Electricity in Albania: A Key Factor for Business Success

Understanding the dynamics of electricity supply and pricing is crucial for any business, especially in Albania. Reliable and cost-effective electricity is foundational for smooth operations and financial planning. This page offers a comprehensive overview of Albania's electricity landscape, focusing on pricing trends and market regulations that directly impact businesses.

Commercial Electricity Prices in Albania

Below is a table detailing the electricity prices for commercial use in Albania. These figures are vital for companies to forecast their operational expenses accurately.
Source: The data for this article have been obtained from the official website of the Hungarian Power Exchange, HUPX. The Hungarian HUPX serves as a reference exchange for the Balkan region - https://hupx.hu/en/market-data/dam/historical-data
In Albania, companies utilizing a high-tension line over 20 kilovolts are required to procure their energy from the free market, where they can secure a contract for a set period of time. This regulation ensures that larger consumers engage in a more competitive and transparent electricity market. The average of these prices for the last 7 years is shown in the table above. However, if these companies are unable to secure a contract, they are subjected to the fluctuating local market price, which can significantly impact their operational costs.

Residential Electricity Prices in Albania
In Albania, the residential electricity prices have shown remarkable stability over the past five years. This consistency is evident in the pricing data for non-commercial (residential) use, where the cost per kilowatt-hour (kWh) has remained unchanged.During this period, the price for residential electricity per kWh has been consistently set at 0.09 Euros. This steady pricing is crucial for households and small businesses operating from non-commercial premises, offering them predictability and stability in their financial planning. Such stability in electricity costs is not only beneficial for budgeting but also reflects the Albanian commitment to maintaining affordable energy prices for its citizens and small business sector.

Electricity Reliability and Power Outages
According to a study conducted by the World Bank, in 2019, Albania experienced an average of 1.5 power outages per month. These incidents usually lasted only for several minutes, except for the times it came with a notice because of some infrastructure changes. However, it's important to note that the frequency of these outages varied across the country, with the capital city, Tirana, experiencing significantly fewer incidents.

Since 2019, there have been substantial improvements in Albania's power grids. These enhancements have been instrumental in reducing the frequency and impact of power outages. As a result, concerns regarding power reliability in Albania, especially in key business and economic centers like Tirana, have largely been mitigated. This progress in the power infrastructure demonstrates Albania's commitment to providing a stable and reliable energy supply, further boosting its attractiveness as a destination for business and investment.

The Rise of Solar Energy in Albanian Businesses
In recent years, there has been a notable shift in Albania's energy landscape, particularly among businesses embracing renewable energy sources. Solar energy, in particular, has seen a growing adoption rate, as companies in Albania increasingly turn to this sustainable and cost-effective solution. Located in Southern Europe, Albania enjoys > 2500 hours of sunshine a year and offers one of the best destinations for solar energy production. This trend is driven by the declining costs of solar panels and the increasing awareness of environmental impacts. Businesses across various sectors are installing solar systems to power their operations, reducing their reliance on traditional electricity sources and benefiting from lower energy costs in the long run. This movement towards solar energy not only reflects a commitment to sustainability but also positions Albanian businesses competitively in a global market that increasingly values green practices.

In August 2020, Voltalia, a French firm, was awarded concessions to build a 140MW photovoltaic park in the country. The plant will provide energy to around 220,000 households and is in its final steps of construction. The firm has also won a similar tender to build another photovoltaic park in Durres, where they aim to deliver energy to Spitallë by the end of 2025.

Albania's Emphasis on Sustainable Energy: Hydroelectric Power
A key aspect of Albania's energy sector is its reliance on hydroelectric power, with an impressive 95% of its electricity being generated from hydroelectric sources. This reliance on hydroelectric power places Albania at the forefront of sustainable energy utilization in Europe. The country's unique geographical features, including its rivers and mountainous terrain, make it ideally suited for hydroelectric generation. This focus on hydroelectric power underscores Albania's commitment to sustainable energy practices, reducing its carbon footprint and setting an example for other nations. For businesses operating in Albania, this means access to a predominantly green and renewable energy source, aligning with global sustainability goals and potentially enhancing their corporate responsibility profiles.

Electricity is a pivotal factor for businesses in Albania, influencing both operational efficiency and financial planning. The shift towards a free market for high-tension electricity consumers represents a significant move towards a more open and competitive energy sector. Understanding these dynamics, along with historical pricing trends, is essential for businesses and residents alike to navigate the energy landscape in Albania effectively.