Policy Paper: Bridging mutual synergies of the energy transition and energy security in Albania
How Albania could enhance compatibility of energy transition and energy security
Coupling energy security with energy transition is an urgent challenge that governments across Europe are working to address. Expanding renewable energy production can contribute to the decarbonization of the energy system while reducing the risks posed by external shocks. Albania, despite generating the majority of its domestic energy from hydropower plants, holds significant potential for developing renewable energy sources such as solar and wind power. However, the increasing dependence on hydropower, which is highly susceptible to weather conditions, poses a threat to the long-term sustainability of the national energy system.
Supporting renewable energy production through targeted policy measures and upgrading the energy transmission system has been a cornerstone of the Albanian government's energy strategy. Diversification of energy sources is a key element of the National Plan for Energy and Climate 2020-2030. The European Union accession process, coupled with the recent energy crises and the green transition, has had a significant impact on the Western Balkans, including Albania. Albania’s renewable energy development strategy is aligned with EU energy policies as the country advances toward EU membership. The Clean Energy Package, as well as the EU’s Green Agenda, which prioritizes renewable energy and decarbonization, remains a key framework for cooperation between the EU and Albania. However, achieving an EU-aligned energy transition requires learning from countries that have undertaken similar paths, such as the Visegrad Group (V4) countries. These nations have faced similar structural challenges in energy transition and European integration, and their experience in developing effective policy mixes on energy governance can provide valuable insights for Albania.
This paper identifies three main pathways to create synergies between energy transition and energy security in Albania: 1) Accelerating diversification and energy efficiency plans; 2) Considering environmental and social aspects of energy transition and security; 3) Investing in the integration of clean energy infrastructure and grid system upgrades.
Accelerating Diversification and Energy Efficiency Plans
Diversifying renewable energy sources is critical for both energy transition and energy security. This is one of the Albanian government's main priorities, as reflected in official documents such as the National Plan for Energy and Climate and the Strategy for Renewable Energy Sources. Renewable energy diversification should be inclusive, incorporating households and private companies into the policy development process. This will contribute significantly to the democratization and decentralization of energy governance, while also helping to balance the national transmission system. A more inclusive energy transition enhances the resilience of the energy system and reduces dependence on energy imports.
To further accelerate renewable energy adoption, Albania can expand the use of Power Purchase Agreements (PPAs) for solar parks and other renewable energy sources. These agreements have proven to be effective in boosting renewable energy production. In addition, supportive mechanisms for household investments in renewable energy systems would be crucial for expanding capacity. Alongside with diversifications objectives, energy efficiency plans on for renovations of building and upgrade of the national distribution system can have an important contribution of enhancing energy efficacy, which has been of the main challenges loosing around 20% of energy due to the downgraded energy transmission system.
Environmental and Social Aspects
Energy security now encompasses not just reliable supply, but also environmental and social considerations. While Albania's reliance on hydropower has provided a sense of security in terms of domestic energy production, it has also led to environmental degradation. The expansion of hydropower plants has resulted in reduced water flows in key rivers, directly impacting rural communities that depend on agriculture and other water-based activities.
Renewable Energy Communities (RECs), which are included in Albania’s legislative framework, offer an opportunity to mitigate these social and environmental challenges. By encouraging community-led renewable energy projects, RECs have become a driving force for a just and democratic energy transition across Europe. They foster community engagement, decentralize energy governance, and reduce the need for energy imports, all while contributing to sustainability and social cohesion.
Clean Energy Infrastructure Projects: Interconnectors and Grid Upgrades
Strengthening cross-border interconnections and upgrading grid infrastructure remain essential for improving energy security. The Trans-European Energy Infrastructure map highlights the importance of regional electricity grids, including those in the Western Balkans. Enhancing clean energy infrastructure is crucial for integrating energy markets, and EU financing instruments such as the Western Balkans Investment Fund (WBIF) and KfW (German Development Bank) provide strong support for these efforts.
Albania has been investing in updating its interconnection grid and plans to further strengthen ties with neighboring countries, such as Greece. Recently, an agreement was signed with Italy and the United Arab Emirates to build an underwater electricity cable, which will integrate Albania into a broader regional energy network. This increased interconnection is vital for energy market integration and will further bolster Albania’s energy security.
Energy transition and energy security must go hand in hand. By following the right pathways, balancing diversification, energy efficiency, and investment in clean energy infrastructure, Albania can secure long-term energy security while achieving a green energy transition. The goal is not just to secure new energy sources but to build a resilient and sustainable energy system that is less vulnerable to external shocks, promotes community ownership, and contributes to a green and just energy transition. This balanced approach will allow Albania to achieve both energy security and a renewed, sustainable energy system for the future.
Read the full policy paper below.