

Albania is taking a structured step toward aligning its financial system with climate and energy transition goals. The initiative led by the Bank of Albania reflects a broader shift underway across emerging European economies: embedding sustainability into financial architecture rather than treating it as a parallel policy track.

At the core of this effort is the development of a national Green Taxonomy, a classification system designed to define which economic activities can be considered environmentally sustainable. This is not merely a technical exercise. In energy terms, such taxonomies directly influence capital allocation—determining whether investments flow into renewable energy, grid modernization, energy efficiency, or continue supporting carbon-intensive assets.

The article emphasizes that the central bank, in cooperation with the European Investment Bank, is working on a first draft of this taxonomy through an inclusive consultation process involving ministries, regulators, financial institutions, and private-sector stakeholders. This multi-layered approach is critical. Green finance frameworks fail when they are designed in isolation; success depends on alignment between policy, regulation, and market implementation.

From an energy expert perspective, one of the most important elements highlighted is the role of the taxonomy in building a climate information architecture. This is often underestimated. Reliable data on emissions, energy use, and climate risks is the backbone of any credible transition strategy. Without it, financial institutions cannot price risk properly, and investors cannot differentiate between genuinely green projects and “greenwashed” ones.

The initiative is also explicitly linked to financial stability, which is a notable shift in central banking priorities. Climate risks—whether physical (extreme weather affecting hydropower, for example) or transition-related (stranded fossil assets)—are increasingly seen as systemic financial risks. By promoting green financing, the central bank is not only supporting environmental goals but also preemptively managing future balance-sheet vulnerabilities in the banking sector.

Another key dimension is EU alignment. The taxonomy is being designed to approximate European Union standards, which is essential for Albania’s accession process. In practical terms, this alignment lowers barriers for international capital, particularly from EU-based investors who are already bound by sustainability disclosure regulations. It also creates a common language for cross-border energy investments, especially in renewable generation and regional interconnection projects.

The consultation process described in the article—bringing together institutions such as finance, energy, agriculture, and environmental ministries, alongside banks and corporations—signals recognition that the green transition is inherently cross-sectoral. For the energy sector specifically, this is crucial. Decarbonization pathways depend not only on energy policy but also on financing conditions, industrial policy, and infrastructure planning.

Importantly, the article notes that the next step will be the formalization of cooperation through a memorandum of understanding and the finalization of the taxonomy framework. This institutionalization phase will determine whether the initiative translates into real investment flows. Many countries develop green taxonomies, but only a subset manage to operationalize them effectively within lending practices and capital markets.

From a broader energy transition standpoint, Albania’s move reflects three structural realities:

First, finance is becoming the primary lever of the energy transition. Regulatory signals alone are insufficient; capital must be directed at scale toward low-carbon assets.

Second, emerging markets face a dual challenge—they must expand energy systems to support growth while simultaneously decarbonizing them. This makes efficient capital allocation even more critical.

Third, regional integration matters. Aligning with EU frameworks is not just about compliance; it is about accessing larger pools of capital and integrating into a wider low-carbon energy system.

In conclusion, the Bank of Albania’s initiative is more than a policy announcement—it is a foundational step toward reshaping how capital flows into the Albanian economy. If effectively implemented, the Green Taxonomy could accelerate investment in sustainable energy infrastructure, improve risk management in the financial sector, and strengthen Albania’s position within the European energy transition landscape.

April 23, 2026

by AEA in News

North Macedonia’s May 2025 blackout was a voltage-control failure, and Europe should read it that way

ENTSO-E’s final report on the Grid Incident in North Macedonia on 18 May 2025 turns what could look like a local technical failure into a broader system warning. At 04:59 CEST, North Macedonia’s power system split between the 400 kV and 110 kV networks, leaving the 110 kV system in blackout while the 400 kV network stayed operational. MEPSO restored the system by 07:47, and the wider Continental Europe system saw no major disturbance. The report therefore matters not because it describes a large geographic event, but because it exposes how voltage stress can cascade into a full loss of supply in a part of the grid that planners had already marked as vulnerable.

The key point is that this was not a surprise in the narrow sense. The factual report says MEPSO had already identified recurring nighttime overvoltage during the spring and autumn low-load season and had introduced countermeasures, including transformer-protection optimisation and the disconnection of one internal 400 kV overhead line. Even so, some 400 kV substations were still operating above the normal band, with voltages reaching 430-437 kV and, in some places over the preceding months, peaking even higher. In other words, the network was already being managed at the edge of its voltage envelope before the incident occurred.

Topology of the transmission system of North Macedonia

The report also shows that regional security tools did not flag an imminent crisis in the way operators would have liked. RCC analysis before the incident judged the grid secure based on the information available, yet it also detected that all 400 kV nodes in the MEPSO control area were expected to exceed acceptable voltage limits. At the same time, MEPSO did not deliver the individual grid model for 18 May, so the backup model used by the RCC relied on the last submission from 13 May. That combination – a system that was already voltage-stressed, plus imperfect visibility in the planning chain – is exactly the kind of operational blind spot the report is trying to highlight.

The final report’s diagnosis is structural, not accidental. Its root causes point to operating the system above defined voltage limits, reduced awareness of overvoltage risk in operational planning, insufficient reactive-power reserves with adequate activation time, and limited availability of effective voltage-control assets. That is an important distinction. The event was not simply about “too much generation” or “too little demand”; it was about a system that lacked enough fast, effective, and coordinated tools to absorb reactive power and hold voltage within bounds during a low-load operating regime.

That diagnosis is already driving a policy and investment response. The report points to three layers of recommendations: continuation of ENTSO-E work on voltage and reactive-power modelling quality and operationally useful KPIs; new regional SEE measures for monitoring voltage-limit violations and coordinating action among TSOs, RCCs and ENTSO-E; and MEPSO-specific changes to its System Defence Plan, including broader low-load and high-renewable scenarios and clearer coordination between TSOs and DSOs. The same logic is visible in the post-incident actions: MEPSO has moved to improve reactive-power support, including a 150 MVAr shunt reactor in SS Dubrovo, expected to be finalised by 2027.

For the wider European power sector, the lesson is straightforward. Security of supply in a more renewable, more dynamic grid is no longer only about enough megawatts and enough interconnection capacity. It also depends on voltage discipline, reactive-power capability, modelling quality, and the speed with which operators can see and correct abnormal conditions. North Macedonia’s blackout shows that a grid can remain “adequate” on paper and still fail in practice if voltage-control assumptions are too optimistic or if the operational toolkit is too thin. That is why this report should be read not as a post-mortem for one country, but as a warning for the entire South-East European system and, by extension, for any grid entering a lower-load, higher-renewables operating era.

April 23, 2026

by AEA in News

Albania’s 2026 Electricity Law: Powering a Competitive, Secure, and Green Energy Future

The new draft Law on the Electricity Sector (2026) aims to overhaul Albania’s power framework for a competitive, secure and green market. Its stated objectives include guaranteeing secure and sustainable supply, deepening market liberalisation and consumer choice, and supporting climate goals. Government spokespeople emphasize moving “away from a centralized model” toward “a more open, more competitive, more flexible” market aligned with EU norms. Similarly, the Energy Community stresses that Albania must shore up security of supply (through EU-aligned risk-preparedness planning) and fully integrate its electricity market regionally. As one official put it, Albania needs to “shore up security of supply through EU-aligned risk-preparedness plans and achieve full market coupling with the EU”. In line with climate targets (Albania’s 2050 neutrality goal), the law also promotes renewables, efficiency and low-carbon flexibility. For example, a separate 2023 Renewables Law explicitly targets increased renewable use, reduced greenhouse gas emissions and sustainable rural energy access. The 2026 electricity law complements this by facilitating renewables integration (e.g. grid access, storage) while also formalizing consumer-friendly concepts like smart meters and dynamic pricing for a low-carbon economy.

Institutional Framework and the Regulator

A key element is the Energy Regulatory Authority (ERE). Under the draft law, ERE remains the independent regulator for electricity (and gas) with strengthened powers. Official briefings note that the new law “expands and makes more important” ERE’s role, explicitly giving it major competencies “for developing market rules, monitoring their operation and ensuring competition”. In practice, ERE already issues tariffs, licenses, and technical codes; the law likely reaffirms its authority over grid tariffs, network access and licensing. EU rules (Electricity Directive 2019/944 Art.59) require national regulators to be fully independent and impartial, and the Energy Community has advised Albania to “strengthen the independence and capacities of all authorities” including ERE. The draft law reportedly aligns with this: it clearly vests regulatory tasks in ERE, separating them from political control. Nonetheless, implementation depends on ERE’s capacity to handle new duties (e.g. oversight of cross-border markets) and to enforce the complex EU-aligned regime. The law will also designate the energy ministry as the risk-preparedness authority (see below), but ERE is expected to coordinate in emergencies and in implementing EU network codes.

Market Design and Competition

The new law fundamentally repackages the market model. Under the current 2015 law, Albania began liberalising in 2021–2025, opening the market by threshold and establishing the ALPEX exchange. Today, large consumers can choose suppliers, and ALPEX operates a day-ahead and intraday auction. The draft law continues this trend: it formally mandates third-party access to networks and the full operation of wholesale markets (day-ahead, intraday, balancing, and even derivatives trading) to ensure transparent price formation. In April 2023 Albania launched its day-ahead market, which in January 2024 was successfully coupled with Kosovo’s market – the first electricity market coupling in the Energy Community. Regional intraday auctions (so-called CRIDAs) between Albania and Kosovo followed in late 2024. The new law codifies these developments and sets the stage for eventual coupling with EU markets, subject to completing EU-market rules. Indeed, Energy Community analysts note that full alignment with EU rules (the Electricity Integration Package) through this law is essential for Albania to join the EU’s single day-ahead and intraday coupling.

At the same time, the law removes many legacy distortions. The current public service obligations (PSOs) – such as requiring the state generator KESH to supply the universal service provider (FSHU) at a government-set price – will be phased out or restructured. Ministry statements emphasize moving away from a model where “state actors had the largest decision-making” and towards one where competition is the basis of the market. In practice, this means eliminating price-setting interventions: for example, Albania’s wholesale market until now has been burdened by non-market contracts for network losses and for supplying captive consumers, which “does not meet the requirements” of EU market rules. The new law should require all grid services (transmission and distribution losses) to be procured on organized markets under competitive principles. It also formally establishes the market operator (ALPEX) as a Nominated Electricity Market Operator (NEMO) under EU law and extends ALPEX’s remit to ancillary markets. Unbundling is enforced: Albania’s transmission operator (OST) is already ownership-unbundled and ENTSO-E member, and distribution (OSSH) is a separate DSO. Clear rules on independent operation of networks and transparent tariff-setting are included to meet EU requirements.

Renewable Energy Integration and Low-Carbon Transition

Although Albania’s generation is dominated by hydropower, renewable integration is a priority. The new law addresses intermittency and grid flexibility: it introduces concepts like energy storage, active prosumers, aggregation and energy communities. For instance, it explicitly provides a legal basis for energy storage systems (to smooth renewable output) and for “active customers” who both consume and generate power. These mirror EU Directive 2019/944 provisions (articles on prosumers, dynamic tariffs and communities) that Albania has not yet fully transposed. The law also encourages technologies such as smart meters and even electric vehicle charging (“electromobility”) as flexibility tools. A separate Law 24/2023 already incentivises renewable deployment (through auctions, PPAs and CfDs) with the goal of reducing fossil imports and emissions. The electricity law complements this by guaranteeing renewables’ grid access and balancing: for example, under the renewables law temporarily-stored solar power is treated as delivered for subsidy purposes, a useful flexibility clause. In short, the legal framework is shifting to support a low-carbon mix: renewables get priority access to networks, and the market must accommodate their variability via storage and demand-side response. Energy efficiency is implicitly supported through demand participation measures, though detailed efficiency obligations remain part of separate legislation.

Security of Supply and Reliability

Ensuring continuous supply is a core aim. The law reportedly designates the infrastructure minister as the authority for risk preparedness and obliges that ministry to adopt a national risk-preparedness plan. This reflects EU Regulation 2019/941 (on gas supply risks), which Albania had missed implementing by its 2023 deadline. The draft law includes initial steps toward compliance: it provides for a risk plan and emergency protocols. In practice, this means formalising procedures for crisis response, including strategic reserves and demand curtailment rules. The law likely retains provisions for last-resort supply and universal service to protect consumers in shortages: under the current system, for example, the state generator KESH sells power to the universal supplier FSHU and to cover network losses. These contracts (often via contract-for-difference at regulated prices) are to be reformed.

Cross-border integration also enhances security. By coupling with neighbours, Albania gains access to wider regional capacity during droughts. Energy Community officials emphasize that full market coupling with Kosovo and eventually the EU “creates larger, more resilient markets” protecting against shocks. Albania’s new law strengthens this by setting clear rules for allocating cross-border capacity and operating bidding zones. Additional stress on reliability is addressed through mandated reserve capacities and balancing mechanisms: the law provides for the TSO to procure reserves and conduct redispatch if needed.

Nonetheless, challenges remain. Albania’s heavy reliance on hydropower (with seasonal rainfall variability) requires backup sources or storage. The law does not itself build new plants, so its impact on resource adequacy depends on fostering investment. Moreover, while emergency oil-stock regulations remain outdated (outside electricity law’s scope), the focus here is on electricity reserves. Overall, the draft law marks progress toward EU-style security measures, but full implementation will require secondary rules and investments in new capacity (or demand response) to ensure true reliability.

Consumer Rights and Protection

The draft law places consumers at the centre of the market. It acknowledges that consumers can also be producers, and it explicitly incorporates EU ideas of active customers, dynamic pricing contracts and citizen energy communities. In practice, Albania has already liberalized retail supply for most customers: all households and businesses above low-voltage can choose supplier. The state supply company FSHU (formerly OSHEE retail) continues as the universal service provider for small (0.4 kV) customers, and has been designated the supplier of last resort for larger low-voltage customers. Under the new law, these protections persist but in more defined forms. For vulnerable groups, the framework is improving: Albania now defines “energy-poor” and “vulnerable” households, bans disconnection for them, and offers subsidies (for heating and electricity) to the poorest. The law is expected to enshrine such protections, in line with EU norms (Directive 2019/944 requires special safeguards for vulnerable consumers).

However, some consumer-rights provisions must still be fleshed out. The Energy Community notes that novel rights – such as aggregation services, transparent billing, and consumer-driven demand response – have not yet been fully enacted. Similarly, current pricing interventions (like keeping FSHU rates regulated) “do not comply with” EU criteria, implying the law will need transitional rules to liberalize prices over time. To ensure transparency, the law should mandate clear billing, easy switching procedures and robust complaint mechanisms (all EU requirements). In sum, the draft law advances consumer empowerment (even heralding a “democratization” of the sector through communities and active customers), but its effectiveness will hinge on accompanying regulations detailing consumer rights, metering standards, and social safeguards as per EU directives.

Harmonization with EU Energy Acquis

A principal motive is alignment with the EU’s Clean Energy Package. The draft law explicitly aims to fulfill Albania’s energy chapter (15) accession commitments. It transposes key elements of the Electricity Directive and Regulation (2019/944 and 2019/943) – together known as the Electricity Integration Package – which govern market design, unbundling, and cross-border trade. For example, secondary legislation under these acts is already underway: in 2025 ERE approved a capacity allocation regulation (adopting CACM Regulation 2015/1222) to manage congestion. The law also enshrines EU-style unbundling (Albania’s OST was certified under ownership unbundling in 2017) and prepares for implementing remaining EU network codes (intra-day auctions 2017/1719 and balancing code 2017/2195 are in process).

Multiple EU directives come into play. Besides the electricity-specific rules, the law must be consistent with the Renewable Energy Directive (now RED II, 2018/2001, as partially reflected in Law 24/2023) and the Energy Efficiency Directive (2018/2002). It must meet EU requirements on state aid neutrality and competition as well. The Energy Community’s recent report underscores that Albania “should complete transposition of the EIP and… strengthen the independence and capacities of all authorities”. In sum, the 2026 law appears designed to maximize convergence: officials claim it will “ensure a high degree of alignment” with EU law. Yet gaps remain (EU country reports note missing adoption of e.g. Regulation 2019/941 on security of supply). The new law closes many gaps, but full compliance will require follow-up secondary legislation (grid codes, consumer rules, capacity markets) to operationalize EU norms.

Implementation Challenges and Outlook

Achieving the law’s vision will be challenging. Legacy market distortions must be unraveled carefully: KESH’s dominance and the public-service contracts for losses and captive load are deeply entrenched, and removing them could face resistance or temporary supply risks. The Energy Community warned that Albania’s PSOs, originally “temporary measures” during crises, still “threaten to impede efficient competition”. Regulatory capacity is another concern: the new regime is complex, and ERE and the ministry must issue numerous secondary rules (e.g. network codes, imbalance settlement procedures, risk plans) quickly. Reports note that even now, some network code implementations (like 15-minute settlement) have been postponed by ERE.

Integration efforts require investment. Building transmission links (to Greece, Macedonia, Italy) and reinforcing grids for bidirectional flow will determine how well cross-border trade can alleviate domestic shortages. Financing remains an issue: regulators and government must coordinate to fund smart metering and storage projects (as envisaged in the law). Socially, the phase-out of price controls must be balanced with protection for the poor; gaps between this law and existing subsidy programs could cause confusion if not harmonized. Finally, political commitment will be tested: the law’s success depends on steady implementation amid changing governments.

In summary, the draft law sets a forward-looking framework: it promises a liberalized, EU-harmonized market with empowered consumers and high renewable integration. If fully enacted and backed by robust secondary measures, it should significantly advance Albania’s goals of a competitive, secure and sustainable electricity sector. However, the road from law to reality involves filling regulatory gaps and overcoming institutional inertia; without that follow-through, key objectives (market liquidity, EU coupling, consumer protections) may fall short. Overall, the 2026 Electricity Law represents a critical step toward a modern Albanian power market – one that, if implemented effectively, aligns closely with best practices in the EU

April 20, 2026

by AEA in News

Serbia needs EUR 27 billion to reach decarbonization goals

Serbia faces a substantial financial and structural challenge in its transition toward a low-carbon energy system. According to recent statements from senior management at the state-owned utility EPS, the country will need approximately EUR 27 billion in investment to meet its decarbonization objectives by 2050.

This estimate underscores both the scale of transformation required and the limits of the current energy model, which remains heavily reliant on fossil fuels—particularly coal—while moving toward alignment with European climate and energy policies.

Financing the Transition: Beyond Public Balance Sheets

A central conclusion emerging from the discussion is that Serbia’s decarbonization pathway cannot be financed through internal resources alone. EPS leadership emphasized that achieving a sustainable transition will require a diversified financing structure involving the state, international financial institutions, commercial banks, and capital markets.

In practical terms, this reflects a broader shift in energy policy: decarbonization is no longer only a technical or environmental issue, but fundamentally a question of financial architecture. Access to long-term, low-cost capital—combined with appropriate risk-sharing mechanisms—will be critical to mobilizing the required investment scale.

To that end, EPS is preparing to enter both domestic and international capital markets. A key milestone in this process is the expected acquisition of a credit rating, which would enable the company to issue green bonds and attract institutional investors.
Such instruments are increasingly central to energy transition financing across Europe, particularly in markets where public funding capacity is constrained.

Structural Transformation of the Power Sector

Beyond financing, the transition implies a deep restructuring of Serbia’s generation portfolio. The gradual decommissioning of aging thermal power plants is seen as inevitable, reflecting both environmental requirements and declining economic viability.

At the same time, the development of renewable energy capacity—primarily wind and solar—is expected to accelerate. EPS has indicated a willingness to engage more actively with private investors through joint ventures, power purchase agreements (PPAs), and even the acquisition of completed or late-stage renewable projects.

This signals a notable evolution in the role of the state utility, from a traditional vertically integrated operator toward a more market-oriented and partnership-driven entity.

Importantly, Serbia’s existing asset base—particularly land holdings and grid infrastructure—provides a strategic advantage for scaling renewable deployment. Leveraging these assets efficiently could reduce project development timelines and costs, improving overall investment attractiveness.

Market Integration and Investor Engagement

The transition strategy also highlights the need for stronger integration with private capital and market mechanisms. EPS leadership explicitly stressed the importance of becoming more agile and active in the market, including building relationships with investors and adapting to competitive dynamics.

This reflects a broader regional trend in the Western Balkans, where historically state-dominated energy sectors are gradually opening to private participation. However, this transition requires not only regulatory reform but also improvements in corporate governance, transparency, and financial performance.

Recent financial results from EPS indicate positive momentum, with a significant increase in annual profit, which could strengthen its credibility with investors and lenders.
Nevertheless, maintaining financial discipline while undertaking large-scale capital expenditure will remain a key challenge.

Strategic Implications: A Transition at Scale and Speed

From a policy perspective, the EUR 27 billion investment requirement highlights the magnitude of Serbia’s decarbonization challenge. The country’s energy system is still largely carbon-intensive, with fossil fuels accounting for a dominant share of electricity generation, making the transition both urgent and complex.

Decarbonization will therefore require a coordinated approach that integrates infrastructure investment, market reform, and financial innovation. It will also need to address social and economic implications, particularly in regions dependent on coal production and thermal generation.

Crucially, the success of this transition will depend on Serbia’s ability to align its energy policy framework with EU standards, improve investment conditions, and mobilize both domestic and international capital at scale.

Conclusion

Serbia’s pathway to decarbonization is now clearly defined in terms of scale, direction, and urgency. The estimated EUR 27 billion investment requirement is not merely a financial figure it represents a comprehensive transformation of the country’s energy system.

The coming years will be decisive. Progress will depend on the effectiveness of financing strategies, the pace of structural reform, and the ability of key institutions such as EPS to evolve into modern, market-oriented energy players. Without these elements, the transition risks delays; with them, Serbia has the potential to position itself as a credible participant in Europe’s low-carbon energy future.

April 20, 2026

by AEA in News

Albania’s Day-Ahead Power Market Is Operational, but Still Not Mature Enough for CfD Support

Albania’s electricity market is making measurable progress, but it is not yet ready to serve as the reference price for modern renewable support mechanisms. That is the central conclusion of ERE’s first assessment of the ALPEX day-ahead market (DAM), which evaluates whether the market is sufficiently liquid and competitive to underpin the future conversion of renewable PPAs into contracts for difference (CfDs). Under Albania’s renewable energy law, ERE is required to carry out such periodic assessments, and it approved the market-readiness methodology in November 2025.

The report’s logic is straightforward: a day-ahead market can only act as a reliable CfD benchmark if it produces a frequent, stable, and credible price signal. To test that, ERE examined price availability, churn, bid-ask spreads, market depth, competition, and the effect of Albania’s coupling with Kosovo. It also benchmarked ALPEX against selected EU markets at the stage when those countries first introduced CfDs, choosing Poland, Hungary, and Croatia as comparators. This approach places Albania in a relevant policy context rather than comparing it with the most mature European exchanges.

The assessment does contain important signs of institutional progress. ALPEX generated a market-clearing price in every hour of the 12-month review period, from 1 November 2024 to 31 October 2025, which satisfies ERE’s criterion for continuous price availability over at least 10 months. The market also appears to be functioning as a shared Albanian-Kosovar trading platform, with coupled prices in more than 99% of hours. In policy terms, that is a meaningful achievement: the market is operational, regional, and capable of producing a continuous price signal.

Yet the core liquidity indicators show that ALPEX remains materially underdeveloped relative to the comparison markets. The churn factor is only 0.102, below HUPX, CROPEX, and TGE, indicating that the ratio of traded volume to total consumption is still weak. The bid-ask spread is also wide: the median is 9.7% of the average market-clearing price, the mean is 17.4%, and the 75th percentile reaches 19.2%. By contrast, the report shows that HUPX had a median spread of just 1.2% and a mean of 3.7%. These figures point to a market that can clear prices, but still struggles to do so efficiently and consistently.

Market depth provides the same message in a different form. ERE finds that in 25% of hours, ALPEX would not have been able to absorb more than about 146 MW of new zero-marginal-cost supply while still maintaining a positive clearing price. That is a critical limitation for a power system that is expected to integrate more renewable generation, especially as photovoltaic capacity continues to expand. In practical terms, the report suggests that the market may face stress at times of low demand or high renewable output, when additional capacity needs a deeper and more resilient trading environment.

Competition is stronger than the liquidity indicators alone might suggest. ERE reports 32 sellers and 33 buyers, with an HHI of 853 on the sell side and 1,220 on the buy side. It interprets this as a competitive sell-side structure and a moderately concentrated buy side. That is an important distinction: the market has participants, but participation has not yet translated into the degree of depth and turnover required for a robust reference price.

The broader policy conclusion is therefore cautious but clear. ALPEX is moving in the right direction, but it is not yet sufficiently liquid to support the transition to CfD-based renewable support. ERE explicitly concludes that the ALPEX DAM is not yet ready to be used as the reference price for support contracts in Albania. At the same time, the report treats this not as a failure, but as a transitional stage: the market has a continuous price signal, a reasonable participant base, and a functioning regional coupling, which are all necessary foundations for future readiness. ERE is expected to continue periodic assessments as the market deepens and matures.

In strategic terms, the report captures Albania’s power-market transition at an important midpoint. The system is no longer at the stage of market creation, but it has not yet reached the level of liquidity, depth, and price stability that would allow it to anchor modern renewable support instruments. For policymakers, the message is that market coupling and institutional setup are advancing faster than commercial liquidity. For investors, especially in renewables, the implication is equally clear: Albania’s market architecture is improving, but the price environment is still not mature enough to be treated as a fully reliable CfD benchmark.

March 27, 2026

by AEA in News

Fuel Importers Warn of Supply Disruptions as Government Price Caps Fall Below Cost in Albania

Following yesterday’s decision by the Transparency Board, which set retail fuel prices in the country at 203 lek per liter for diesel and 175 lek per liter for gasoline, down from 214 and 199 lek respectively, and wholesale prices at 191 and 163 lek per liter, major fuel importers have responded.

They have warned the Ministry of Finance and Economy and the Ministry of Infrastructure and Energy that, in order to avoid selling below cost and suffering very large losses, they are forced to take temporary measures, specifically:

Suspending and limiting wholesale sales of diesel and gasoline;
Slowing down and restricting the customs clearance process for fuel in Porto Romano until further notice.

Monitor is in possession of at least two letters that the importing companies sent today to the Ministry of Finance and Economy and the Ministry of Infrastructure and Energy.

The importers justify this decision by arguing that the retail prices set by the Transparency Board are below cost.

In the letter, they explain that following the latest publication of prices by the Transparency Board on March 26, 2026, which set the ceiling wholesale price for diesel at 191 lek/liter and for gasoline at a maximum of 163 lek/liter, they wish to inform the authorities of the significant issues related to the method used to calculate these prices.

According to the importers, the calculation is based on the formula used in 2022, which does not reflect current market conditions and, in particular, the contracts currently in force with our suppliers. As a result, the prices set do not reflect the actual costs that currently determine the price of one liter of diesel and gasoline for wholesale trade.

Market close on March 26, 2026:

Diesel = $1,402.5/ton, up by $134.75/ton
Gasoline = $1,037.25/ton, up by $49.25/ton

Based on the current premiums we have:

Diesel = CIF + $55/ton
Gasoline = CIF + $75/ton

Today’s costs are:

Diesel = 206.2 lek/liter
Gasoline = 169.7 lek/liter

With a gross margin of 3 lek/liter, today’s wholesale selling prices should be:

Diesel = 209.2 lek/liter
Gasoline = 172.7 lek/liter

Therefore, there is a very large gap between the prices that should apply today and the selling prices set by the Transparency Board. Specifically, diesel is 18.2 lek/liter higher, while gasoline is 9.7 lek/liter higher, the importers state in the letter obtained by Monitor.

In their letters, the importers have requested that the “Transparency Board for the temporary limitation of wholesale/retail prices of petroleum subproducts and gas” be convened as soon as possible to approve new selling prices for gasoil and gasoline.

They also call for a revision of the calculation methodology, so that the price is applied under CIF Med conditions, with the premium for gasoil calculated at +$50/ton and for gasoline at +$75/ton.

2- Gross margins should be calculated as follows: for gasoil, +3.5/liter wholesale and +15/liter retail; for gasoline, +4.5/liter wholesale and +16/liter retail.

Retail prices were reduced today

Earlier today, following the Transparency Board’s decision, retail diesel prices at fuel stations fell by 11 lek per liter. From 214 lek per liter, diesel is now being sold at 203 lek per liter. A price drop was also recorded for gasoline: from 199 lek per liter previously, the price today has fallen to 175 lek per liter.

Earlier, importers had warned that if prices were reduced to cost, they would suspend supply, since the government cannot pass on all the costs of the war to them. “Cost cannot be what is determined by a board, but what is actual, proven by contract, supplier invoice, and therefore by the value of the transaction, and this value is used as a reference by customs for VAT purposes. No board or entity has the legitimacy to order a business to sell below cost,” said Luigj Aliaj of the Association of Hydrocarbon Companies.

In Albania, fuel prices are 30–40% higher than in neighboring countries, but according to importers this is explained by the heavy tax burden applied to fuel prices. In total, an Albanian currently pays 1.16 euros in taxes per liter of diesel, or 53% of the final price; a Macedonian citizen pays 0.58 euros per liter, or 36% of the final price; a Montenegrin pays 0.55 euros, or 35%; and a citizen of Kosovo pays 0.67 euros, or 38.5% of the final price. Importers also say that the 20% excise tax reduction, which was expected to lower diesel prices by 8–10 lek per liter, has not yet entered into force.

This has led many vehicle users to refuel in neighboring countries, spending up to 1 million euros per day.

March 27, 2026

by AEA in News

Safety at construction sites: IKMT intervenes in Golem and Qerret, only two out of 55 entities are legally compliant.

The Golem and Qerret areas have emerged as some of the most problematic regions regarding compliance with legal obligations for technical safety at construction sites. The Chief Inspector of the National Inspectorate of Territory Protection (IKMT), Afrim Qendro, accompanied by the Mayor of Kavajë, Fisnik Qosja, held a meeting today with entrepreneurs operating within this territory.

“Currently, there are 55 active development permits here. Initial inspections conducted by the National Inspectorate of Territory Protection revealed that only two projects comply with legal criteria, while the remainder are classified as ‘poor’ or ‘very poor.’ I urge you to take immediate measures, as this is your obligation. It is unacceptable for tourism in this area to be compromised by these 55 construction sites. The fact that two businesses are in full compliance proves that meeting these standards is possible for everyone,” stated Chief Inspector Afrim Qendro.

According to Qendro, Golem, Qerret, and Kavajë host hundreds of thousands of permanent residents in addition to the influx of tourists. “If we do not operate in harmony with them—if we do not guarantee their safety—then you are failing not only yourselves but the entire community that surrounds you,” Qendro noted.

Furthermore, he criticized the performance of the local Territory Protection Inspectorate (IMT) of the Municipality of Kavajë.

“I want to address the Director of IMT Kavajë directly: If you had performed your duties properly, we would not be here today. You must rise to the level of responsibility required to execute this task,” Qendro emphasized.

The Chief Inspector announced that a follow-up inspection of all construction sites in the area will commence next week.

“If the entities have not fulfilled their technical safety obligations, severe measures will be taken as provided by law. We are providing a sufficient grace period. If you fail to react, there will be zero tolerance for anyone,” Qendro declared.

The Mayor of Kavajë, Fisnik Qosja, thanked the IKMT for its commitment ahead of the peak tourist season and called upon businesses to take immediate action.

“Given the tourism we anticipate in this region, it is inexcusable not to take the necessary precautions and properly secure construction perimeters to guarantee technical safety,” Qosja concluded.

March 27, 2026

by AEA in News

Strengthening Europe’s Energy Sovereignty: The Imperative of a Clean Heat Transition

While often framed as a macroeconomic abstraction, Europe’s reliance on fossil fuel imports carries direct, tangible consequences for millions of households. Domestic energy security is fundamentally tied to the home; space and water heating account for 77.6% of the average EU household’s energy consumption, with approximately one-third of these homes relying on gas. By 2025, 90% of the EU’s gas supply was sourced from third countries, creating a strategic vulnerability to energy coercion that endangers the stability of millions of residences.

Diversification vs. Decarbonization: The REPowerEU Challenge

Historically, Russia served as the primary architect of Europe’s gas supply. In the wake of the full-scale invasion of Ukraine, the EU successfully pivoted, slashing Russian imports from 45% to 12%. This shift was codified through the REPowerEU Regulation, which aims to secure energy independence by permanently banning Russian fossil gas.

However, the broader imperative is not merely to swap suppliers, but to reduce gas demand entirely. This requires equal commitment to the other two pillars of the 2022 REPowerEU Plan: energy conservation and an accelerated clean energy transition. Current projections are sobering:

Heat Pump Shortfall: Europe is currently on track to meet only half of its deployment targets.
Demand Impact: This lag means fossil gas demand will likely only decrease by 60% of 2024 Russian import levels, rather than the intended 120%.

Bridging the €78 Billion Funding Gap

Achieving a clean heat transition requires significant capital. A study by LCP Delta for the Cool Heating Coalition identifies an annual investment gap of €78 billion through 2050. At present, combined public and private sector contributions cover only half of this requirement.

To close this disparity, Europe must look toward smarter fiscal reallocation:

Subsidy Realignment: The EU currently directs approximately €111 billion per year toward fossil fuel subsidies. Redirecting this capital toward renewable solutions would effectively bridge the clean heat funding gap.
Innovative Business Models: Policymakers should incentivize “social leasing” frameworks. This requires updating the Consumer Credit Directive to ensure these schemes are covered by robust consumer protection laws.
The Role of ETS2: The upcoming ETS2—which prices emissions from buildings and road transport—will be a pivotal market driver. When paired with the Social Climate Fund, it provides a mechanism to finance the transition while shielding the most vulnerable consumers.

The Path to Strategic Autonomy

The postponement of ETS2 for one year in December 2025 sent a confusing signal to the clean heat market. There is no longer room for delay. Member States must utilize this additional window to aggressively support the shift to decarbonized heating, remediate housing inadequacies, and reduce the energy load of the continent’s worst-performing buildings.

Since 2022, the EU has demonstrated remarkable resilience in reducing its dependence on Russian energy. However, as new geopolitical shocks emerge, Europe must prioritize the elimination of all strategic vulnerabilities. The legal framework exists; the transition now requires the political resolve to see it through.

March 27, 2026

by AEA in News

Albania to Launch New Renewable Energy Auction in Q3 2026

Albania is preparing to launch a new renewable energy auction in the third quarter of 2026, as the focus of its energy policy increasingly shifts toward strengthening the transmission grid and international interconnections.

Speaking at an event with foreign investors, the Minister of Energy and Infrastructure, Enea Karakaçi, emphasized that geopolitical developments have rendered the sector one of the most exposed to external shocks. “Dealing with global crises has now become routine; today, once again, due to a war far from our borders, the energy sector is being placed in a stressful and difficult situation,” he stated.

According to the Minister, this situation requires a rapid response and stronger institutional coordination to guarantee energy security. In this regard, the government has undertaken reforms to build a more resilient system and attract investment, moving beyond the standard obligations of European integration. “This is not only a result of the need for EU alignment but also a necessity to attract investments,” the Minister added.

Diversification and Private Investment

One of the primary pillars of this transformation remains the diversification of energy sources. Since 2019, Albania has built a more balanced energy portfolio, where solar energy is steadily gaining ground. “Approximately 10 percent of domestic production now comes from solar energy, reducing our dependence on hydropower plants,” he underlined.

The sector’s development has been increasingly supported by private investments that extend beyond state support schemes. According to the Minister, the market now includes both projects realized through formal auctions and independent private investments.

Strengthening the Transmission Grid

However, recent developments in Europe have highlighted a structural vulnerability: the critical importance of the transmission network. “Energy security is not only about production but also about transmission. If we build generation capacities, we must simultaneously build the corresponding transmission infrastructure,” he said.

In this framework, Albania is accelerating regional interconnection projects, including the link with North Macedonia, the doubling of capacity with Greece, and a strategic project with Italy. These investments aim to increase flexibility and enable more efficient utilization of production resources.

Strategic Goals for 2030

Another strategic objective remains the country’s transformation from a net importer to a net exporter of energy by 2030. “Our goal is for Albania to become a net exporter of energy,” the Minister declared.

In parallel, the government aims to increase energy efficiency through dedicated financial instruments. “We will create a financing fund for energy efficiency,” he said, noting that approximately 400 MW of self-production capacity has already been installed by businesses and households.

Investments will not be limited to infrastructure alone. The Minister emphasized the need for human capital development, announcing the creation of an Energy Academy with international support. Simultaneously, major public projects are being planned, including the development of dams and storage technologies such as “pumped storage,” aimed at increasing overall system flexibility.

The upcoming 2026 renewable energy auction is expected to be a significant step toward market consolidation and capacity growth, reflecting an integrated approach between energy production and transmission.

March 23, 2026

by AEA in News

Albania Government Subsidies for Water Utilities Reach €3.5 Million, Majority Spent on Electricity Costs

Water supply and sewerage companies received 350 million lek, or more than €3.5 million, in government subsidies last year. Official data show that most of this amount was used to pay for electricity. The share of this expense in total subsidies was 88.8%. The remainder was allocated to compensate vulnerable groups.

“For 2025, the Central Government has distributed subsidies totalling 350 million lek to twelve Regional Water Utilities, out of the fourteen established so far, as well as to the Vorë Water Utility.

The distribution of subsidies has been carried out in accordance with Instruction No. 1 of the Ministry of Infrastructure and Energy, dated 04.07.2025, ‘On the approval of the methodology, criteria, and procedures for the allocation and use of state subsidies for service providers in the water supply and sewerage sector for the 2025 budget year.’

Based on point 6(a) of this instruction, the subsidy fund is used to grant a 100% monthly discount on water supply and sewerage tariffs for vulnerable categories, as defined in point 3 of the methodology, to compensate for the consumption of the minimum vital quantity of up to 5 m³/month,” the document from the Water Regulatory Authority states.

For 2025, the amount used for vulnerable groups for the 12 Regional Water Utilities and the Vorë Water Utility is 39 million lek.

Meanwhile, the Authority clarifies that based on point 6(b) of the same instruction, the remaining part of the subsidy fund is used to settle electricity obligations for companies that have more than 75% of water production through mechanical pumping. This criterion has been applied to subsidize the Regional Water Utilities of Fier, Shkodër, Elbasan, Sarandë, Durrës, and the Vorë Water Utility.

“For companies that have not completed the regionalization process, according to the provisions of Council of Ministers Decision No. 302 specifically the Tirana and Kamëz Water Utilities, which are expected to be consolidated into the structure of the Tirana Regional Utility no subsidies were allocated in 2025 for covering electricity costs or supporting vulnerable groups.

This situation is linked to the strategic orientation of the central government to prioritize financial support for water utilities that have become part of the regionalization reform, in accordance with Decision No. 302, where the Ministry of Infrastructure and Energy/AKUK holds 51% of the shares. It also appears that during 2025, two regional water utilities, namely Gjirokastër and Dibër, did not benefit from subsidies,” the document states.