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Report No. 53331-ALB

CLIMATE VULNERABILITY ASSESSMENTS

An Assessment of Climate Change Vulnerability, Risk, and

Adaptation in Albania’s Power Sector

FINAL REPORT

December 2009

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ESMAP MISSION

The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and technical assistance trust fund

program administered by the World Bank and assists low- and middle-income countries to increase know-how and institutional

capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth.

ESMAP COPYRIGHT DISCLAIMER

Energy Sector Management Assistance Program (ESMAP) reports are published to communicate the results of ESMAP‘s work

to the development community with the least possible delay. Some sources cited in this paper may be informal documents that

are not readily available.

The findings, interpretations, and conclusions expressed in this report are entirely those of the author(s) and should not be

attributed in any manner to the World Bank, or its affiliated organizations, or to members of its board of executive directors for

the countries they represent, or to ESMAP. The World Bank and ESMAP do not guarantee the accuracy of the data included in

this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors,

denominations, other information shown on any map in this volume do not imply on the part of the World Bank Group any

judgment on the legal status of any territory or the endorsement of acceptance of such boundaries.

Vice President:

Philippe H Le Houerou

Country Director:

Jane Armitage

Sector Director:

Peter Thomson

Sector Manager:

Ranjit Lamech

Task Team Leader:

Jane Ebinger

TABLE OF CONTENTS

SYNOPSIS

ACKNOWLEDGMENTS

vii

ACRONYMS

viii

EXECUTIVE SUMMARY

Albania‘s Energy Sector and Climate Change

Recommendations for Building Climate Resilience of the Energy Sector

PËRMBLEDHJE EKZEKUTIVE

Sektori i energjisë në Shqipëri dhe ndryshimet klimatike

Rekomandimet për krijimin e elasticitetit klimatik të sektorit energjitik

xvii

1. OVERVIEW

1.1 Methodological Approach

1.2 Structure of this Report

2. CONTEXT

2.1 Existing Energy Sector Context in Albania

2.2 Climate Is Changing

2.3 Albania‘s Low Adaptive Capacity

3. CLIMATIC VULNERABILITIES, RISKS, AND OPPORTUNITIES FOR ALBANIA‘S ENERGY

SECTOR

3.1 Cross-cutting Issues

3.2 Large Hydropower Plants (LHPPs)

3.3 Small Hydropower Plants (SHPPs)

3.4 Thermal Power Plants (TPPs)

3.5 Wind Power

3.6 Power Transmission and Distribution

3.7 Energy Demand

3.8 Oil, Gas, and Coal Production

4. IDENTIFICATION OF ADAPTATION OPTIONS FOR MANAGING RISKS TO ALBANIA‘S

ENERGY SECTOR

5. COST–BENEFIT ANALYSIS OF ADAPTATION OPTIONS

5.1 Objective of the Cost–Benefit Analysis

5.2 Assessment of Shortfall in Future Power Generation Due to Climate Change

5.3 Options to Meet the Projected Power Shortfall Due to Climate Change

5.4 Benefit Categories / Parameters Used in the Cost–Benefit Analysis

5.5 Results of the Cost–Benefit Analysis

5.6 Sensitivity Analysis

5.7 Using the Results of the Cost–Benefit Analysis to Support Decisions to Manage

the Albanian Energy Sector in the Face of Climate Change

6. NEXT STEPS TO IMPROVE THE CLIMATE RESILIENCE OF ALBANIA‘S ENERGY SECTOR

7. REFERENCES, ANNEXES, AND APPENDICES

ANNEX 1: METHODOLOGICAL APPROACH TO THE ASSESSMENT

A1.1 Analysis of Observed Climatic Conditions and Data on Future Climate Change

A1.2 Geographical Information System (GIS) Mapping

A1.3 Workshop 1: Hands-on Vulnerability, Risk, and SWOT Analyses with Energy

Sector Stakeholders in Albania

A1.4 Analysis of Climate Risks for Regional Energy Markets in South East Europe

A1.5 Development of High-level Qualitative and Quantitative Assessments of Climate

Change Risks to Energy Assets

A1.6 Workshop 2: Adaptation and Cost–Benefit Analysis with Energy Sector

Stakeholders in Albania

A1.7 High-level Cost–Benefit Analysis (CBA)

ANNEX 2: RISK ASSESSMENT BACKGROUND AND RATIONALE

iii

ANNEX 3: ADAPTATION OPTIONS

ANNEX 4: WEATHER / CLIMATE INFORMATION SUPPORT FOR ENERGY SECTOR MANAGEMENT

109

ANNEX 5: FURTHER DETAILS ON APPROACH TO COST–BENEFIT ANALYSIS

112

A5.1 Methodology

112

A5.2 Framing Workshop Parameters Summary

115

A5.3 Financial Assumptions

121

A5.4 Benefits Assessment and Valuation

121

A5.5 Benefit/Disbenefit Valuation

122

A5.6 Results Summary

124

A5.7 Limitations

125

ANNEX 6: FURTHER DETAILS ON OPTIONS TO IMPROVE THE CLIMATE RESILIENCE OF

ALBANIA‘S ENERGY SECTOR

127

ANNEX 7: ALBANIA POWER SUPPLY DEMAND PASSIVE SCENARIO PROJECTIONS

2003 TO 2050

132

ANNEX 8: ESTIMATING IMPACTS OF CLIMATE CHANGE ON LARGE HYDROPOWER PLANTS IN

ALBANIA

140

A8.1 Existing Available Information on LHPPs and Climate Change Impacts

140

A8.2 Albania‘s First National Communication

141

A8.3 Assessment of Climate Change Impacts on the Vjosa Basin

142

A8.4 Assessment of Climate Change Impacts on the Mati River Basin

143

A8.5 Correlation of Annual Average Inflows to Fierze and Electricity Generation

144

A8.6 Verbal Information from the World Bank

146

A8.7 Assessments of LHPPs in Brazil

146

A8.8 Summary

146

ANNEX 9: ESTIMATING IMPACTS OF CLIMATE CHANGE ON ENERGY GENERATION IN ALBANIA,

EXCLUDING LARGE HYDROPOWER PLANTS

148

A9.1 Small Hydropower Plants (SHPPs)

148

A9.2 Thermal Power Plants (TPPs)

148

A9.3 Wind

148

A9.4 Domestic Solar Heaters

148

A9.5 Concentrated Solar Power

149

A9.6 Transmission and Distribution

149

ANNEX 10: GLOSSARY OF KEY TERMS

150

FIGURES

Figure 1: Generation, import, and supply of energy in Albania from 2002 to 2008

Figure 2: Net Present Value of diversification options, using base case assumptions

xiv

Figura 1: Prodhimi, importimi dhe furnizimi me energji elektrike në Shqipëri nga viti 2002 në

2008

xvi

Figura 2: Vlera e Tanishme Neto e alternativave të diversifikimit, duke përdorur supozimet e

rastit bazë

Figure 3: The UKCIP risk-based decision-making framework for climate change adaptation,

modified for use in this assignment

Figure 4: Generation, import, and supply of energy in Albania from 2002 to 2008

Figure 5: Locations of the five large hydropower plants that provide about 90 percent of

Albania‘s domestic electricity production

Figure 6: Existing and candidate interconnections in the region

Figure 7: Increases in concentrations of carbon dioxide in the atmosphere from 10,000 years

before present to the year 2005

Figure 8: Observed changes in climate, physical and biological systems

Figure 9: Projected increases (averaged across nine IPCC AR4 global climate models) in winter

and summer temperatures across South East Europe by the 2050s compared to the 1961

to 1990 average, under the A2 emissions scenario

Figure 10: Man-made emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O)

and sulphur dioxide (SO2) for six SRES scenarios

Figure 11: Projected changes averaged across nine IPCC AR4 global climate models in

summer and winter precipitation (mm/day) across South East Europe by the 2020s and

2050s compared to the 1961 to 1990 average, under the A2 emissions scenario

Figure 12: The ECA countries likely to experience the greatest increases in climate extremes by

the end of the twenty-first century

Figure 13: The drivers of vulnerability to climate change

Figure 14: Impact of natural disasters in ECA, 1990–2008

Figure 15: Annual Energy Profile for Albania from 1985 to 2006 in GWh

Figure 16: Relationship between Drin River flow and electricity production at Fierze

Figure 17: Variation of Fierze inflows and electricity generation, 1999 to 2007

Figure 18: Relationship between Mati River flow and electricity production from Ulëza and

Shkopeti HPP

Figure 19: Projected electricity supply/demand for Albania from 2010 to 2050

Figure 20: Electricity shortage due to climate change

Figure 21: NPV using base case assumptions

Figure 22: Breakdown of NPV of options by parameter

Figure 23: Tornado chart showing sensitivity of NPV for each option to variations in the values

of each parameter

Figure 24: Net present value of options under high parameter assumptions

Figure 25: Breakdown of costs and benefits, high parameter case

Figure 26: Costs vs. benefits for the extreme storm case (1 week per year outages)

Figure 27: Costs vs. benefits for the extreme storm case (1 month per year outages)

Figure 28: Costs vs. benefits for 50-year duration analysis

Figure 29: Sensitivity of options to discount rate

Figure 30: Sensitivity of options to carbon dioxide and other GHGs

Figure 31: Sensitivity of options to the value placed on water

Figure 32: Rainfall and Drin Dam Cascade generation in a wet year (October 2005 to

September 2006)

Figure 33: Rainfall and Drin Dam Cascade generation in a wet year (October 2006 to

September 2007)

Figure A1.1: Sample GIS output

Figure A1.2: Acclimatise Business Risk Pathways Model, adapted for Workshop 1

Figure A8.1: Average change in mean runoff according to CCSA for three time horizons: 2025,

2050, 2100

142

Figure A8.2 Projected Climatic Changes to 2100

143

Figure A8.3 Expected changes in runoff, Mati catchment‘s

144

Figure A8.4: Relation of electricity production to river flow, MRCA

145

Figure A8.5: Electricity generation and Fierze inflows, 1999–2007

145

TABLES

Table 1: Electricity production in South Eastern Europe in 2006, as % of total

Table 2: Summary of Albanian Scenarios for Changes in Precipitation (compared to 1961 to

1990 baseline) by Number of Global Climate Models

Table 3: Summary of Climate Risks before Adaptation

Table 4: Number of Risks in Each Risk Severity Category, Before and After Adaptation

Table 5: Risk Register

Table 6: Base Case and High Case Parameter Value Assumptions

Table A2.1: Scale for Assessing Likelihood of Occurrence of Hazard

Table A2.2: Scale for Assessing Magnitude of Consequence

Table A2.3: Risk Mapping (Before Adaptation)

Table A2.4: Risk Mapping (After Adaptation)

Table A3.1: Adaptation Options that Apply to All Energy Asset Classes

Table A3.2: Adaptation Options—Energy Demand and Demand-side Energy Efficiency

Table A3.3: Adaptation Options—Large Hydropower Plants (LHPPs)

Table A3.4: Adaptation Options—Small Hydropower Plants (SHPPs)

100

Table A3.5 Adaptation Options—Thermal (Fossil Fuel) Power Plants (TPPs)

102

Table A3.6: Adaptation Options—Other Renewable Energy Sources

104

Table A3.7 Adaptation Options—Electricity Transmission and Distribution

105

Table A3.8: Adaptation Options—Fossil Fuel Supply and Transmission / Transportation

107

Table A4.1: Design and Operation of Energy Plants

109

Table A5.1: Private Benefit Categories—Examples

114

Table A5.2: Parameters for the CBA Discussed at Workshops and Meetings

117

Table A5.3: CAPEX and OPEX Summary (U.S. Dollars, 2010)

121

Table A5.4: Monetized Unit Benefit Values (U.S. Dollars)

124

Table A5.5: Benefits Realized by Each Option (U.S. Dollars, 2010)

124

Table A5.6: Base-case Parameters Results (U.S. Dollars, 2010)

126

Table A5.7: High-case Parameters Results (U.S. Dollars, 2010)

126

Table A7.1: Passive Scenario Projections 2030 to 2050

132

Table A7.2: Active Scenario Projections 2030 to 2050

136

Table A8.1 Climate Change Scenarios for Albania

141

Table A8.2: Climate Change Scenarios for Three Time Horizons: 2025, 2050, 2100

142

Table A8.3: Results for Hydropower (Deviation from the Reference Projections) and Relative

Participation of Each Basin in the Brazilian Hydropower System

146

Table A8.4: Projected Changes in Annual Climatic Conditions, Runoff, and Hydropower

Production

147

Table A9.1 Range of Projected Changes Compared to 1961–1990 Baseline

148

BOXES

Box 1: Development and climate change at work

Box 2: Regional electricity markets in South Eastern Europe and climate risks

Box 3: Climate change modeling and greenhouse gas emissions scenarios

Box 4: Climate change, water resources, energy, and food security in Europe and Central Asia

(ECA)

Box 5: Categorization of adaptation options for robust decision making under conditions of

high uncertainty, with some examples

Box 6: A vital ‗no-regrets‘ option for Albania—improved monitoring and forecasting of

weather and climate

Box 7: Weather risk management through weather coverage and insurance instruments

Box 8: Active and passive scenarios in the draft National Energy Strategy, 2007

SYNOPSIS

Many countries are increasingly vulnerable to destructive weather events—floods, droughts,

windstorms, or other parameters. The vulnerability is driven in part by climate but also by

countries‘ sensitivity to events exacerbated by past practices, socioeconomic conditions, or

legacy issues. The degree to which vulnerability to weather affects the countries‘ economies is

driven by their coping or adaptive capacities.

Seasonal weather patterns, weather variability, and extreme events can affect the production and

supply of energy, impact transmission capacity, disrupt oil and gas production, and impact the

integrity of transmission pipelines and power distribution networks. Climate change also affects

patterns of seasonal energy demand. It is important to explore these vulnerabilities for the energy

sector given its major contribution to economic development, the long life span of energy

infrastructure planning, and the dependence of energy supply and demand on weather.

This report showcases a pilot vulnerability, risk, and adaptation assessment undertaken for

Albania‘s energy sector to raise awareness and initiate dialogue on energy sector adaptation. A

bottom-up, stakeholder-based, qualitative/semi-quantitative risk-assessment approach is used to

discuss and identify risks, adaptation measures, and their costs and benefits. It draws on

experience and published guidance from the United Kingdom and Australia, as well as existing

research and literature. The climate vulnerability assessment framework puts stakeholders at the

heart of the decision-making process and involves:

 Climate risk screening of the energy sector to identify and prioritize hazards, current

vulnerabilities, and risks from projected climate changes out to the year 2050.

 Identification of adaptation options to reduce overall vulnerability.

 A high-level cost benefit analysis of key physical adaptation options.

This pilot assessment demonstrates an approach that can be used to help countries and energy

sector stakeholders develop policies and projects that are robust in the face of climatic

uncertainties, and assist them in managing existing energy concerns as the climate changes. It

identifies key direct risks to energy supply and demand and options for adaptation to establish

where to focus subsequent in-depth analyses. It also identifies additional research needed to

better understand the implications of extreme climatic events for the energy sector as well as

potential indirect impacts—such as possible adaptation actions in the agriculture sector that may

affect energy supply.

vii

ACKNOWLEDGMENTS

This Report has been prepared by a core team led by Jane Ebinger. Team members are Lucy Hancock,

Antonio C. Lim, Magnus Gehringer, Aferdita Ponari (World Bank), Richenda Connell, Nina Raasakka

(Acclimatise), Stuart Arch, Alastair Baglee, Ivaylo Mirchev, Liudmila Nazarkina, Ben Pope

(WorleyParsons), and Besim Islami (consultant). The team was assisted by Ana Gjokutaj, Kozeta

Haxhiaj, and Josephine Kida (World Bank).

The team benefited greatly from a wide range of consultations with stakeholders. Meetings and

workshops were held in Albania with (in alphabetical order): Petrit Ahmeti, Neritan Alibali, Sokol Aliko,

Ramadan Alushi, Ymer Balla, Indrit Baholli, Leonard Bardhoshi, Irma Berdufi, Daniel Berg, Taulant

Bino, Miriam Bogdani, Agim Bregasi, Eglantina Bruci, Kujtime Caci, Eduart Cani, Marjana Coku,

Marialis Çelo, Endri Çili, Leonidha Çobo, Erion Cuni, Engjell Dakli, Stavri Dhima, Luan Dibra, Nazmi

Diku, Dorjan Duka, Eduart Elezi, Lavdosh Ferrunaj, Arben Gazheli, Ilia Gjermani, Ardit Gjeta, Gani

Gjini, Kole Gjoni, Konalsi Gjoka, Edmond Goskolli, Martin Graystone, Lorenc Gura, Sazan Guri, Suzana

Guxholli, Marjola Hamitaj, Skender Hasa, Alfred Hasanaj, Ervin Hatija, Aheron Hizmo, Eida Hoxha,

Fatmir Hoxha, Farudin Hoxha, Zhuljeta Hoxha, Rajmonda Islamaj, Hajri Ismaili, Qerim Ismeni, Marinela

Jazoj, Ilir Kaci, Erion Kalaja, Mirela Kamberi, Shaban Kamberi, Zeki Kaya, Eniana Kociaj, Nevton

Kodheli, Molnar Kolaneci, Lavdie Konjari, Niko Kurila, Hysni Laçi, Artan Leskoviku, Bashkim Lushaj,

Sherif Lushaj, Margarita Lutaj, Bikore Mala, Afrim Malaj, Perparim Mancellari, Robert Manghan, Sokol

Mati, Xhemal Mato, Merita Mansaku-Meksi, Niklas Mattson, Dorina Mehmeti, Olgert Metko, Marieta

Mima, Donald Mishaxhi, Driada Mitrushi, Piro Mitrushi, Arben Mukaj, Alken Myftiu, Genc Myftiu,

Agim Nashi, Bujar Nepravishta, Ndue Preka, Nikolin Prifti, Erikan Proko, Elton Qendro, Eduart Reimani,

Anastas Risha, Kristo Rodi, Daniela Ruci, Mitat Sanxhaku, Alma Saraçi, Denisa Saja, Aleksander Shalsi,

Erlet Shaqe, Sherefedin Shehu, Angjelin Shtjefni, Dritan Shutina, Mimoza Simixhiu, Muharrem Stojku,

Kliti Storja, Konti Tafa, Peter Troste, Fatjon Tugu, Teuta Thimjo, Piro Trebicka, Endrit Tuta, Andi Vila,

Anisa Xhitoni, Lufter Xhuveli, Petrit Zorba.

The work was conducted under the general guidance of Charles Feinstein, Ranjit Lamech, and Camille

Nuamah (World Bank). Ron Hoffer and Demetrios Papathanasiou (World Bank) and Amarquaye Armar

(ESMAP) also provided valuable guidance. Additional input was provided by Drita Dade, Gazmend Daci,

Giuseppe Fantozzi, and Salvador Rivera (World Bank). The report benefited from peer review by

Mohinder Gulati and Walter Vergara (World Bank), Roberto Schaeffer (Federal University of Rio de

Janeiro) and Vladimir Stenek (International Finance Corporation).

The financial and technical support by the Energy Sector Management Assistance Program (ESMAP), the

Trust Fund for Environmentally and Socially Sustainable Development (TFESSD) made available by the

Governments of Finland and Norway, and The World Bank is gratefully acknowledged. ESMAP—a

global knowledge and technical assistance partnership administered by the World Bank and sponsored by

official bilateral donors—assists low- and middle-income countries, its ―clients,‖ to provide modern

energy services for poverty reduction and environmentally sustainable economic development. ESMAP is

governed and funded by a Consultative Group (CG) comprised of official bilateral donors and multilateral

institutions, representing Australia, Austria, Canada, Denmark, Finland, France, Germany, Iceland, the

Netherlands, Norway, Sweden, the United Kingdom, and the World Bank Group.

Finally, the team would like to dedicate this report to Antonio (Tony) Lim who passed away in October

2009. Tony was a tireless campaigner for climate change and carbon finance at the World Bank who

worked diligently to bring better appreciation for and attention to climate issues and challenges,

particularly in the energy sector.

viii

ACRONYMS

AKBN National Agency for Natural Resources

AR4 The Fourth Assessment Report of the IPCC, released in 2007

CAPEX Capital expenditure

CO2 Carbon dioxide

CAT-DDO Catastrophe Risk Deferred Draw-down Option

CBA Cost–benefit analysis

CCGT Combined cycle gas turbine power plant

CCSA Climate change scenario for Albania

CSP Concentrated solar power

ECA Europe and Central Asia

ECMWF European Centre for Medium-range Weather Forecasting

EIA Environmental Impact Assessment

EMI European meteorological institution

EMP Environmental Management Plan

ERE Energy Regulatory Authority

ESIA Environmental and Social Impact Assessment

ESMAP Energy Sector Management Assistance Program

EUCOS EUMetNet Composite Observing System

EUMetSat European Organisation for the Exploitation of Meteorological Satellites

GCM General circulation model / Global climate model

GIS Generation Investment Study

GIS Geographical information system

GHG Greenhouse gas

IEWE Institute of Energy, Water, and Environment

IPCC Intergovernmental Panel on Climate Change

KESH Korporata Energjitike Shqiptare, Albanian Electricity Corporation

LHPP Large hydropower plant

LNG Liquefied natural gas

METE Ministry of Economy, Trade and Energy

NES National Energy Strategy

NHMS National hydrometeorological service

NMS National meteorological Service

OPEX Operating expenditure

OST Transmission System Operator

RCM Regional climate model

REBIS Regional Balkans Infrastructure Study

SEE South Eastern Europe

SHPP Small hydropower plant (less than 15 MW)

SRES Special Report on Emissions Scenarios

SST Sea surface temperature

SWOT Strengths, weaknesses, opportunities and threats analysis

T&D Transmission and distribution

TAP Trans-Adriatic Pipeline

TFESSD Trust Fund for Environmentally and Socially Sustainable Development

TPP Thermal power plant

UKCIP UK Climate Impacts Programme

UNFCCC United Nations Framework Convention on Climate Change

WB World Bank

WBG World Bank Group

WMO World Meteorological Organization

EXECUTIVE SUMMARY

Albania’s Energy Sector and Climate Change

Albania‘s water resources are a national asset, with hydropower from the River Drin currently

providing about 90 percent of domestic electricity. As climate change mitigation targets and

legislation are tightened, and with other countries struggling to reduce their greenhouse gas

emissions, Albania‘s green production capability is an increasingly important national and

regional asset. However, such a high dependence on hydropower also brings challenges. Albania

finds it difficult to meet energy demand and maintain energy supply. The country‘s rainfall, on

which its hydropower depends, is among the most variable in Europe. Hydropower production

varies between about 2,900GWh in very dry years to twice that amount in very wet years.

Coupled with this, Albania has limited regional electricity interconnections at present, and

imports are expensive. There are also significant inefficiencies in domestic energy supply,

demand and water use. Technical losses in the transmission network were 213GWh in 2008 (3.3

percent), an improvement on losses in 2006 (which were 256GWh or 4 percent). Technical and

commercial losses from the distribution system amounted to 1,927GWh (33 percent) in 2008.

From 10 percent to 20 percent of water resources are lost in the irrigation system. All these

factors have compounded to create frequent load shedding and consequent impacts on Albania‘s

economic development. Figure 1 clearly shows lower domestic power production linked to low

rainfall in the period 2002 to 2008, with resultant associated high energy imports. It is worth

noting that, even with imports, load shedding has still been required, so the energy supply data in

Figure 1 do not represent the true energy demand.

Efforts are underway to address these challenges and improve resource use efficiency: In 2008,

for the first time, no load shedding was programmed and there has been a recent decision in

Albania to eliminate load shedding from 2009 onward, along with a commitment to provide a

24-hour electricity supply. As well as reductions in losses from the transmission system, losses

from the distribution system were reduced by 5.5 percent in 2008 compared to 2007. The

efficiency of water use in energy generation is influenced by long-term reductions in efficiency

(due to aging of assets) and more-recent management actions to improve water use efficiency. In

2007 and 2008, inflows to Fierze Reservoir were similar (approximately 4,120,000,000 m3) but

power generation in 2008 was 29.4 percent higher than in 2007. This was because high water

levels were maintained in the reservoir in 2008, and there was better optimization between

electricity import and domestic production. This improvement is reflected in a metric known as

specific consumption (m3 of water consumed per kWh of electricity generated). Specific

consumption in 2007 was 1.40 m3/kWh, whereas in 2008 it improved to 1.04 m3/kWh. The new

Dam Safety Project (funded by the World Bank) is reviewing investments in the Drin and Mati

River Cascades, including investments in bathymetry and hydrology.

However, unless prompt action is taken, climate change looks set to worsen Albania‘s energy

security over the medium to long term. This study estimates that a reduction in runoff of 20

percent by 2050 driven by climate change could lead to 15 percent less electricity generation

from Albania‘s large hydropower plants (LHPPs) and 20 percent less from small hydropower

plants (SHPPs). At the same time, increases in extreme precipitation events could lead to

increased costs for maintaining dam security. Other energy assets are not immune from climate

impacts. Rising sea levels and increased rates of coastal erosion will threaten energy assets in the

coastal region. Rising air temperatures are also estimated to reduce the efficiency of TPPs by

about 1 percent by 2050. If river-water cooled TPPs were developed in future, these would be

affected by changes in river flows and higher river temperatures, further reducing their

efficiency. Efficiency losses of 1 percent by 2050 are also estimated for transmission and

distribution networks. Owing to uncertainties in current and future wind speeds, estimates of

changes in wind power generation cannot be made. Solar energy production in Albania may,

however, benefit from projected decreases in cloudiness—it is estimated that output from solar

power could increase by 5 percent by 2050.

Figure 1: Generation, import, and supply of energy in Albania from 2002 to 2008 (ERE,

2008)

Energy demand is also related to climatic conditions. Higher temperatures due to climate change

will reduce demand for space heating, particularly in winter, but will increase demand for space

cooling and refrigeration in hotter months.

The seasonality of Albania‘s supply–demand imbalance will become increasingly critical: As

summer demand rises along with temperatures, hydropower production in summer looks set to

be most affected by reduced rainfall. At the same time, demand for agricultural irrigation will

rise, further competing with water demand for small hydropower.

Adapting to climate variability and change will become increasingly important for the Albanian

energy sector. KESH, Korporata Energjitike Shqiptare, the Albanian Electricity Corporation, is

currently privatizing the country‘s energy sector. (The distribution system has recently been

privatized, with the Czech company, CEZ, being the private sector operator.) As awareness of

climate issues is accelerating globally, concerns about unmanaged climate risks and their impacts

on the financial performance of the energy sector could make Albania less attractive to foreign

energy investors.

This study provides high-level assessments of climate risks and adaptation options for Albania‘s

energy sector, drawing on existing research and literature. It identifies key direct risks to energy

supply and demand and options for adaptation in order to establish where subsequent more in-

depth analyses should be focused. Additional research is recommended to better understand the

implications of extreme climatic events for the energy sector and of changes in seasonality in

energy supply and demand, as well as potential indirect impacts—for instance, due to the

adaptation actions that may be taken in the agriculture sector, which may affect energy supply.

Recommendations for Building Climate Resilience of the Energy Sector

Given the challenges above, how could Albania best manage its future security of energy

supply in the face of a changing climate?

Albania‘s recent draft National Energy Strategy (NES) sets out a so-called active scenario,

which aims to improve energy security. It looks out to the medium term (the year 2019) and

describes plans to diversify the energy system, by encouraging development of renewable energy

generation assets (solar, small hydropower plants, wind, and biomass) and thermal power plants.

It does not consider climate change impacts on energy security on these timescales. Yet, as

already described, over the longer time horizons of this study (out to the year 2050) these assets

will be increasingly affected by climate change. The draft NES‘s active scenario notes the

importance of new electricity interconnection lines to facilitate Albania‘s active participation in

the South East Europe energy market. But the wider region will also be affected by climate

change—about one quarter of the region‘s electricity is generated by hydropower plants, and

regional summer energy demand will rise along with temperatures and due to economic

development. This could increase import prices and reduce supply, so these interconnections

may not help Albania maintain energy security unless regionwide coping strategies are devised.

The draft NES active scenario also emphasizes the need for improved energy efficiency through

greater use of domestic solar water heating, improved building standards, lower-energy

appliances, and alternative heating sources other than electricity. These energy-efficiency

measures are increasingly critical as the climate changes, and Albania must provide financial

incentives to promote their uptake. But, based on experience from other countries, implementing

them in a timely manner will be a significant challenge.

Even if the measures in the draft NES active scenario were extrapolated to 2050 and fully

implemented, this study estimates that, due to climate change impacts on supply and demand,

Albania would still have a supply–demand gap. The estimated net shortfall due to climate change

is on the order of 350 GWh per year by 2030, equivalent to power generation from a 50 MW

thermal power plant. By 2050, the shortfall rises to 740 GWh per year (105 MW), or 3 percent of

total demand. As previously noted, this disguises a more significant impact on energy security

due to changing seasonal demand and production, with summer peak demand increasing when

hydropower production is at its lowest.

So, what are the critical actions that Albania could take now to improve energy security now

and in the future?

First, Albania could increase its investment in, and coordination of, meteorological,

hydrometeorological and hydrological monitoring, modeling, and forecasting. These capabilities

have been considerably eroded in recent decades due to lack of investment and poorly

coordinated institutional arrangements. The current poor state of monitoring networks and

forecasting capability prevent optimal use of water resources and operation of hydropower plants

today—though some recent optimization improvements have been made. By exploiting better

data on reservoir use, margins, and changes in rainfall and runoff, it should be possible to

improve further the management of existing reservoirs. Investments in monitoring and

forecasting would have other benefits, helping the agriculture and transportation sectors and the

general population, while building resilience to climate change. Albania could develop (in-

country) or obtain (from elsewhere) weather and climate forecasts appropriate for energy-sector

xii

planning, from short-range forecasts (1 to 3 days ahead) and medium-range forecasts (3 to 10

days ahead), to seasonal forecasts and regional downscaled climate change projections. Short-

range and medium-range forecasts should be made available to decision makers with adequate

lead time to help in optimizing the operation of the energy system. This could be supported by

better interaction between meteorological/hydrometeorological experts and energy-sector

decision makers. Drawing on this information, energy-sector stakeholders could work in

partnership with water users in the agricultural sector to undertake climate risk assessments that

are integrated across these sectors and could devise agreed strategies for managing shared water

resources. Regional cooperation across South East Europe on sharing of monitoring data and

forecasts could also be strengthened, especially in relation to shared watersheds (Drin, Vjosa).

Albania could work in partnership with neighbors on regional studies on climate risks and their

implications for energy security, prices and trade. These studies will help to build understanding

of the extent to which the whole region will be affected in the same way at the same time by

climatic events such as droughts, and how best to manage such regional risks.

Second, there are enormous opportunities for Albania to close its supply–demand gap through

improved energy efficiency and demand-side management. While this is recognized in the draft

NES active scenario, more emphasis and progress could be made on this issue. The large

technical and commercial losses in the distribution system could be reduced and demand-side

management could be improved through, for example, improved bill collection and

establishment of cost-recovery tariffs (amending energy subsidies that are distorting market

signals). Such actions are vital for many reasons—fiscal, economic, and as part of good

governance. The recent privatization of the distribution system provides a driver for this.

Similarly, the losses from the water irrigation system could be tackled and greater emphasis

placed on improving the management of reservoirs, and on coordinating actions for more-

efficient water resource use in every sector. The Ministry of Agriculture, Food and Consumer

Protection has made significant progress recently in reducing irrigation losses from agriculture in

some parts of Albania, and this work could usefully be scaled up across the country. In the face

of climate change, the imperative for efficient and sustainable use of water resources is

increasing.

Thirdly, Albania could review its technical standards and planning/contractual processes for all

energy infrastructure, and upgrade them where needed to ensure that assets can withstand

climate variability and projected climate change impacts over their lifetimes. For new assets,

consideration of climate variability and change could be addressed through site selection

decisions, environmental impact assessments, tariffs, incentives, contracts and public–private

partnerships. Similarly, upgrading and rehabilitation of existing assets could build in assessments

of, and resilience to, climate change impacts. For instance, it may be possible to increase water

storage in existing reservoirs at a reasonable cost, to dampen the effects of seasonal variations in

runoff. Emergency Contingency Plans (ECPs) for hydropower plants could also be reviewed and

upgraded where needed, to take account of expected increases in precipitation intensity due to

climate change. Power producers and local authorities may also need to improve their capacities

to implement ECPs, ensuring that they provide sound mechanisms for monitoring weather and

its influence on river flows and reservoir levels, as well as communication with downstream

communities and contingency plans for evacuation.

Finally, climate change emphasizes the imperative (recognized in the draft National Energy

Strategy active scenario) for Albania to increase the diversity of its energy supplies—both

through increased regional energy trade and through developing a more diverse portfolio of

domestic generation assets, ensuring that these are designed to be resilient to climate change. For

example, Albania could structure Power Purchase Agreements including off-take arrangements

xiii

and power-swap agreements that recognize the complementarities between the different

countries‘ energy systems. For this study, a high-level cost–benefit analysis (CBA) has been

undertaken to estimate the relative costs and benefits to Albania of increased energy trade and

different types of domestic energy generation, to supply the shortfall in Albania‘s electricity that

is attributed to climate change impacts (350 GWh per year by 2030, and 740 GWh per year by

2050) that remains after full implementation of an extrapolated NES active scenario to 2050. The

CBA included the following options:

 Import of electricity

 Upgrading of existing large hydropower plants

 Upgrading of existing small hydropower plants

 New large hydropower plants

 New small hydropower plants

 New thermal power plants

 New wind farms

 New concentrated solar power plants (CSPs)

The performance of these options has been assessed, using parameters confirmed as important by

energy-sector stakeholders in Albania. As well as financial parameters (capital and operational

costs), environmental factors including water value, greenhouse gas emissions, and other

emissions and ecosystem values were seen as relevant in choice among energy asset options. In

terms of social parameters, disturbance to people and property was also assessed in the CBA.

Using these parameters, the sustainability of the various options was ranked.

Figure 2 presents the net present value (NPV) results in current (2010) U.S. dollar terms for each

of the options tested, under a base case set of assumptions. According to the CBA, the most

economic options for Albania are upgrade of existing LHPPs and SHPPs, followed by

development of new SHPPs and thermal power plants (the latter assumed to be gas-fired and

shown as CCGTs in Figure 2). An alternate thermal power option could be the use of

supercritical pulverized coal technology. While not considered in detail in the CBA, this option

would lead to greater GHG emissions and water usage than a gas-fired thermal power facility,

and would be less sustainable. Nevertheless, it would likely still be the fourth most-sustainable

option.

Sensitivity analyses were undertaken, to test the sensitivity of these options to varying discount

rates and values of greenhouse gas emissions. These confirmed that upgrading existing LHPPs

and SHPPs were the most economic options. For discount rates in the range 2 percent to 20

percent, the relative ranking of the top two options does not change, with the ―Upgrade existing

LHPP‖ option returning the greatest NPV over all discount rates, followed by ―Upgrade existing

SHPP.‖ However, when the discount rate is larger than 16.2 percent, thermal power plants

(CCGTs) become marginally more attractive than ―New SHPP.‖ Thermal power plants have

higher operating costs, but the effects of future operating costs on their NPV are diminished at

higher discount rates. In addition, as the discount rate increases, import of electricity becomes a

relatively more attractive option, though it remains NPV-negative across all discount rates

examined.

xiv

Net Present Value of Options

-200

-100

100

200

300

400

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figure 2: Net Present Value of diversification options, using base case assumptions

In relation to the effects on the options of varying the price of CO2 and other greenhouse gases

(GHGs), as expected, the economics of the renewable assets are insensitive to this parameter.

Clearly, those options that are sensitive to increasing GHG value are thermal power plants

(CCGTs) and import of electricity (assumed generated using CCGTs). The higher the value

placed on carbon dioxide and other GHGs, the more unfavorable thermal power plants and

electricity imports become in relative terms. However, domestic thermal power plants remain

NPV-positive up to the highest value tested, US$100 per tonne of GHG.

In conclusion, there are several critical actions that Albania could take now—namely, improving

meteorological and hydrometeorological monitoring, modeling, and forecasting, and improving

energy efficiency, demand-side management, and water-use efficiency. These will help manage

existing climate variability better and will build the country‘s resilience to climate change.

Albania is on the brink of a significant adaptation opportunity: major investments in new energy

assets are underway or being planned. Integrating adaptation measures into these can help ensure

their climate resilience. As the electricity system is privatized, it is possible to consider how to

structure incentives for adaptation; there could be opportunities for cost sharing between

government and the private sector. According to the CBA, upgrades to existing LHPPs and

SHPPs are the most economic options for Albania to fill the climate change-induced energy gap

that will emerge over the period 2030 to 2050. For development of new assets and upgrade of

existing assets, the earlier that climate risks and resilience are considered, the greater the

opportunities to identify financially and economically efficient solutions that will build the

robustness of the energy system for coming decades.

PËRMBLEDHJE EKZEKUTIVE

Sektori i energjisë në Shqipëri dhe ndryshimet klimatike

Burimet ujore të Shqipërisë janë një pasuri kombëtare, ku energjia hidrike nga lumi Drin siguron

rreth 90% të energjisë elektrike të prodhuar në vend. Ndërkohë që synimet dhe legjislacioni për

zbutjen e ndryshimeve klimatike bëhen më shtrënguese, dhe kur vendet e tjera mundohen të ulin

shkarkimet e gazeve serë, aftësia e Shqipërisë për prodhim ―të gjelbër‖ është një vlerë kombëtare

dhe rajonale gjithnjë dhe më e rëndësishme. Megjithatë, një varësi e tillë e lartë tek energjia

hidrike sjell dhe sfida. Për Shqipërinë është e vështirë të plotësojë kërkesën për energji elektrike

dhe të ruajë nivelin e furnizimit me energji. Sasia e reshjeve të shiut në vend, nga të cilat varet

dhe energjia hidrike, janë nga më të ndryshueshmet në Europë. Prodhimi i energjisë hidrike

luhatet nga rreth 2,900 GWh në vitet shumë të thata deri në rreth dyfishin e kësaj sasie në vitet

që janë jashtëzakonisht të lagështa.

Përveç kësaj, Shqipëria ka aktualisht numër të kufizuar interkonjeksionesh rajonale për energjinë

elektrike dhe importet janë të shtrenjta. Gjithashtu, ka inefiçencë të lartë si në anën e furnizimit

vendas me energji elektrike dhe në kërkesë, ashtu dhe në përdorimin e ujit. Humbjet teknike në

rrjetin e transmetimit në vitin 2008 ishin 213GWh (3.3%), një përmirësim në krahasim me

humbjet e vitit 2006 (të cilat ishin 256GWh ose 4%). Humbjet teknike dhe tregtare nga sistemi i

shpërndarjes shkonin në 1,927GWh (32.7%) në vitin 2008. Ndërmjet 10% dhe 20% e burimeve

ujore humbasin në sistemin e ujitjes. Të gjithë këta faktorë janë grumbulluar dhe shkaktojnë

ndërprerje të shpeshta të energjisë dhe pasoja me ndikim në zhvillimin ekonomik të Shqipërisë.

Figura 1 tregon qartësisht që ulja e prodhimit vendas të energjisë elektrike është e lidhur me

uljen e sasisë së reshjeve në periudhën nga viti 2002 deri në vitin 2008, me një rezultante të

shoqëruar me rritje të importeve të energjisë. Ja vlen të vihet në dukje që, edhe me importet, janë

nevojitur ndërprerje në furnizimin me energji elektrike, kështu që të dhënat e furnizimit me

energji në Figurën 1 nuk përfaqësojnë kërkesën e vërtetë për energji.

Po bëhen përpjekje për të adresuar këto sfida dhe për të përmirësuar eficencën e përdorimit të

burimeve: Në vitin 2008, për të parën herë, nuk janë programuar ndërprerje të energjisë elektrike

dhe ka patur një vendim të kohëve të fundit në Shqipëri për të eliminuar ndërprerjet për shkak të

mbikgarkesës nga viti 2009 dhe më tej, së bashku me një angazhim për të siguruar një furnizim

me energji 24 orë. Ashtu si uljet e humbjeve nga sistemi i transmetimit, edhe humbjet në

sistemin e shpërndarjes u ulën me 5.5% në vitin 2008, krahasuar me vitin 2007. Eficenca e

përdorimit të ujit gjatë prodhimit të energjisë elektrike ndikohet dhe nga uljet historike në

eficencë (për shkak të vjetërimit të aseteve) si nga dhe veprimet menaxhuese më të fundit që

synojnë të përmirësojnë eficencën e burimeve ujore. Në vitet 2007 dhe 2008, prurjet në

rezervuarin e Fierzës ishin shumë të ngjashme (rreth 4,120,000,000 m3) por prodhimi i energjisë

elektrike në vitin 2008 ishte 29.4% më i lartë se në vitin 2007. Kjo erdhi si shkak i ruajtjes në

nivele të lartat të ujit në rezervuar në vitin 2008, dhe optimizimit më të mirë ndërmjet importimit

dhe prodhimit të brendshëm të energjisë elektrike. Ky përmirësim pasqyrohet në një element të

njohur si konsumim specifik (m3 ujë të konsumuar për kWh energji elektrike të prodhuar).

Konsumi specifik në vitin 2007 ishte 1.40 m3/kWh, ndërsa në vitin 2008 u përmirësua deri në

1.04 m3/kWh. Projekti i ri mbi Sigurinë e Digave (financuar nga Banka Botërore) po shqyrton

investimet në kaskadat e lumenjve Drin dhe Mat, përfshirë dhe investimet në batimetri dhe

hidrologji.

xvi

Figura 1: Prodhimi, importimi dhe furnizimi me energji elektrike në Shqipëri nga viti 2002

në 2008 (ERE, 2008)

Megjithatë, po të mos ndërmerren veprime të menjëhershme, ndryshimet klimatike duket që do

ta përkeqësojnë sigurinë e energjisë në Shqipëri në afat të mesëm dhe të gjatë. Ky studim

vlerëson se një reduktim 20% në rrjedhje deri në vitin 2050 i nxitur nga ndryshimet klimatike

mund të çojë në 15% më pak prodhim të energjisë elektrike nga hidrocentralet e mëdha të

Shqipërisë (HECM) dhe 20% më pak nga hidrocentralet e vogla (HECV). Në të njëjtën kohë,

rritjet në ngjarjet ekstreme të reshjeve mund të çojnë në rritjen e shpenzimeve për ruajtjen e

sigurisë së digave. Edhe asetet e tjera të energjisë nuk janë të imunizuara nga ndikimet klimatike.

Rritja e niveleve të detit dhe rritja e shkallës së erozionit bregdetar do të kërcënojnë asetet e

energjisë në zonat bregdetare. Temperaturat në rritje të ajrit vlerësohen gjithashtu që do të

zvogëlojnë efikasitetin e TEC-ve me 1% deri në vitin 2050. Nëse në të ardhmen do të ndërtohen

TEC-e që ftohen me ujin lumenjve, këto do të ndikohen si nga ndryshimet në sasinë e rrjedhës së

lumenjve ashtu dhe nga temperaturat më të larta të ujit të lumit, duke zvogëluar më tej

efikasitetin e tyre. Humbjet e efikasitetit prej 1% deri në vitin 2050 janë parashikuar edhe për

rrjetet e transmetimit dhe shpërndarjes. Për shkak të paqartësive mbi shpejtësinë e erës si atë

aktuale dhe në të ardhmen, nuk mund të bëhen vlerësime mbi ndryshimet në prodhimin e

energjisë elektrike me anë të erës. Megjithatë, prodhimi i energjisë diellore në Shqipëri mund të

përfitojë nga zvogëlimi i parashikuar në mbulimin me re – është llogaritur që prodhimi nga

energjia diellore mund të rritet me 5% deri në vitin 2050.

Kërkesa për energji elektrike është e lidhur edhe me kushtet klimatike. Temperaturat më të larta

për shkak të ndryshimeve klimatike do të ulin kërkesën për ngrohjen e hapësirave, veçanërisht në

dimër, por do të rrisin kërkesën për ftohje hapësirash dhe përdorim frigoriferik në muajt më të

nxehtë.

Sezonaliteti i çekuilibrit furnizim-kërkesë të Shqipërisë do të bëhet gjithnjë e më kritik: ndërkohë

që kërkesa gjatë verës rritet së bashku me temperaturat, prodhimi i energjisë hidrike në verë

duket do të jetë më i prekuri nga reduktimi i sasisë së reshjeve. Në të njëjtën kohë, kërkesa për

xvii

ujitje në bujqësi do të rritet, duke konkuruar më shumë me kërkesën për ujë të hidrocentraleve të

vogla.

Adaptimi me ndryshueshmërinë dhe ndryshimin e klimës do të bëhet gjithnjë e më i rëndësishëm

për sektorin energjetik shqiptar. KESH-i, Korporata Elektorenergjitike Shqiptare, është

aktualisht duke privatizuar sektorin e energjisë të vendit. (Sistemi i shpërndarjes është privatizuar

kohët e fundit, ku kompania çeke CEZ është operatori privat i sektorit). Ndërkohë që

ndërgjegjësimi mbi kërcënimet e klimës po përshpejtohet në nivel global, shqetësimet në lidhje

me rreziqet e pamenaxhuara të klimës dhe ndikimet e tyre mbi performancën financiare të

sektorit të energjisë mund ta bëjnë Shqipërinë më pak tërheqëse për investitorët e huaj të

energjisë.

Ky studim jep vlerësime të nivelit të lartë mbi rreziqet klimatike dhe mundësitë për tu përshtatur

për sektorin energjitik të Shqipërisë, duke u mbështetur në kërkimet dhe literaturën ekzistuese.

Ai identifikon rreziqet kryesore të drejtpërdrejta për furnizimin dhe kërkesën për energji

elektrike dhe mundësitë për tu përshtatur, si dhe paraqet ku duhet të përqendrohen më shumë

analizat e mëtejshme më të thella. Rekomandohen kërkime shtesë për të kuptuar më mirë

implikimet e ngjarjeve ekstreme klimatike për sektorin e energjisë dhe të ndryshimeve në

sezonalitetin e furnizimit dhe kërkesës për energji elektrike, si dhe ndikimet e mundshme të

tërthorta – për shembull, për shkak të veprimeve përshtatëse që mund të merren në sektorin e

bujqësisë, dhe të cilat mund të ndikojnë në furnizimin me energji.

Rekomandimet për krijimin e elasticitetit klimatik të sektorit energjitik

Duke patur parasysh sfidat e mësipërme, si mund të menaxhojë më mirë Shqipëria në të

ardhmen sigurinë e furnizimit me energji përballë një klime që po ndryshon?

Draft-strategjia e fundit Kombëtare e Energjisë (SKE) e Shqipërisë përcakton një të ashtuquajtur

‗skenar aktiv‘, i cili synon të përmirësojë sigurinë e energjisë. Ai mbulon periudhën afat-mesme

(deri në vitin 2019) dhe përshkruan planet për të diversifikuar sistemin energjitik, duke nxitur

ndërtimin e aseteve për prodhimin e energjisë të rinovueshme (diellore, hidrocentrale të vogla,

era dhe biomasa) dhe termocentraleve. Ajo nuk merr parasysh ndikimet e ndryshimeve klimatike

mbi sigurinë e energjisë në këto periudha kohore. Megjithatë, siç përshkruhet dhe më lart,

përgjatë shtrirjeve më të gjata kohore të këtij studimi (deri në vitin 2050) këto asete do të

ndikohen gjithnjë e më shumë nga ndryshimet klimatike. Skenari aktiv i draft- SKE-së vë në

dukje rëndësinë e linjave të reja të interkonjeksionit të energjisë elektrike për të lehtësuar

pjesëmarrjen aktive të Shqipërisë në tregun e energjisë të Europës Jug-Lindore. Por dhe rajoni

më i gjerë gjithashtu do të ndikohet nga ndryshimet klimatike – rreth një e katërta e energjisë

elektrike të rajonit prodhohet nga hidrocentralet, dhe kërkesa rajonale për energji gjatë verës do

të rritet së bashku me temperaturat dhe për shkak të zhvillimit ekonomik. Kjo mund të rrisë

çmimet e importit dhe të zvogëlojë furnizimin, kështu që këto interkonjeksione mund të mos e

ndihmojnë Shqipërinë të ruajë sigurinë e energjisë nëse nuk hartohen strategji përballuese për

gjithë rajonin. Skenari aktiv i draft SKE-së gjithashtu thekson nevojën për të përmirësuar

efiçencën e energjisë nëpërmjet rritjes së përdorimit më të madh shtëpiak të ngrohjes së ujit me

energji diellore, përmirësimin e standarteve të ndërtimit, përdorimin e pajisjeve shtëpiake që

përdorin pak energji dhe burimet alternative për ngrohje përveç energjisë elektrike. Këto masa të

efiçencës së energjisë janë gjithmonë e më kritike ndërkohë që klima ndryshon, dhe Shqipëria

duhet të ofrojë nxitje financiare për të bërë të mundur përdorimin e këtyre masave. Por, duke u

bazuar në përvojën e vendeve të tjera, zbatimi i tyre në kohë do të jetë një sfidë e rëndësishme.

xviii

Edhe në qoftë se masat në skenarin aktiv të draft SKE-së që shtrihet deri në vitin 2050 do të

zbatohen plotësisht, ky studim vlerëson se, për shkak të ndikimeve të ndryshimeve klimatike mbi

kërkesën dhe ofertën, Shqipëria ende do të ketë një hendek furnizim-kërkesë. Mungesa e

parashikuar neto për shkak të ndryshimit të klimës është rreth 350 GWh në vit deri në vitin 2030,

e barabartë me prodhimin e energjisë nga një termocentral 50 MW. Deri në vitin 2050, mungesa

rritet në 740 GWh në vit (105 MW), ose 3% e kërkesës totale. Siç u theksua dhe më lart, kjo

fsheh një ndikim më të rëndësishëm për sigurimin e energjisë për shkak të ndryshimit të kërkesës

dhe të prodhimit sezonal, me rritjen e kërkesës pik të verës në kohën që prodhimi i energjisë

hidrike është në nivelin e tij më të ulët.

Pra, cilat janë veprimet kritike që Shqipëria mund të ndërmarrë tani për të përmirësuar

sigurinë e energjisë tani dhe në të ardhmen?

Së pari, Shqipëria mund të shtojë investimin e saj, dhe koordinimin e monitorimit, modelimit dhe

parashikimit meteorologjik, hidrometeorologjik dhe hidrologjik. Këto aftësi janë shkatërruar në

mënyrë të konsiderueshme në dekadat e fundit për shkak të mungesës së investimeve dhe

rregullimet institucionale të koordinuara dobët. Gjendja e keqe aktuale e rrjeteve të monitorimit

dhe aftësive parashikuese pengojnë përdorimin optimal të burimeve ujore dhe funksionimin e

hidrocentraleve sot – megjithëse, siç vihet në dukje më lart, janë bërë disa përmirësime të kohëve

të fundit për optimizimin. Duke shfrytëzuar të dhëna më të mira mbi përdorimin e rezervuarëve,

kufijve dhe ndryshimeve në sasinë e reshjeve dhe rrjedhjeve, do të jetë e mundur të përmirësohet

më tej menaxhimi i rezervuarëve ekzistues. Investimet në monitorim dhe parashikim të motit do

të kishin përfitime të tjera, duke ndihmuar edhe sektorët e bujqësisë dhe transportit dhe

popullatën në përgjithësi, si edhe ndërtimin e elasticitetit ndaj ndryshimeve klimatike. Shqipëria

mund të zhvillojë (në vend) ose të marrë (nga vende të tjera) parashikimet e motit dhe klimës të

përshtatshme për planifikim në sektorin e energjisë, duke mbuluar parashikimet në periudhë afat

shkurtër (1-3 ditë përpara), parashikimet në periudhë afat mesme (3-10 ditë), parashikimet

sezonale si dhe parashikimet rajonale të ndryshimit të klimës me shkallë të zvogëluar.

Parashikimet për periudhë afat shkurtër dhe afat mesme duhet të jenë në dispozicion të vendim-

marrësve në kohë reale, për të ndihmuar në optimizimin e funksionimit të sistemit energjitik. Kjo

mund të mbështetet nëpërmjet bashkëveprimit më të mirë ndërmjet ekspertëve

meteorologjikë/hidrometeorologjikë dhe vendim-marrësve në sektorin e energjisë. Duke u

mbështetur në këto të dhëna, palët e interesuara të sektorit të energjisë mund të punojnë në

partneritet me përdoruesit e ujit në sektorin e bujqësisë, për të ndërmarrë vlerësime të rrezikut të

klimës që janë të integruara në të gjithë këta sektorë dhe të hartojnë strategji të pranuara për të

menaxhuar burimet ujore të përbashkëta. Duhet gjithashtu të forcohet bashkëpunimi rajonal në të

gjithë Europën Juglindore për shkëmbimin e të dhënave të monitorimit dhe parashikimeve,

veçanërisht në lidhje me pellgjet ujëmbledhës të përbashkëta (Drin, Vjosa). Shqipëria mund të

punojë në partneritet me fqinjët në studime rajonale mbi rreziqet klimatike dhe implikimet e tyre

për sigurinë, çmimet dhe tregtinë e energjisë. Këto studime do të ndihmojnë për të ndërtuar të

kuptuarit nëse i gjithë rajoni do të ndikohet në të njëjtën mënyrë, e në të njëjtën kohë nga ngjarjet

klimatike të tilla si thatësira, dhe cila është mënyra më e mirë për të menaxhuar rreziqe të tilla

rajonale.

Së dyti, ekzistojnë mundësi shumë të mëdha për Shqipërinë për të mbyllur hendekun e saj

furnizim-kërkesë përmes përmirësimit të efiçencës së energjisë dhe menaxhimit të anës së

kërkesës. Megjithëse kjo është e pranuar në skenarin aktiv të draftit të SKE-së, duhet t‘i vihet më

shumë theksi dhe të bëhet përparim në këtë çështje. Mund të reduktohen humbjet e mëdha

teknike dhe tregtare nga sistemi i shpërndarjes, si dhe mund të përmirësohet menaxhimi i

kërkesës përmes mbledhjes së përmirësuar të faturave dhe vendosjes së tarifave që mbulojnë

kostot (duke ndryshuar subvencionet e energjisë të cilat po deformojnë sinjalet e tregut).

xix

Veprime të tilla janë jetike për shumë arsye – fiskale, ekonomike dhe si pjesë e qeverisjes së

mirë. Privatizimi i fundit i sistemit të shpërndarjes siguron një shtysë për këtë. Në mënyrë të

ngjashme, humbjet nga sistemi i ujitjes mund të trajtohen dhe të vihet më shumë theksi në

përmirësimin e menaxhimit të rezervuarëve, dhe në bashkërendimin e veprimeve për përdorimin

më efiçent të burimeve ujore në çdo sektor. Ministria e Bujqësisë, Ushqimit dhe Mbrojtjes së

Konsumatorit ka bërë përparim të ndjeshëm kohët e fundit në reduktimin e humbjeve gjatë

ujitjes në bujqësi në disa pjesë të Shqipërisë, dhe kjo punë mund të shkallëzohet në mënyrë të

dobishme në të gjithë vendin. Përballë ndryshimeve klimatike, po rritet domosdoshmëria për

përdorim efiçent dhe të qëndrueshëm të burimeve ujore.

Së treti, Shqipëria mund të rishikojë standardet e saj teknike dhe proceset planifikuese/

kontraktuese për të gjithë infrastrukturën energjitike, dhe për t‘i përmirësuar ato ku të jetë e

nevojshme për të siguruar që asetet mund të përballojnë ndryshueshmërinë klimatike dhe

ndikimet e parashikuara të ndryshimeve klimatike gjatë jetës së tyre. Për asetet e reja, shqyrtimi i

ndryshueshmërisë dhe ndryshimeve të klimatike mund të trajtohet përmes vendimeve mbi

përzgjedhjen e vendndodhjes, vlerësimeve të ndikimit në mjedis, tarifave, stimujve, kontratave

dhe partneritetit publik-privat. Në mënyrë të ngjashme, përmirësimi dhe rehabilitimi i aseteve

ekzistuese mund të përfshijë vlerësimet, dhe elasticitetin, ndaj ndikimeve të ndryshimeve

klimatike. Për shembull, mund të jetë e mundur të rritet ruajtja e ujit në rezervuaret ekzistuese

me një kosto të arsyeshme, për të zbutur efektet e variacioneve sezonale në rrjedhje. Planet e

emergjencave të paparashikuara (PEP) për hidrocentralet duhet gjithashtu të shqyrtohen dhe

përmirësohen aty ku është e nevojshme, për të marrë parasysh rritjet e pritshme në intensitetin e

reshjeve si shkak i ndryshimeve klimatike. Prodhuesit e energjisë dhe autoritetet lokale mund të

kenë gjithashtu nevojë për të përmirësuar kapacitetet e tyre për të zbatuar PEP, duke siguruar që

ato japin mekanizma të shëndoshë për monitorimin e motit dhe ndikimin e tij në prurjet e

lumenjve dhe nivelet e rezervuarëve, si dhe komunikim me komunitetet që banojnë poshtë

rrjedhës dhe planet e emergjencës për evakuim.

Së fundmi, ndryshimet klimatike theksojnë domosdoshmërinë (e pranuar në skenarin aktiv të

draftit të Strategjisë Kombëtare të Energjisë) për Shqipërinë, për të rritur diversitetin e

furnizimeve me energji – si nëpërmjet rritjes së tregtisë rajonale të energjisë ashtu dhe nëpërmjet

zhvillimit të një portofoli më të shumëllojshëm të aseteve prodhuese vendase, duke siguruar që

këto të jenë projektuar në mënyrë që të jenë elastikë ndaj ndryshimeve klimatike. Për shembull,

Shqipëria mund të strukturojë Marrëveshjet e Blerjes së Energjisë duke përfshirë edhe

rregullimet e marrjes dhe marrëveshjet e këmbimit të energjisë, të cilat njohin plotësimet

ndërmjet sistemeve të energjisë të vendeve të ndryshme. Për këtë studim, është ndërmarrë një

analizë e nivelit të lartë të kosto-përfitimeve (CBA) për të llogaritur kostot dhe përfitimet relative

për Shqipërinë të tregtisë së rritur të energjisë dhe llojet e ndryshme të prodhimit vendas të

energjisë, për të furnizuar (mbuluar) mungesën e energjisë elektrike të Shqipërisë që i atribuohet

ndikimeve të ndryshimeve klimatike (350 GWh në vit deri në vitin 2030, dhe 740 GWh në vit

deri në vitin 2050) dhe që mbetet pas zbatimit të plotë të skenarit aktiv të SKE të shtrirë

(ekstrapoluar) deri në vitin 2050. CBA përfshin mundësitë e mëposhtme:

 përmirësimin e hidrocentraleve të mëdha ekzistuese,

 përmirësimin e hidrocentraleve të vogla ekzistuese,

 hidrocentrale të reja të mëdha,

 hidrocentrale të reja të vogla,

 termocentrale të reja,

 impiante të reja të erës, dhe

 impiantet e reja të energjisë së përqëndruar diellore (CSP).

Performanca e këtyre alternativave është vlerësuar, duke përdorur parametrat që janë konfirmuar

si të rëndësishme nga aktorët kryesorë të sektorit të energjisë në Shqipëri. Ashtu si dhe

parametrat financiare (shpenzimet kapitale dhe operative), faktorët mjedisorë duke përfshirë

vlerën e ujit, gazet me efekt serrë dhe shkarkimet e tjera dhe vlerat e ekosistemit u panë si të

rëndësishëm në zgjedhjen midis alternativave të aseteve të energjisë. Përsa i përket parametrave

sociale, u vlerësua shqetësimi i njerëzve dhe pronës në CBA. Duke përdorur këto parametra, u

rendit qëndrueshmëria e alternativave të ndryshme.

Figura 2 paraqet rezultatet e Vlerës së Tanishme Neto (Net Present Value – NPV) në terma

aktuale (2010) në USD për secilin nga alternativat e testuara, bazuar në një grup supozimesh si

rast bazë. Sipas CBA, alternativa më ekonomike për Shqipërinë është përmirësimi i HECM dhe

HECV ekzistuese, e ndjekur nga ndërtimi i HECV të reja dhe termocentraleve të reja (treguar në

Figurën 2 si ‗CCGT‘ – turbina gazi me cikël të kombinuar). Një opsion alternativ i energjisë

termike mund të jetë përdorimi i teknologjisë superkritike me qymyr të pluhurizuar. Megjithëse

nuk shqyrtohet me hollësi në CBA, kjo alternativë mund të ketë shkallë më të lartë të

shkarkimeve të gazrave me efekt serrë dhe të përdorimit të ujit krahasuar me një termocentral me

gaz, si dhe do të jetë më pak i qëndrueshëm. Megjithatë, ka të ngjarë të jetë zgjedhja e katërt më

e qëndrueshme e grupit të alternativave.

Net Present Value of Options

-200

-100

100

200

300

400

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figura 2: Vlera e Tanishme Neto e alternativave të diversifikimit, duke përdorur

supozimet e rastit bazë

Janë ndërmarrë analizat e ndjeshmërisë, për të provuar sa të ndjeshme janë këto opsione në

nivele të ndryshme zbritjeje dhe vlera të ndryshme të shkarkimeve të gazeve serë. Ato

konfirmuan se përmirësimi i HECM dhe HECV ekzistuese ishin alternativat më ekonomike. Për

normat e zbritjes (discount rates) nga 2% deri 20%, renditja relative e dy opsioneve kryesore nuk

ndryshon, ku alternativa ―Përmirësimi i HECM‖ shfaqi NPV më të madhe nga të gjitha normat e

zbritjes, e ndjekur nga ―Përmirësimi i HECV ekzistues‖. Megjithatë, kur norma e zbritjes është

më e madhe se 16,2%, termocentralet (CCGT – turbina gazi me cikël të kombinuar) bëhen pak

më tërheqëse se sa ―HECV të reja‖. Termocentralet kanë kosto të larta operative, por efektet e

kostove të ardhshme operative mbi NPV e tyre zvogëlohen në nivele më të larta zbritjeje. Përveç

kësaj, me rritjen e normave të zbritjes, importimi i energjisë elektrike bëhet një alternativë

xxi

relativisht më tërheqëse, edhe pse ai mbetet me NPV negative në të gjitha normat e zbritjes që

janë ekzaminuar.

Në lidhje me ndikimet mbi opsionet e ndryshme të ndryshimit të çmimit të CO2 dhe gazeve të

tjera me efekt serë (GHG), siç pritej, ekonomia e aseteve të rinovueshme është e pandjeshme

ndaj këtij parametri. Është e qartë që ato opsione që janë të ndjeshme ndaj vlerës në rritje të

GHG janë termocentralet (CCGT) dhe importimi (supozohet të jetë prodhuar duke përdorur

CCGT). Sa më e lartë të jetë vlera e vendosur mbi dioksidin e karbonit dhe GHG-të e tjera, aq

më të pafavorshme bëhen termocentralet dhe importimi në terma relative. Megjithatë,

termocentralet vendase mbeten me NPV pozitive deri në vlerën më të lartë të testuar, me 100

USD për ton GHG.

Në përfundim, ekzistojnë disa veprime të rëndësishme që Shqipëria mund të ndërmarrë tani –

përkatësisht, përmirësimin e monitorimit, modelimit dhe parashikimit meteorologjik dhe

hidrometeorologjik, dhe përmirësimin e efiçencës së energjisë, menaxhimin e anës së kërkesës

dhe përdorimin efiçent të ujit. Këto do të ndihmojnë për të menaxhuar më mirë

ndryshueshmërinë ekzistuese të klimës, dhe do të krijojnë elasticitetin e vendit ndaj ndryshimeve

klimatike. Shqipëria është në prag të një mundësie të rëndësishme përshtatshmërie: investime të

mëdha në asetet e reja energjitike janë duke u zhvilluar ose duke u planifikuar. Integrimi i

masave të adaptimit në to mund të ndihmojë sigurimin e elasticitetit të tyre ndaj klimës.

Ndërkohë që sistemi i energjisë elektrike është është privatizuar, është e mundur të shqyrtohet se

si të strukturohen stimujt për adaptim; mund të ketë mundësi për ndarjen e shpenzimeve

ndërmjet qeverisë dhe sektorit privat. Sipas CBA, përmirësimi i HECM dhe HECV ekzistuese

është opsioni më ekonomik për Shqipërinë për të mbushur hendekun e energjisë të shkaktuar nga

ndryshimet klimatike, i cili do të shfaqet gjatë periudhës nga viti 2030 deri në 2050. Për

zhvillimin e aseteve të reja dhe përmirësimin e aseteve ekzistuese, sa më herët të merren në

konsideratë rreziqet dhe elasticiteti klimatik, aq më të mëdha do të jenë mundësitë për të

identifikuar zgjidhje me efiçencë financiare dhe ekonomike që do të krijojnë qëndrueshmërinë e

sistemit të energjisë për dekadat e ardhshme.

1. OVERVIEW

Energy security is a key concern in Albania, which relies on hydropower for about 90 percent of

its electricity production. While renewable energy resources like hydropower play a fundamental

role in moving the world towards a low-carbon economy, they are also vulnerable to climatic

conditions. Climate variability already affects Albania‘s energy production to a considerable

extent, and climate change is bringing further challenges.

This report summarizes work conducted in partnership with stakeholders in Albania‘s energy

sector and other closely related sectors. It aimed to build greater understanding of the climate

risks faced by the energy sector and of priority actions that could be taken to reduce

vulnerabilities. It addressed the following question:

“How can Albania best manage its future security of energy supply in the face of a

changing climate?”

Best is defined as ―an optimal balance between financial, environmental and social objectives.‖

The work involved:

 Climate-risk screening of the energy sector to identify and prioritize hazards, current

vulnerabilities

 Estimating the impacts of projected climate changes on energy supply and demand out to the

year 2050

 Identifying adaptation options to reduce overall vulnerability

 A high-level cost–benefit analysis of key physical adaptation options

The analysis was intended to raise awareness among stakeholders and provide high-level (semi-

quantitative) assessments of risks and adaptation options for Albania‘s energy sector, drawing on

existing research and literature on climate change and its impacts. It aimed to identify key risk

areas and options for adaptation, to establish where subsequent more in-depth analyses should be

focused. Additional research would help to improve understanding of the implications of

extreme climatic events, which are addressed only briefly in this study. There may also be

significant indirect impacts that could be better understood through integrated cross-sectoral

assessments—for instance, the effects on energy supply of the adaptation actions that may be

taken in the agriculture sector. The recommended next steps to further refine and improve the

evidence base for adaptation planning are described in Section 6.

It is intended that this assessment will help support the Albanian government and other energy-

sector stakeholders in developing policies and projects (future energy assets) that are robust in

the face of climatic uncertainties, and will also assist them in managing existing energy

concerns, as the climate changes.

Box 1: Development and climate change at work

The World Bank Group‘s (WBG) operational response to climate change is articulated in Development and

Climate Change: A Strategic Framework for the World Bank Group, a framework prepared at the request of

the Development Committee during the WBG‘s 2007 Annual Meetings and endorsed a year later. Six action

areas are identified to support the specific needs and priorities of World Bank clients:

1. Support climate actions in country-led development processes.

2. Mobilize additional concession and innovative finance.

3. Facilitate the development of market-based financing mechanisms.

4. Leverage private sector resources.

5. Support accelerated development and deployment of new technologies.

6. Step up policy research, knowledge, and capacity building.

Supporting tools for adaptation and actions with mitigation co-benefits are linked to each action area. The

focus is on improving knowledge and capacity, including learning by doing. The framework sets measurable

indicators to track implementation performance over fiscal years 2009 to 2011.

(Adapted from: Development and Climate Change, A Strategic Framework for the World Bank Group, World

Bank, 2008a).

The analysis has been co-funded by the Energy Sector Management Assistance Program

(ESMAP), the Trust Fund for Environmentally and Socially Sustainable Development

(TFESSD) and the World Bank. It fits within the broader context of the World Bank‘s Strategic

Framework on Development and Climate Change (see Box 1).

1.1. METHODOLOGICAL APPROACH

The overall approach for undertaking the analysis followed a risk-based framework for decision-

making on climate change adaptation, applying guidance published in the UK (Willows and

Connell, 2003) and Australia (Broadleaf Capital International and Marsden Jacob Associates,

2006). An annotated version of the framework is shown in Figure 3.

The framework puts stakeholders at the heart of the decision-making process. It starts by

working with stakeholders to define their objectives and success criteria, and maintains their

involvement through the stages of climate vulnerability assessment, risk assessment, and risk

management (adaptation planning).

The assessment was intended to deliver a high-level (semi-quantitative) analysis covering the

entire energy sector. It identifies key issues related to Albania‘s energy security in the face of

climate variability and change, and demonstrates where subsequent in-depth analyses should be

focused.

Delivering the assessment involved the following activities that are described further in Annex 1:

 Review Albania‘s energy sector strategies, energy assets and energy demand projections.

 Review and build on work conducted for Albania‘s First National Communication to the

United Nations Framework Convention on Climate Change (Islami et al., 2002).

 Analyze observed climatic conditions and data on future climate change for Albania.

 Use Geographical Information System (GIS) to map Albania‘s energy assets overlaid with

data on climate change.

 Conduct a hands-on vulnerability assessment and development of SWOT1 analyses, with

energy-sector stakeholders in Albania, through a workshop and series of meetings.

 Review and assess Albania‘s meteorological and hydrometeorological capacity, monitoring

networks and forecasting, and assess information exchange between hydrometeorologists and

energy-sector decision makers.

 Analyze climate risks for regional electricity markets in South East Europe.

 Review literature and expert analyses to develop risk ratings and high-level semi-quantitative

assessments of climate change risks to energy security.

 Identify adaptation options to address climate-related vulnerabilities and risks, along with

agreement on the objectives and parameters for the cost–benefit analysis, through a second

workshop and meetings with energy sector stakeholders in Albania.

 Conduct a desk-based high-level cost–benefit analysis (CBA).

Figure 3: The UKCIP risk-based decision-making framework for climate change

adaptation, modified for use in this assignment (Willows and Connell, 2003).

1 Strengths, Weaknesses, Opportunities and Threats

What is the energy

sector in Albania aiming

to achieve?

Develop criteria for assessing risks

and adaptation options, considering

critical thresholds and sensitivities,

legislation, cost, etc.

Identify risk management

(adaptation) options including:

 No regret & low regret

options,

 Win-win options,

 Flexible options –

adaptive management.

Evaluate risk

management options

against Stage 2

criteria.

Undertake cost-

benefit analysis.

How can Albania’s energy sector ensure that it delivers

successfully on its energy security objectives in the face

of climate variability and climate change? What are the

opportunities from climate change for Albania’s energy

sector?

Bring information

together.

Undertake final

checks.

Undertake tiered vulnerability

and risk assessments, drawing on

latest climate change trends and

future projections.

Evaluate risks against Stage 2

criteria.

1.2. STRUCTURE OF THIS REPORT

This report presents the outcomes of the assessment just described. The remainder of this report

is set out as follows:

Section 2 describes the context for this assessment, covering the Albanian energy sector,

observed and projected climatic conditions and Albania‘s adaptive capacity.

Section 3 outlines the climatic vulnerabilities, risks, and opportunities facing Albania‘s energy

sector.

Section 4 describes the key adaptation options identified for managing climate risks to the

energy sector.

Section 5 provides the cost–benefit analysis of physical adaptation options.

Section 6 sets out next steps for improving the climate resilience of Albania‘s energy sector.

Section 7 includes references and lists of annexes and appendices.

Annex 1 describes the methodological approaches to each stage of the assignment.

Annex 2 provides the background and rationale for the prioritization of climate-related risks.

Annex 3 provides tables of cross-cutting adaptation options, as well as options for each asset

type.

Annex 4 describes the weather and climate information needs for energy sector management,

covering design, operations and maintenance.

Annex 5 gives further details on the approach to the cost–benefit analysis.

Annex 6 gives further details on recommended actions to improve the climate resilience of the

energy sector.

Annex 7 is a spreadsheet providing the scenarios of Albania power supply and demand from

2003 to 2050, which were applied in the cost–benefit analysis.

Annex 8 estimates impacts of climate change on large hydropower plants in Albania.

Annex 9 estimates impacts of climate change on energy generation in Albania, excluding large

hydropower plants.

Annex 10 includes a glossary of key terms.

2. CONTEXT

2.1 EXISTING ENERGY SECTOR CONTEXT IN ALBANIA

Overview of Albania’s Energy Sector

Albania has been struggling for some time to meet energy demand and maintain energy security.

This is largely as a result of the country‘s current dependence on hydropower as almost the sole

means of electricity production, coupled with a lack of investment in other energy assets. The

situation has developed in a process of radical change since the beginning of Albania‘s economic

transition in the early 1990s. At that time, the country was virtually 100 percent electrified and a

net exporter of electricity within the region. After an initial decline in industrial production and

ensuing reduced energy demand during the early transition period, the demand for energy rose

by 10 percent per year from 1992 to 2000, making Albania a net energy importer by 1998

(World Bank, 2008). However, demand rose by less than 1 percent per year from 2000 to 2006,

possibly in part linked to regional events but probably also partly due to increases in electricity

prices, reductions in network losses and improvements in collections (World Bank, 2008). Poor-

quality supply also meant that some consumers switched permanently to alternative sources of

energy (Kaya, Z., pers. comm.).

The outdated technologies used in many branches of the economy, as well as old equipment and

standards applied in households and the services sector, mean that Albania is a country with low

energy consumption per capita, but with high energy intensity (Government of Albania, 2007).

Due to increasing consumer demand and insufficient quantity of electrical power produced in the

country, it is almost certain that electricity imports in the near future will continue to be essential

to maintain a secure power supply (Government of Albania, 2007). However, financial and

transmission constraints have restricted the amount of energy imports to date, resulting in load

shedding (power cuts) that has had adverse economic and social effects. In addition, because of a

worsening electricity shortage in the South East Europe region more generally, import prices

have risen to unusually high levels, and KESH, the Albanian Electricity Corporation, has

occasionally been unable to buy imports even when it has the funds to pay for them (World

Bank, 2008).

Figure 4 depicts the relationship between electricity production in Albania and imports.

Hydropower production ranges from below 2,900 GWh in very dry years to as much as 5,800

GWh in abnormally wet years (World Bank, 2008).

Efforts are underway to address these challenges and improve resource use efficiency: In 2008,

for the first time, no load shedding was programmed and there has been a recent decision in

Albania to eliminate load shedding from 2009 onward, along with a commitment to provide a

24-hour electricity supply. As well as reductions in losses from the transmission system, losses

from the distribution system were reduced by 5.5 percent in 2008 compared to 2007. The

efficiency of water use in energy generation has also improved, due to better monitoring and

management. In 2007 and 2008, inflows to Fierze Reservoir were very similar (approximately

4,120,000,000 m3) but power generation in 2008 was 29.4 percent higher than in 2007. This was

because high water levels were maintained in the reservoir in 2008, and there was better

optimization between electricity import and domestic production. This improvement is reflected

in a metric known as specific consumption (m3 of water consumed per kWh of electricity

generated). Specific consumption in 2007 was 1.40 m3/kWh, whereas in 2008 it improved to

1.04 m3/kWh.

Climate risks already affect all asset types in the energy sector to varying degrees and, unless the

risks are proactively managed, future climate change is likely to further degrade the

inefficiencies already present in the system. Furthermore, the wider South East Europe region

may also experience similar challenges, as highlighted in Box 2 (Ponari et al., 2009).

Figure 4: Generation, import, and supply of energy in Albania from 2002 to 2008 (ERE,

2008).

Albania’s Draft National Energy Strategy and Recent Regulatory Reforms

The draft recent National Energy Strategy (NES) recognizes that problems with energy security

have had an impact on the development of economic activity in the country, as well as on levels

of living comfort (Government of Albania, 2007). The main aim of the draft NES, which looks

out to 2019, is to guarantee a safe supply of energy to support the sustainable economic

development of the country. To that end it has outlined key issues to address the growing

challenges facing Albania regarding energy supply and demand, including the following main

objectives (Government of Albania, 2007):

 Improving energy security through the diversification of the energy system and construction

of new generation assets and inter-connection lines

 Encouraging development of renewable energy generation assets (solar, small hydropower

stations, wind, biomass) to maximize use of local resources

 Opening up the domestic electricity market and actively participating in the regional market,

in the framework of the Community Energy Treaty of South-Eastern European Countries,

based on the requirements of the European Union for reforming the electrical power sector

(Directive 54/2003 of EU)

The regulatory licensing process for energy assets has recently been altered. The Power Sector

Law has assigned the Regulatory Licensing Authority, ERE, the role of regulating the electricity

system and issuing licenses for electricity production, while permission to construct new energy

production facilities is granted by the Ministry of Economy, Trade and Energy (METE). In the

past year, regulations have been developed related to the 2008 amendment of the law on

renewables, which aimed to harmonize Albanian practice with EU directives, as well as to speed

up and manage the approval process for renewable concessions. The revised approval process

covers authorization of wind, biomass, other renewables, and thermal power plants. Small

hydropower plants are covered by the Law on Concessions.

Albania’s Energy Assets

A brief overview of the existing and planned energy assets in Albania is useful for understanding

the extent to which high dependence on hydropower, low diversity in the energy system, and

inefficient grid systems constitute the main reasons for Albania‘s poor energy security.

Large Hydropower Plants

Hydropower from three large hydropower plants (LHPPs) on the River Drin account for about

90 percent of electrical power produced within Albania, utilizing the country‘s plentiful water

resources (Government of Albania, 2007). The remaining domestic generation is mainly from

the two LHPPs on the Mati River Cascade. These five LHPPs have a combined installed

capacity of 1.45GW (see Figure 5):

Drin River Cascade:

 Fierza—4  125 MW with annual production of about 1,800 GWh, built in the 1970s and

modernization completed in 2006

 Koman—4  150 MW, with annual production of about 2,000 GWh, built in the 1980s

 Vau i Dejes—5  50 MW, with annual production of about 1,000 GWh, built in the 1960s

Mati River Cascade:

 Ulza—25 MW, producing about 120 GWh, commissioned in 1958

 Shkopeti—25 MW, producing about 94 GWh per year, commissioned in 1970

A further LHPP is installed on the Bistrica River, with 25MW installed capacity.

Recognizing the importance of the main five LHPPs to Albania and the wider South Eastern

Europe Energy Community, the World Bank has provided credit of US$35.3 million to Albania

for a dam safety project, which will contribute to safeguarding them, improve their operational

efficiency, and enhance the stability of power supply for the regional electricity market (World

Bank, 2008b).

The Ministry of Economy, Trade and Energy (METE) estimates that there is capacity for about

3,200MW of additional hydropower power plants within Albania (Tugu, 2009). A number of

large hydropower plant projects are being considered or are in progress:

Box 2: Regional electricity markets in South Eastern Europe and climate risks

At present, hydropower is about 30 percent of electricity production across South Eastern Europe (SEE) as a

whole, though the relative contributions of hydropower, fossil fuel combustion and nuclear power vary

considerably from country to country (Table 1). This diversity in sources of electrical power is becoming a

strength, as countries in the region have subscribed to the Energy Community Treaty, which aims to create a

regional energy market compatible with the internal energy market of the European Union.

Table 1: Electricity production in South Eastern Europe in 2006, as % of total

Country

Hydropower

Fossil fuel

combustion

Nuclear

Albania

Bosnia and Herzegovina

Bulgaria

Croatia

Greece

Kosovo

100

FYR Macedonia

Montenegro

Romania

Serbia

TOTAL SEE

(World Bank, 2009a; International Energy Agency, 2009). Note: Grey highlights a dependence above 50

percent.

Across the region, electricity demand is expected to grow considerably over coming decades. Expansion of

hydropower could make a significant contribution toward meeting future demand: as the cost of fossil fuels

rise, hydropower is increasingly cost-effective. Excluding Croatia, which does not plan to develop further

hydropower, SEE has an unexploited potential of about 22,000 MW of hydropower capacity (annual

generation of about 73,000 GWh). However, regional development of hydropower sources and regional

trading do not necessarily help to manage energy security risk: climate trends can affect shared transboundary

waters and regionwide energy demand in the same way, at the same time.

Future energy prices in South Eastern Europe will be sensitive to climate change, in part because hydropower

is exposed to climate risk. An assessment of the sensitivity of energy prices to availability of water for

hydropower for the years 2010 and 2015, undertaken in the Regional Balkans Infrastructure Study, Electricity

(REBIS) and Generation Investment Study (GIS), indicated that the marginal production cost for a unit of

energy could be 15 percent to 50 percent higher in a dry year than in a wet year (PricewaterhouseCoopers

LLC and Atkins International, 2004). REBIS assumed that the region might be wet or dry as a whole. In fact,

climate patterns within SEE are complex, and a regional approach to managing climate risk for the energy

sector could potentially be devised. Research undertaken in Brazil (Pereira de Lucena et al., 2009) has

demonstrated that climate risk to Brazil‘s hydropower facilities is buffered by the fact that they are located

across several partly uncorrelated hydrological regimes. Drawing on Brazil‘s experience, it would be very

helpful to understand whether all South Eastern Europe‘s watersheds face wet or dry years or seasons at the

same time, or whether it is possible that careful selection of an ensemble of hydropower investments could

help to diversify risk.

(Ponari et al, 2009).

Vjosa River:

 Kalivaci HPP is under construction.

 A study on the hydropower potential of the Vjosa is being prepared by KESH and is

expected to lead to further concessions soon.

Drin River Cascade:

 Verbund (Austria) have been granted a concession for Ashta HPP and construction is

expected to start shortly.

 Scavica HPP is currently under tender.

Devolli River Cascade:

 A concession has been granted to EVN (Austria).

Figure 5: Locations of the five large hydropower plants that provide about 90 percent of

Albania’s domestic electricity production (World Bank, 2008b).

Small Hydropower Plants (less than 15 MW capacity)

Small hydropower plants (SHPPs) are defined in Albanian law as plants with capacity up to

15MW, in line with EU norms. While there are 84 existing SHPPs, only about 20 privately

owned SHPPs are operating at present. Most of these are in need of rehabilitation.

Since the passage of the General Concession Law on December 18, 2006, by the Albanian

Parliament, an additional 50 new concessions were granted to small hydropower plant (SHPP)

owners in Albania. A feed-in tariff for SHPP is a major incentive for new investments.

Thermal Power Plants

The only thermal power plant (TPP) currently operating in Albania is at Fier. The plant operates

on heavy fuel oil produced by the Ballsh oil refinery, and available capacity has only about

20MW capacity. Due to its low fuel efficiency and associated high operating costs, the plant is

used for only a few days every year (World Bank, 2008). It is currently being rehabilitated.

The commissioning of the 100 MW seawater-cooled Vlore TPP (due to commence full operation

in January 2010) will add about 760 GWh (15 percent) per year of domestic production.

Additional large TPP projects are also being considered or taken forward, including a 250MW

combined cycle gas turbine (CCGT) power plant at Fier as part of the planned LNG terminal and

a coal-fired TPP at Porto Romano (1000MW) that could export some of its electricity to Italy

(Hoxha, 2009).

Renewables

Currently, apart from hydropower, there are no industrial-scale renewable assets in operation in

Albania (World Bank, 2008). The lack of investment in other assets to diversify the energy

system plays an important role in the current challenges Albania is faced with in terms of energy

security.

Several wind projects are under discussion or development, including plans for a joint

wind/biomass project in Lezhe District and close to Vlore (Karaburun Peninsula). Some seven

wind licenses have been issued to date, which would provide 1 million kWh installed capacity

(2-2.2 billion kWh per year of production). These will likely export some of the electricity they

generate to Italy. Solar and geothermal are not currently foreseen for industrial-scale power

generation purposes. However, they are considered useful for heating in the domestic, public,

and services sectors.

Electricity Transmission System

The transmission system consists of 122 km of 400 kV, 1128 km of 220 kV, 34.4 km of 150 kV,

and 1216 km of 110 kV lines. There is a 400 kV interconnection to Greece (Elbasan to Kardia), a

220 kV interconnection to Montenegro (Vau i Dejes to Podgorica) and a 220 kV interconnection

to Kosovo (Fierze to Prizren). There is also a 150 kV interconnection with Greece (Bistrice 1 to

Igumenice). The 220 kV transmission network serves to interconnect the three LHPPs on the

Drin River and the existing Fier TPP, with the major load centers of Tirana-Durres, Elbasan,

Burreli, and Fier (World Bank, 2008). The existing transmission grid does not yet have enough

capacity to allow for full regional energy trade with Albania‘s neighbors, but it is generally in

good condition, as most transmission lines are either new or have been upgraded (Acclimatise et

al., 2009a). The expected completion in 2010 of a 400 kV transmission interconnection between

Tirana and Podgorica and a subsequent 400 kV transmission interconnection to Kosovo will

relieve the transmission constraint on importing electricity.

Some new interconnection lines are underway (see Figure 6) such as Tirana–Elbasan (AL), a 400

kV line which is due to be finished in 2010, and the interconnection line Tirana (AL)–Prishtina

(KS), also 400 kV, which is under development and for which construction is expected to start in

2010. An interconnection of Albania with Italy with DC lines is in an early stage of

development, but no details are available yet. Other particularly important regional

interconnection updates are given as below (Electricity Coordinating Center Ltd and Energy

Institute ‖Hrvoje Požar,‖ 2004):

The priorities until the year 2010 are as follows:

 Ugljevik (BA) to S. Mitrovica (SER)

 C. Mogila (BG) to Stip (MK) (under construction)

 Florina (GR) to Bitola (MK)

 Maritsa Istok (BG) to Filipi (GR)

 Ernestinovo (HR) to Pecs (HU)

 Filipi (GR) to Kehros to Babaeski (TR)

 Bekescaba (HU) to Nadab (Oradea) (RO)

The priorities for the period 2010 and 2015 are:

 Zemlak (AL) to Bitola (MK) 2010/15

 Nis (SER) to (Leskovac) to Vranje to Skopje (MK) 2010/15

These projects are broadly supported by decision makers in the region, as well as the EU,

because they will help with the creation of a regional energy market in SEE, facilitating smooth

integration into the EU internal electricity market by 2010.

Under the Athens Memorandum of November 2002,2 the countries in the region made

commitments toward a common energy policy, including gradual liberalization of power

markets, restructuring of energy companies, maintenance of cost-recovery tariffs, adoption of

tariff methodologies and technical codes for network access, enforcement of payments,

introduction of social safety nets, and setting-up of independent regulators to scrutinize third-

party network access.

The subsequent treaty establishing the Energy Community in South East Europe comprises a

number of market design elements in electricity. The European Commission notes that this

European market design is ―not based on one single concept, but has rather evolved from

different regional designs‖ harmonized through the Florence process involving existing EU

Member States (European Commission, 2005).

2 The 2002 Athens Memorandum relates to electricity, whereas the 2003 Memorandum relates to gas.

Figure 6: Existing and candidate interconnections in the region (Cerepnalkovski et al.,

2002).

Electricity Distribution System

The distribution grid is considerably weaker and more inefficient than the transmission system.

Commercial losses (i.e., electrical power taken from the network illegally) constitute the main

losses from the distribution grid and have led to KESH being unable to invest in maintenance

and rehabilitation of the system (World Bank, 2008). Commercial losses amounted to 760 GWh

(13.4 percent) in 2008 and carry a considerable economic cost to KESH (Government of

Albania, 2007).

Although city distribution networks are generally in good condition, there are significant parts of

the distribution grid that need upgrading, especially those serving rural and mountain

communities, many of which do not have secure energy supplies (Acclimatise et al., 2009a).

The recent privatization of the distribution system to CEZ will see new investment, as well as

efforts to curb total losses from the grid, with targets to reduce total losses (technical and

commercial) to 15 percent at the end of 2014, down from a value of about 33 percent in 2008

(CEZ Regulatory Statement, 2008).

Oil, Gas, and Coal Production Facilities

The main areas where oil is produced are Patoz Marinza, Cakran-Mollaj, Ballsh-Hekal, Gorisht-

Kocul, and Kucova. Bankers Petroleum currently produces about 600kt/yr of oil, about 75

percent of Albania‘s domestic production, approximately half of which is for export markets.

The remainder is mainly produced by Albpetrol. Bankers Petroleum has plans to reactivate some

existing wells, which could more than double national production in the next three to four years.

It should be noted that there is a significant legacy of contaminated land around the oil

production facilities at Patos Marinza, which is recognized by the EU as an environmental

hotspot (UNEP, 2000).

Albania has two oil refineries. The main refinery is at Ballsh (producing 1 m bbl/yr of heavy fuel

oil, low grade diesel (8 API) and bitumen), and a second at Fier produces about 0.5 m bbl/yr.

While Albania has both on- and off-shore gas reserves, none are currently being exploited.

There are no current oil and gas pipeline connections to regional markets, though there are a

number of proposals including the TAP (Trans-Adriatic Pipeline) and the Balkans Gas Ring.

In addition, an LNG terminal is proposed in the Fier Region.

The coal industry in Albania is small. Most mines have been shut down, while those at Memalija

and Mborje-Drenova are still operating but at reduced capacity. Waste minerals, stored in

enrichment facilities near mines, present a contamination risk.

2.2 CLIMATE IS CHANGING

Causes and Effects of Global Climate Change

According to the Intergovernmental Panel on Climate Change Fourth Assessment Report (IPCC

AR4), warming of the climate system is unequivocal, and most of the observed increase in global

average temperatures since the mid-twentieth century is very likely due to emissions of

greenhouse gases, such as carbon dioxide, from human activities. Eleven of the twelve years

from 1995 to 2006 rank among the twelve warmest years in the instrumental record of global

surface temperature (since 1850).

Carbon dioxide concentrations in the atmosphere are higher now than at any time during the past

650,000 years, with human activities already having increased concentrations by one-third

compared to preindustrial levels (see Figure 7). By the middle of the twenty-first century,

concentrations are likely to be double preindustrial levels.

Figure 7: Increases in concentrations of carbon dioxide in the atmosphere from 10,000

years before present to the year 2005 (IPCC, 2007).

Figure 8 shows the temperature changes that have occurred globally from 1970 to 2004. Large

parts of the northern hemisphere land mass have seen increases over this period of up to 2oC.

Changes in snow, ice, and frozen ground have increased the number and size of glacial lakes and

increased ground instability in mountain and other permafrost regions. Some hydrological

systems have also been affected through increased runoff and earlier spring peak discharge in

many glacier- and snow-fed rivers and effects on thermal structure and water quality of warming

rivers and lakes. In terrestrial ecosystems, spring events are occurring earlier and plants and

animals are shifting poleward and upward in altitude, in response to warming. Of the more than

29,000 observational data series that show significant change in physical and biological systems,

more than 89 percent are consistent with the direction of change expected as a response to

warming.

Figure 8: Observed changes in climate, physical and biological systems (IPCC, 2007).

Baseline Climatic Conditions and Observed Trends in Albania’s Climate

In general, temperatures in Albania showed a decreasing trend from 1961 until the mid-1980s,

but temperatures have been increasing since then. In the last 15 years, a positive temperature

trend has been observed at almost all of Albania‘s meteorological stations. Since the 1980s, the

numbers of very hot days (when temperatures exceeded 35oC) has increased, whereas the

numbers of very cold days (with temperatures below –5oC) has decreased (Bruci, 2008).

In general, over the period from 1961 to 1990, annual precipitation across Albania decreased by

about 1 percent. The decreasing trend was statistically significant for the Ishmi River basin, in

the downstream basin of the Mati River, and in the upper part of the Vjosa River basin. In the

northern Albanian Alps, a slight positive trend in precipitation was observed, but this was not

statistically significant (Bruci, 2008).

Sea levels have risen in the Mediterranean, though by less than in the neighboring Atlantic sites

during the period 1960 to 2000. However, decadal sea level trends in the Mediterranean are not

always consistent with global values, in particular for the 1990s, during which the Mediterranean

has seen sea level rise of up to 5 mm per year compared to the global average (Marcos and

Tsimplis, 2008).

Climate Change Scenarios for Albania and the Wider South Eastern Europe Region

Climate change scenarios for Albania and the wider region over coming decades are summarized

as follows. Further details are provided in Acclimatise, 2009. These scenarios are taken from

nine of the most up-to-date global climate models (GCMs) used in the Intergovernmental Panel

on Climate Change Fourth Assessment Report (IPCC, 2007), for a range of greenhouse gas

emissions scenarios (see Box 3).

Temperature

According to the scenarios, annual average temperatures are expected to increase by about 1°C

to 2°C by the 2020s and 3°C by the 2050s (see Figure 9). The greatest temperature increases are

expected to occur in summer months (June to August).

Winter 2050s

Summer 2050s

Figure 9: Projected increases (averaged across nine IPCC AR4 global climate models) in

winter and summer temperatures across South East Europe by the 2050s compared to the

1961 to 1990 average, under the A2 emissions scenario (Acclimatise, 2009).

Precipitation

Although precipitation projections are generally inconsistent among global climate models, the

eastern Mediterranean is one region for which most global models produce a similar result,

which is one of drying over the course of the twenty-first century. Models indicate reductions in

annual average precipitation for Albania of approximately 5 percent by 2050, and decreased

summer precipitation of about 10 percent by the 2020s and 20 percent by 2050 (see Figure 11).

This drying, coupled with the marked increase in temperature noted above, would lead to

reduced runoff and increased wild-fire risk.

Box 3: Climate change modeling and greenhouse gas emissions scenarios

Modeling of future climate conditions is undertaken by meteorological agencies around the world using

models of the climate system that have been developed over many decades. These models, known as general

circulation models (GCMs) or global climate models, are validated in current practice by tests of how well

they are able to simulate climate conditions that have occurred over the last 100 years or so and through

international climate model intercomparison experiments. While these models provide data at a coarse spatial

scale (typically 2.5o x 2.5o), they indicate the future climatic conditions that countries could experience over

coming decades.

For some regions and countries, regional climate models (RCMs) have also been developed, providing better-

resolved projections of future climates, typically at about 50 km  50 km spatial resolution.

To project changes in future climate conditions, scenarios of future greenhouse gas (GHG) and other

emissions are fed into the GCMs. Because there are uncertainties about the amounts of emissions that will be

released in the future, a range of emissions scenarios are used. At present, most GCMs have been run using the

SRES emissions scenarios (Nakićenović and Swart, 2000), and these underpin the recent assessments of future

climate published by the Intergovernmental Panel on Climate Change (IPCC, 2007).

Figure 10: Man-made emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and

sulphur dioxide (SO2) for six SRES scenarios (Nakićenović and Swart, 2000). The IS92a scenario from

the IPCC Second Assessment Report in 1996 is also shown for comparison.

Summer 2020s

Summer 2050s

Winter 2020s

Winter 2050s

Figure 11: Projected changes averaged across nine IPCC AR4 global climate models in

summer and winter precipitation (mm/day) across South East Europe by the 2020s and

2050s compared to the 1961 to 1990 average, under the A2 emissions scenario.

(Acclimatise, 2009)

Table 2 summarizes projected trends in future precipitation in Albania drawn from nine GCMs.

Summers are projected to be drier in the 2020s by six of the nine models presented, with one

model showing wetter summers and two models indicating a mixed signal. None of these models

projects a wetter summer by the 2050s. Eight of the nine models presented show drier summers

and one model shows a mixed signal.

The nine models show less agreement concerning winter precipitation change: by the 2020s,

four of the nine models indicate drier winters, three show wetter winters and one shows a mixed

signal. A similar situation is seen in the 2050s, where five of the nine models indicate drier

winters and four show wetter winters. The risk of uncertainty is heightened by the consideration

that most of Albania‘s precipitation occurs in the winter months.

Table 2: Summary of Albanian Scenarios for Changes in Precipitation (compared to 1961

to 1990 baseline) by Number of Global Climate Models (Acclimatise, 2009)

Model trend in

future

precipitation

compared to

baseline

Number of models

2020s

summer

2020s

winter

2050s

summer

2050s

winter

Dry

Wet

Mixed

Ensemble mean

Dry

Wind Speed, Relative Humidity, Cloudiness

Projections of future changes in wind speed are viewed with low confidence as hindcasts appear

to have weak skill; as it happens the selected climate models show little change in wind speed.

Relative humidity and cloudiness are projected to decrease slightly in future over the year as a

whole, with decreases being greatest in summer, in association with decreased rainfall. Climate

change scenarios indicate a reduction in cloudiness of 6 percent to 8 percent by the 2050s in

summer and a reduction of 0 percent to 3 percent in winter.

Sea Surface Temperature and Sea Level Rise

Sea surface temperatures (SSTs) throughout the eastern Mediterranean are projected to increase

by about 1oC in the 2020s and 2oC by the 2050s. Sea levels are also projected to rise, due to

thermal expansion of the oceans and melting of ice, leading to increased flood and erosion risks

in coastal areas.

Extreme Events

There has been concern that climate change may bring a change in the frequency of magnitude

of extreme climatic events—for instance, more-intense heavy rainfall events and a lengthening

of dry periods. According to some models, Albania is projected to be highly affected by changes

in extreme events, compared to other countries in Europe and Central Asia (ECA) (World Bank,

2009a). It is second only to Russia in terms of projected increases in extremes, as indicated in

Figure 12.

Figure 12: The ECA countries likely to experience the greatest increases in climate

extremes by the end of the twenty-first century (Baettig et al., 2007 in: World Bank, 2009b).

(The index combines the number of additional hot, dry, and wet years; hot, dry, and wet

summers; and hot, dry, and wet winters projected over the 2070–2100 period relative to the

1961–1990 period. As such, countries already experiencing substantial variability and

extremes are less likely to rank highly on this index.)

Uncertainties and Limitations in Scenarios of Future Climate Change

Scenarios of future changes in climatic conditions for a given location have a number of

uncertainties and limitations that need to be borne in mind by users of the information:

1. Different general circulation models (GCMs) show different projected future climate

conditions, because the models vary in the ways that they represent the atmosphere, land, and

sea, and the interactions between them. It is therefore important to use a range of GCMs to

assess the importance of the differences among the selected models. In general, agreement

among the nine models presented concerning changes in temperature is good, while there is

less agreement among these models concerning precipitation changes. The agreement among

these models concerning precipitation changes in the eastern Mediterranean is better than it is

for some other areas of the world. Model agreement for changes in wind conditions is

weaker.

2. GCMs are usually run at a coarse spatial scale (typically 2.5o  2.5o). Locally, the same

models could project different trends if undertaken at higher resolution, , particularly in areas

where the topography is very variable or in coastal locations. Downscaling from GCMs using

Regional Climate Models (RCMs) or statistical methods identifies these variations. To be

sure, if the parent GCMs are themselves in poor agreement, downscaling does not resolve the

differences.

3. As noted in Box 3, there are uncertainties about the amounts of greenhouse gas emissions

that will be released in the future, so a range of emissions scenarios should be explored. In

practice, for the near term (2020s) this uncertainty makes little difference as, on these

timescales, the climatic changes that will result from greenhouse gas emissions have already

been built into the climate system due to past emissions. For the 2040s onwards, however,

projections based on different emissions scenarios start to diverge and by the end of the

century, there are large differences between them.

4. GCMs project changes in average seasonal or annual climate conditions, but do not provide

ready information on changes in extreme climatic events, such as heavy downpours of rain,

which may have significant impacts.

These issues are explored in further detail in Acclimatise (2009). Ideally, the quantified estimates

of climate change impacts on Albania‘s energy assets provided in Section 3 should be provided

as ranges of potential future changes, to capture uncertainties. For instance, hydrological

assessments of changes in runoff affecting large and small hydropower plants should make use

of a wide range of climate models and emissions scenarios (and indeed hydrological models),

using downscaling methods to provide data at the catchment scale. This depth of analysis was

beyond the scope of the current study and is an area for future research.

2.3 ALBANIA’S LOW ADAPTIVE CAPACITY

Managing the risks for Albania‘s energy sector from changing climatic hazards appropriately

will require analysis and forward planning by government and private energy sector players, to

establish optimal adaptation strategies for existing and new energy infrastructure.

Figure 13 illustrates the breakdown of three different factors that drive ECA countries‘

vulnerability to climate change, which indicates that Albania suffers from relatively high

exposure and sensitivity to climate change, coupled with a relatively low adaptive capacity to

offset these vulnerabilities. Among ECA countries, Albania is second only to Tajikistan in this

vulnerability rating.

Figure 13: The drivers of vulnerability to climate change (Fay and Patel, 2008 in: World

Bank, 2009b).

Albania‘s current low adaptive capacity is mainly due to its inefficient and wasteful use of water

and energy resources, weak regional interconnections, and the poor state of national

hydrometeorological services.

Inefficient Use of Water Resources

The management of water resources is a key issue for Albania, given its dependency on

hydropower and the use of water for irrigating agriculture. Responsibilities for water resource

management are fragmented; many water bodies are involved in its use and oversight3. Lack of a

comprehensive inventory of water resources and a weak institutional framework for their

management, compounded by climate change, means that the country risks increasing water

crises in the future (World Bank, 2003). It is estimated that some 10 percent to 20 percent of

Albanian water resources are lost in the irrigation system (Fantozzi, 2009). As outlined in

Section 2.1, efforts are underway to change this, and the efficiency of water use in energy

generation has improved recently. Furthermore, some areas of agricultural land in Albania have

been equipped with efficient irrigation systems in the last couple of years.

Weak Regional Interconnections, Technical and Commercial Losses and Inefficient Use of

Energy

As just highlighted, although the power transmission grid has been recently upgraded, the

interconnections between Albania and its neighboring countries are currently weak and constrain

energy import and export. Technical losses in the power transmission network in 2008 were

213GWh (3.3 percent) (ERE, 2008). In 2008, technical and commercial losses from the

distribution system amounted to 33 percent, though there are strong targets to reduce this as part

of the privatization of the distribution system (CEZ Regulatory Statement, 2008). Demand-side

energy efficiency is also currently low, and the draft National Energy Strategy includes

objectives and measures to tackle this issue (Government of Albania, 2007). Increased demand

and insufficient quantity of electrical power produced in the country make it likely that imports

will be essential in the near future to ensure a steady supply of power (Government of Albania,

2007).

Deficiencies in Hydrometeorological Services

The energy sector is one of the economic sectors most affected by weather, and most dependent

on weather and climate information (Ebinger et al., 2009). The currently depreciated and poor

state of the national weather and hydrological monitoring network places a significant constraint

on Albania‘s ability to monitor and forecast in support of secure energy (Hancock and Ebinger,

2009).

Coupled with low funding and the poor state of National Meteorological Services (NMS) and

National Hydrometeorological Services (NMHS) is the high weather dependence of the Albanian

economy—about 65 percent of Albania‘s GDP is estimated to be weather dependent, the highest

among eight ECA countries assessed (IBRD & HMI, 2006; Tsirkunov et al., 2007; Hancock,

Tsirkunov and Smetanina, 2008 in: Ebinger et al., 2009).

Financial constraints are at the heart of the issue behind the poor state of the Albanian national

meteorological services (NMS) and national hydrometeorological services (NHMS) (HMI &

IBRD, 2006; Hancock and Ebinger, 2009; Ebinger et al., 2009). A comparison of Albania with

seven other ECA countries reveals that it has the lowest investment in annual NMS and NHMS

3 Water management is the responsibility of the National Water Council established under Law 8093 on

Water Reserves (March 21, 1996, as amended). Responsibilities are also allocated to River Basin Councils

under a decision of the Council of Ministers Nr 2 “Establishment of River Basin Councils” (June 21, 2006,

as amended). Further responsibilities and tasks are allocated to Organizations of Water Users under Law

8518 on “Irrigation and Drainage” (July 30, 1999, as amended).

funding, totalling $440,000, or only 0.01 percent of average annual GDP (Tsirkunov et al., 2007;

Hancock, Tsirkunov and Smetanina, 2008 in: Ebinger et al., 2009). The percentage of weather

equipment that has been completely depreciated is about 60 percent, and there is an increasing

need for modernization in all departments, especially for replacing aging equipment and

observation stations (IBRD & HMI, 2006). Insufficient funding also limits the consistency and

availability of national hydrological and meteorological datasets. Although comprehensive,

digitized datasets exist up until 1990, thereafter the information is much more patchy and data

are generally only digitized up until 2000 (Hancock and Ebinger, 2009).

KESH is now working with weather and climate experts and is planning to install a network of

river-level sensors and a system for collecting regional weather forecasts. With this information,

managers will be able to forecast the level of the Drin more accurately, timing the filling and

releasing of water from reservoirs, to maximize energy generation while maintaining dam

security. However, more could be done; Albania is not fully exploiting the benefits of weather

forecasting. The Institute of Energy, Water, and Environment (IEWE) does not provide 1 to 3

day forecasts of precipitation and runoff applicable to the needs of KESH, because the

meteorological and hydrological stations operated by IEWE do not report daily; many transmit

observations by postal mail. The monitoring network also has serious gaps: there are neither

upper-air stations nor radar in the network, despite the necessity of these for forecasting and for

assessment of rainfall that has occurred. Furthermore, Albania does not currently subscribe to

quantitative precipitation forecasts 3 to 10 days ahead, which are available from organizations

such as the European Centre for Medium-range Weather Forecasting (ECMWF).

The lack of coordination among the three agencies charged with weather monitoring and

forecasting is a further key factor behind the weak national capacity of Albania‘s NHMS

(Hancock and Ebinger, 2009). The Military Weather Service, the Institute for Energy, Water and

Environment (which operates within the University of Tirana), and the National Air Traffic

Agency currently do not cooperate effectively, and thus each remains short of data and resources

needed for its mandate (Hancock and Ebinger, 2009). Furthermore, Albania does not currently

share meteorological and hydrological data effectively with its neighbors with whom it shares

watersheds, even though this could help to reduce uncertainties about inflows into its reservoirs.

This further limits its abilities to engage effectively in regional energy trading.

The incidence and impact of natural disasters over the last decades provides another proxy for

vulnerability to current climate (World Bank, 2009b). As depicted in Figure 14, this suggests that

Albania is among the most vulnerable countries in ECA. Existing climate risks and extreme

events are not generally well monitored, understood or managed.

Unless improvements are made, Albania‘s ability to cope successfully with changing climate

risks will be severely constrained by its low adaptive capacity.

0 20 40 60 80 100 120 140

Belarus

Bulgaria

Croatia

Estonia

Latvia

Poland

Slovenia

Turkmenistan

Hungary

Kyrgyz Republic

Romania

Serbia

Slovakia

Turkey

Uzbekistan

Czech Republic

Kazakhstan

Rus sia

Ukraine

Armenia

Bosnia

Georgia

Azerbaijan

Lithuania

Macedonia, FYR

Moldova

Tajikistan

Albania

Population affected by natural

disaster (per 1,000 person)

Economic losses resulting from

natural disaster (per

$1,000,000 of GDP)

Figure 14: Impact of natural disasters in ECA, 1990–2008 (EM-DAT, Centre for the

Research on the Epidemiology of Disasters, Université Catholique de Louvain, no date in:

World Bank, 2009b).

3. CLIMATIC VULNERABILITIES, RISKS, AND OPPORTUNITIES FOR

ALBANIA’S ENERGY SECTOR

This section highlights the climate-related vulnerabilities, risks and opportunities for Albania‘s

energy sector, based on the outcomes of the stakeholder-led and desk-based analyses described

in Annex 1. A SWOT (strengths, weaknesses, opportunities and threats) analysis developed with

stakeholders (see Acclimatise et al., 2009a) helped to highlight key current vulnerabilities in the

energy system, some of which have already been emphasized in earlier sections of this report.

An overview of the specific vulnerabilities for each asset type is summarized in this section.

Looking forward, the risks identified from climate variability and climate change, in the absence

of adaptation, are highlighted in Table 3. Some of these risks affect the energy sector in general,

such as the impacts of climate change on demand for electricity; others are associated with

specific energy asset types. The components of each risk (probability of hazard and magnitude of

consequence) are shown on the risk maps in Annex 2, Tables A2-3 and A2-4. It is important to

note that the consequence of a particular risk may be manifest in many different ways: there may

be financial loss, impacts on energy security, environmental or social impacts, or perhaps a

reputational consequence for Government. The risks for each asset type are outlined in Table 3,

with further detail provided in Acclimatise et al. (2009a).

Table 3: Summary of Climate Risks before Adaptation

Risk

Code

No.

Description of risk

Magnitude of risk

before adaptation

Asset class

affected

Higher peak demand in summer due to higher

temperatures could lead to lack of capacity.

Extreme

All

Less summer electricity generation from hydropower

facilities due to reduced precipitation and runoff could

reduce energy security.

Extreme

LHPP /

SHPP

EU Carbon trading schemes add cost to thermal power

generation.

Extreme

TPP

Changes in seasonality of river flows (including more

rapid snowmelt due to higher winter temperatures)

combined with mis-management of water resources

could decrease the operating time for SHPPs, resulting

in decreased production.

Extreme

SHPP

Increased CAPEX / OPEX due to climate change

could lead to reduced shareholder value.

Extreme

All

Higher peak summer demand across the region could

increase import prices and reduce supply.

Extreme

All

Paucity of hydromet data makes it difficult to manage

water resources and optimize operation of hydropower

plants.

Extreme

LHPP /

SHPP

Sea level rise could lead to increased coastal erosion,

potentially affecting coastal infrastructure such as

ports for oil export.

High

Oil

Production &

other coastal

infrastructure

Lack of data (impact of climate change on wind

patterns) creates uncertainty about optimal sites /

design for generation using wind.

High

Wind

Risk

Code

No.

Description of risk

Magnitude of risk

before adaptation

Asset class

affected

Climate change increases risk of competition between

water users.

High

SHPP, LHPP

& river-

cooled TPP

Dry periods followed by heavy downpours of rain

would exacerbate soil erosion from agricultural land,

leading to increased sedimentation and reduced output

from SHPP and LHPP.

High

LHPP /

SHPP

Mal-adapted infrastructure design if climate change

not built-in could lead to reduced operation /

efficiency of assets.

High

All

Changes in extreme precipitation lead to higher costs

for maintaining dam operations / security.

High

LHPP

Changing temperature, ground conditions and extreme

precipitation could increase contamination risks

associated with oil and coal mining facilities,

potentially leading to increased risk of contamination

of local water courses.

High

Oil and Coal

Production

Reduced precipitation and increased temperatures can

affect environmental performance of river water-

cooled TPP abstracting and discharging water into

local water courses.

High

TPP

Transmission and distribution losses increase due to

summer temperature rise resulting in higher effective

demand and reduced energy security.4

High

Transmission

Distribution

Concerns about unmanaged climate risks causes

Albania to be less attractive to foreign investors.

Moderate

All

Changes in extreme precipitation and wind lead to

transmission disruption.

Moderate

Transmission

Distribution

Loss of productivity for thermal plants due to higher

air and water temperatures and / or reduced ability to

abstract and discharge cooling water.

Moderate

TPP

Increases in landslips due to heavy rains resulting

from climate change could increase the risk of loss of

integrity for gas pipelines.

Low

Gas

Note: The magnitude of risk rating system presented here is described in Annex 2, Tables A2.1 and A2.2

4 Losses in the transmission network are already relatively high, due to the configuration of the electricity

network. The main sources of power generation are in the north of the country, while the main electricity

consumers are located in central and southern Albania.

3.1 CROSS-CUTTING ISSUES

Current Vulnerabilities

As highlighted in earlier sections, energy security has been a major concern in Albania for some

years. This is particularly prominent in relation to electricity distribution systems and

hydropower plants: Unstable power supplies and lack of access to electricity in some rural

communities are constraining economic development, and the productivity of both large and

small hydropower plants has been affected by droughts in recent years, leading to frequent load

shedding.

Many of Albania‘s existing energy assets are aged and have seen insufficient investment. They

are operating inefficiently or, in some cases, not at all. Technical and commercial losses of

energy are a major cause for concern and energy demand is poorly managed. While energy trade

could help with energy security, limited interconnectivity with neighboring countries prevents

robust trade at present.

Other vulnerabilities related to Albania‘s low adaptive capacity were discussed in Section 2.3.

Risks and Opportunities

Rising temperatures associated with climate change, together with economic development, are

set to increase energy demand in summer, when the water available for hydropower plants is

lowest, threatening future energy security. The same effect on demand is likely to occur across

South Eastern Europe, which could increase costs of importing electricity. There will however be

benefits in terms of reduced heating demand in Albania during warmer winters.

For existing, unadapted energy assets, climate change seems set to reduce efficiencies and

increase operating costs (OPEX). Capital expenditure (CAPEX) will be needed to retrofit

existing assets so they can cope with new climatic conditions. Private developers of energy

assets also have concerns about climate risks.

However, Albania is also on the brink of an exciting opportunity: as highlighted in Section 2.1,

major investments in new energy assets are underway or being planned. Integrating adaptation

measures into concession agreements, contracts, site selection, and design decisions for these

new facilities could help ensure their climate resilience. As KESH privatizes the energy system,

it could consider how to structure incentives for adaptation; there could be opportunities for cost

sharing between Government and the private sector on adaptation actions. The earlier that

climate risks and adaptation are considered, the greater the opportunities to identify financially

efficient solutions to build the robustness of the energy system for coming decades.

3.2 LARGE HYDROPOWER PLANTS

Current Vulnerabilities

The output from large hydropower plants is vulnerable to variability in the runoff that feeds their

reservoirs. In turn, runoff is affected both by seasonal precipitation and temperature (including

the timing of snowmelt). Figure 15 clearly depicts lower production from Albania‘s LHPPs

(shown in blue), linked to low rainfall in the period 2000 to 2002, and resultant associated high-

energy imports. Planning for new LHPPs draws on river gauge data gathered for a year prior to

application. However, rating curves linking river level to discharge have not been updated. As

the calibration is likely to have changed as a result of natural and man-made erosion of riverbeds,

river flow remains uncertain in most basins other than the Drin and to some extent the Mati. This

lack of information constrains Albania‘s ability to plan effectively for new assets that are robust

to changing climate risks.

Extreme rainfall can also cause spillover at LHPPs and threaten dam security. As outlined in

Section 2.1, the World Bank has provided credit to Albania for a dam safety project (World

Bank, 2008b) for Albania‘s five LHPPs, aimed at safeguarding them from dam failure and

improving their operational efficiency.

Current levels of sedimentation of LHPP reservoirs are unknown but may be significant.

250

500

750

1000

1250

1500

1750

2000

2250

2500

2750

3000

3250

3500

3750

4000

4250

4500

4750

5000

5250

5500

5750

6000

6250

6500

6750

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Import

Small HPP

Thermal Pow er Plants

Hydro Pow er Plants

Figure 15: Annual Energy Profile for Albania from 1985 to 2006 in GWh (Islami, 2009).

Risks and Opportunities

As outlined in Section 2.2, the climate change models examined in this study are in good

agreement that Albania and the wider eastern Mediterranean region will experience decreases in

summer precipitation, projected to be about 20 percent by the 2050s. The models examined are

in weaker agreement about the direction of change in winter precipitation (i.e., whether it will

increase or decrease) although increases in temperature (which are mutually consistent) will

mean that snowmelt occurs more rapidly and evapotranspiration increases. Even if winter

precipitation amounts increase in the future, lack of reservoir storage and turbine selection

adapted to past hydrology may impose limits on the ability of hydropower facilities to harness

increased winter river flows and energy may be wasted through spillover. Furthermore, while

seasonal changes can be managed to some extent by improved reservoir management (and

indeed this is beginning to be achieved by KESH), this is impeded by the country‘s lack of

hydrometeorological capacity, as outlined in Section 2.3.

Climate change is also projected to increase the intensity of rainfall, which can cause higher

spillover at hydropower facilities, put increased pressure on dam reservoirs, and cause landslips.

Communities and land close to large dams may be exposed to increased risk of flooding.

Increased intensity of precipitation events can also lead to upstream soil erosion and greater

siltation of hydropower reservoirs.

As a consequence of these risks, unless risks are proactively managed, climate change is

anticipated to impact negatively on the financial performance of LHPPs, leading to loss of

revenue and increased OPEX and CAPEX.

High-level Quantitative Estimate of Climate Change Impact on LHPP Production by 2050

An in-depth approach to quantifying the impacts posed by climate change for hydropower plants

would involve hydrological modeling using downscaled climate change scenarios, and

subsequent modeling of the impacts of changes in river flows on hydropower plant output. Such

analysis is beyond the scope of this analysis; instead, to develop high-level quantitative

estimates, the following information and data were used:

 Rainfall-runoff modeling of the relationships between projected changes in climate

(precipitation and temperature) and changes in river flows for several catchments Albania

(Islami et al., 2002; Bogdani and Bruci, 2008; Islami and Bruci, 2008).

 A correlation of annual average inflows to Fierze hydropower plant on the Drin Cascade

(Annex 8) and consequent electricity generation, together with a similar correlation for

power production from LHPPs on the Mati River (Islami and Bruci, 2008).

 Recent research undertaken in Brazil, which used regional climate modeling data to project

impacts on output from Brazil‘s hydropower plants (Andre et al., 2009; Schaeffer et al.,

2009).

Rainfall-runoff modeling undertaken for the Drin, Mati and Vjosa River basins using climate

change projections for temperature and precipitation indicates reductions in runoff in these

catchments of about 20 percent by 2050 (Islami et al., 2002; Bogdani and Bruci, 2008; Islami

and Bruci, 2008). It should be noted that this is an approximate estimate, based on a small

number of global climate models and hydrological models. As highlighted in Section 2.2, a wide

range of models and greenhouse gas emissions scenarios better represents uncertainties, but it

was beyond the scope of the current study to undertake new hydrological assessments.

Furthermore, climate change is expected to lead to increased rainfall intensity and longer dry

periods, which will affect runoff and hence hydropower production. Again, analysis of the

implications of these changes, while they may be important, is beyond the scope of this

assessment and is an area for future research.

Correlations were developed for both the Drin and Mati Rivers of the relationship between river

flows into the reservoirs and electricity production (Connell, 2009; Islami and Bruci, 2008).

These are shown in Figures 16 to 18. These correlations indicate that, as a first estimate, if the

flows on the Drin and Mati Rivers declined by 20 percent, electricity generation would fall by

about 15 percent. This estimate has been applied in the cost–benefit analysis presented in Section

5. Further information on how this estimate was derived is provided in Annex 8.

It is worth noting that Albania‘s hydropower managers have recently begun to improve their

operations to better manage drought risks to production. Working with weather and climate

experts, they are planning to expand the network of river-level sensors and rain gauges, and a

system for collecting regional weather data. Using this information, managers will be able to

forecast the level of the Drin more accurately, timing the filling and release of water from

reservoirs so they can draw the most energy from the system without endangering dams that may

collapse if the water level rises to over-top dam height.

Figure 16: Relationship between Drin River flow and electricity production at Fierze

(Annex 8).

Figure 17: Variation of Fierze inflows and electricity generation, 1999 to 2007 (Annex 8).

3.3 SMALL HYDROPOWER PLANTS (SHPP)

Current Vulnerabilities

Existing small hydropower plants in Albania have generally been constructed to serve local

communities and sized accordingly. In that sense, they are not necessarily in the best locations or

sized optimally for river flows. Many are being rehabilitated, so they will recommence operation

in their current locations. As with LHPPs, the key climatic vulnerabilities for SHPPs relate to

variability in precipitation and temperature, through their impacts on runoff.

During three consecutive years of drought in Albania (2005, 2006, 2007), some SHPPs were

unable to produce the needed power to feed into the grid or even to supply their local

communities on a sustainable basis, reducing the total power available. Annual operating periods

of some SHPP facilities have reduced in recent years from 8 months to 4, linked to less snow

(Acclimatise et al., 2009a).

Figure 18: Relationship between Mati River flow and electricity production from Ulëza

and Shkopeti HPP (Islami and Bruci, 2008).

Risks and Opportunities

Because SHPPs do not have reservoirs, their performance is linked essentially to the intensity

and duration of precipitation. They will therefore be affected by any future decreases in annual

average and summer precipitation amounts. Snow affects SHPP production by slowly releasing

stored water as it melts, and consequently SHPPs are particularly sensitive to more-rapid

snowmelt due to higher winter temperatures.

The irrigation needs of agriculture take precedence over energy production in Albania, so SHPPs

could also be affected by farmers‘ adaptation strategies in response to climate change—namely

the need to increase irrigation (World Bank, 2009c). At present, agricultural irrigation is

undertaken for about three to four months per year in summer, often in the daytime, when energy

demand is lower, thus reducing the chance of conflicts over water use. Energy demand is

currently at a maximum in winter. However, as already noted, rising temperatures will cause

shifts to greater energy demand in summer, potentially bringing farmers and SHPP owners into

conflict over water use, unless actions are taken to manage this. The need for agricultural

irrigation in Albania cannot currently be easily forecast before or during the irrigation season,

making forward planning by SHPP owners very difficult. Furthermore, water delivery to farmers

is not organized in automated delivery schemes that follow defined basin modeling so it is not

possible to maximize its effectiveness. However, large areas of agricultural land in Albania have

been equipped with efficient irrigation systems in the last couple of years, which has had a

dramatic effect on reducing water use in these areas.

Additionally, minimum flow requirements are in place to protect river ecology, so potential

lower flows due to climate change could affect the flow available for SHPP utilization. Climate

change is also anticipated to lead to increased risks of siltation for SHPPs, when combined with

deforestation and poor watershed management, affecting asset performance.

High-level Quantitative Estimate of Climate Change Impact on SHPP Production by 2050

Assumption of a one-to-one relationship between changes in river flows and SHPP power output

leads to projection of a 20 percent reduction by 2050, according to the projected decrease in

runoff estimated for LHPP generation in the previous section (Annex 9). This estimate has been

applied in the cost–benefit analysis presented in Section 5. It is noted that there could be

significant indirect impacts of climate change on SHPPs, due to the adaptation actions that may

be taken in the agriculture sector. For instance, farmers‘ demands for irrigation water will

increase due to higher temperatures. Hence, the 20 percent reduction may be an underestimate.

Assessments of such indirect impacts were beyond the scope of this assessment but could

usefully be addressed in additional cross-sectoral climate change risk assessments.

Box 4 overleaf summarizes some of the interlinkages between water resources, energy security,

and food security.

3.4 THERMAL POWER PLANTS (TPPS)

Risks and Opportunities

As outlined in Section 2.1, Albania is developing thermal power plants to improve energy

security. Optimal TPP performance is slightly vulnerable to climate change impacts, mostly with

regards to operating efficiency: rising temperatures have a modest impact on gas turbine

performance, and the availability and temperature of cooling water can also affect operations.

Currently, the TPP assets under development or in discussion (at Vlore Port, Fier and Porto

Romano) are to be cooled by sea water. However, if Albania were to consider developing river-

water-cooled TPPs, then the impacts of climate change on river flows and water temperatures

could have significant effects on their operation in warmer, drier months. There could then be

insufficient river flow to meet cooling requirements, and abstractions could be prevented for

periods of time by regulations designed to protect river ecology during low flows. Thermal

power plants in the United States have been subjected to such constraints on a number of

occasions during recent droughts (Karl et al., 2009).

The Vlore TPP is located near Vlore Port. The Vlore plant has raised the elevation of the site by

2 m above sea level due to its proximity to the Vlore floodplain (Maire Engineering, 2008).

Further modifications have been made to equipment installed on site. Nevertheless, it is not

possible to estimate in this assessment how much more frequently, if at all, the site might flood

in the future due to climate impacts due to limited available information on the reason for the site

elevation decision.

In general, coastal energy assets may be significantly affected by rising sea levels and coastal

erosion and this should be an important consideration in the siting of future TPPs.

High-level Quantitative Estimate of Climate Change Impact on TPP Efficiency by 2050

The authors estimated the efficiency (output) reduction for TPP based on engineering expertise

at 1 percent by 2050, associated with the impacts of rising temperatures.

3.5 WIND POWER

Risks and opportunities

As outlined in Section 2.1, Albania currently has no industrial wind power generation facilities,

although it is holding discussions about developing them and seven licenses have been issued.

The wind resources of Albania are uncertain. Until recently, the wind field maps available could

draw only on data measured at 10 m height above ground (as per World Meteorological

Organization standards adhered to by Albania‘s national measuring stations), rather than the

height where the turbines would be located. Especially in Albania‘s mountainous terrain, there is

no consensus model for extrapolation from the measured field to the wind field of interest. These

considerations have made wind farm development vulnerable to climate uncertainties that can

affect design and operational parameters. Recognizing this, a Wind Energy Resources

Assessment for Albania has been conducted by the Italian Ministry for the Environment, Land

and Sea, which has resulted in a map of average wind speed for Albania that is an improvement

on past data availability. If changes in wind speed and/or direction were to occur, however,

Box 4: Climate change, water resources, energy, and food security in Europe and Central Asia (ECA)

Rising temperatures and changing hydrology are already affecting forestry and agriculture in many countries in

ECA. The region‘s natural resilience and adaptive capacity have been diminished by the Soviet legacy of

environmental mismanagement and the pursuit of economic growth carried out with blatant disregard to the

environment. This is evident in agriculture where poor management of soil erosion, water resources, pest

control, and nutrient conservation increases the sector‘s vulnerability to climate change. Inadequate capital

investment and watershed management have led to significant water losses and reduced the productivity of

irrigation systems as well as hydropower generation capacity.

Over time, the impact of global warming, other nonclimatic factors (such as inefficient use of water), legacy

issues and the continuing unsustainable demand will exacerbate water stress in Europe and Central Asia. Global

warming will negatively affect water systems in some parts, as reduced precipitation and high evaporation rates

decrease water availability for agriculture and hydropower production alike.

ECA countries are expected to help offset the projected decline in world food production due to decreasing

agriculture yields in lower latitudes due to climate change. However, there are important caveats: the projected

gap between potential and actual yields in ECA is 4.5 times higher than the potential increase in agricultural

production from climate change by 2050. Unless current inefficiencies in the agricultural sector are addressed,

food insecurity in the region will become a major development concern. The inability of Kazakhstan, Russia,

and Ukraine to close the productivity gap and respond to recent crop price increases does not bode well for their

capacity to adapt to and benefit from climate change.

Going forward, improved water resource management and better-performing water utilities and energy systems

will help reduce climate vulnerability. Gains from improved agricultural practices, including adaptation

measures such as better water resource management, could outweigh projected negative impacts. Energy

security considerations will be integral to the long-term investment decisions on water resource allocation.

Albania currently derives 90 percent of its energy from (both large and small) hydropower plants; plants that are

feeling the effect of weather variability and are likely to see further declines in runoff and energy production into

the future (estimated at 15 percent and 20 percent respectively by 2050, as outlined in this section of the report).

It is a complex picture. Agricultural demand for irrigation water is seasonal and subject to significant variability.

Timing is also critical. Today, water demand for agricultural use is low during periods of peak energy demand

(winter and night-time) and high when energy needs drop (summer and daytime). But winter demand for energy

is expected to drop with climate change and daytime summer demand to rise with increasing temperature and

cooling demand.

(World Bank, 2009d)

reoptimization of the design and operation of wind energy facilities would be could be needed to

ensure that installed turbines did not slip out of their optimal operating band.

High-level quantitative estimate of climate change impact on wind power by 2050

The climate change projections are very uncertain with respect to wind, and the data that are

available for Albania indicate little or no change. The cost–benefit analysis in Section 5 has

therefore assumed no change.

3.6 POWER TRANSMISSION AND DISTRIBUTION

Current vulnerabilities

As outlined in Section 2.1, the power transmission system was recently upgraded, aligning with

EU standards, and ongoing investments are focusing on improving regional interconnectivity.

Technical losses in the transmission network in 2008 were 213GWh (3.3 percent) (ERE, 2008).

The distribution grid already presents clear climatic vulnerabilities and has high technical and

commercial losses (about 33 percent in 2008). Although city networks are generally in good

condition, there are significant parts of the distribution grid that need upgrading, especially those

serving rural and mountain communities, who already do not have secure energy supplies due to

the deterioration of the grid. In periods of high winter precipitation, snow and ice can cut off

distribution lines. Repair crews have difficulties repairing damaged networks due to difficult

road conditions and local authorities may not always have the resources and expertise to repair

damage quickly. High winds can also cause damage to power lines. The capacity of communities

to cope with interruptions to supply of power (and other services) is highly dependent on the

level of economic development. For instance, small businesses may not have backup generators.

Even if the effect of intermittent power can be managed with the use of backup generators, there

is an additional capital and operating cost in use of such generators.

Risks and opportunities

Owing to the recent technical upgrades of the transmission system, its performance is not

expected to be significantly affected by projected changes in temperature and precipitation.

However, it is worth noting that, at present, EU standards do not account for climate change, and

the technical specifications may require review in the years to come. Indeed, the EU Adaptation

White Paper refers to the need to review and update EU regulations in the light of climate change

projections (European Commission, 2009).

Rising temperatures due to climate change will gradually erode the efficiency of the transmission

and distribution systems, by reducing the ability of transmission lines to lose heat to their

environment.

If climate change leads to increased winter precipitation, damaging events could occur more

frequently unless the distribution grid is upgraded, with consequent worsening social impacts.

Because projections of future changes in wind are highly uncertain, it is not possible to say with

any confidence whether damage to power lines from these events will happen more often.

However, increased intensity of precipitation could lead to greater incidence of landslips,

affecting distribution lines in hill terrain.

High-level Quantitative Estimate of Climate Change Impact on Transmission and Distribution

Efficiency by 2050

Using engineering expertise, the efficiency reduction for transmission and distribution has been

estimated as 1 percent by 2050, the consequence of rising temperatures.

3.7 ENERGY DEMAND

Current Vulnerabilities

Energy demand is not managed effectively at present, with old, inefficient equipment and

standards being applied in households and the services sector. Many houses have inadequate

insulation, leading to wasteful use of energy. Furthermore, electrical power is often the main

source of energy for heating. Commercial losses are significant, running at 13.4 percent in 2008

(ERE, 2008).

Risks and Opportunities

The most significant impacts of climate change on energy consumption are likely to be the

effects of higher temperatures on the use of electricity and the direct use of fossil fuels for

heating in Albania. Higher temperatures are likely to affect the following major electric end uses:

 Space heating Energy demand for space heating will decline

 Air conditioning Energy demand for space cooling will increase

 Water heating Energy demand for water heating will decline slightly

 Refrigeration Energy demand for refrigeration will increase

Of these end uses, air conditioning and space heating are those most likely to be significantly

affected by climate change in Albania, since both are functions of indoor-outdoor temperature

differences. Compounded by the anticipated reduction in availability of hydropower in summer,

this could exacerbate energy security difficulties. There are opportunities, however: climate

change is expected to shorten the cold season and reduce the severity of cold weather events,

reducing energy demand for heating.

Quantitative estimates of climate change impacts on energy demand are described in Section 5.2.

3.8 OIL, GAS, AND COAL PRODUCTION

Current Vulnerabilities

Although Albania‘s oil production facilities are not considered to be directly vulnerable to

climate risks to any great extent, the ability to import LPG or to export crude oil products

depends on shipping ports. At present, extreme weather can delay ships arriving into Vlore Port

by one to two days, although wider channels being opened at Vlore Port in summer 2009 will

reduce this problem. Furthermore, it is understood that the port has a transgressive geological

structure though current rates of erosion are not well understood (Acclimatise, 2009a).

Oil production facilities at Patoz Marinza are one of five European hotspots for contaminated

land (UNEP, 2000). Pollution carried via drainage channels into the Gjanica River, which is

heavily contaminated by oil operations, and contamination pathways are affected by climatic

influences on ground conditions.

The Ballsh oil refinery is vulnerable to electricity disruptions: it relies on the grid, and if a power

cut lasts more than an hour, financial losses estimated at $100,000 or above can occur

(Acclimatise et al., 2009a).

The existing low-pressure gas pipelines from Fier and Ballsh have experienced loss of integrity

in the past, due to landslips at valley crossings after storms and heavy downpours. These risks

are seen as minimal, however, when compared to the risk of sabotage.

Albania‘s coal industry is small, employing only about 200 people at present (Acclimatise et al.,

2009a). Coal is stored outdoors, sometimes on slopes, and is therefore vulnerable to heavy

rainfall, which can lead to loss of product and also ground and water contamination.

Risks and Opportunities

Higher temperatures are not anticipated to affect oil production facilities significantly. Indeed,

there may be a slight positive effect of warming temperatures on their cost profile.

However, unless steps are taken to adapt new and existing port developments, port operators

could face increased risk of flooding and storm damage, with consequent service disruption for

oil producers and increased operating costs. Furthermore, it is not clear whether the new design

for Vlore Port takes into account projections of rising sea levels, but, given the fact that the

coastline is eroding, increased risk of coastal erosion is a potential cause for concern.

The existing problems with contaminated land and watercourses at Patos Marinza could be

exacerbated if, as projected, climate change brings increased summer droughts. The consequent

changes in ground conditions could create new pathways for pollutants, which would then flush

through into water courses during heavy downpours, worsening an already difficult situation.

The low-pressure gas pipelines from Fier and Ballsh could see increased risk of landslips,

associated with projected increased incidence of heavy downpours as a result of climate change.

The main climate change impacts on Albania‘s limited coal facilities are also likely to result

from heavy downpours of rain, which could lead to increased loss of product and increased risks

of ground and water contamination.

As outlined in Section 1, the focus of this assessment is on how Albania can best manage its

future security of energy supply in the face of climate change. Given that oil, gas, and coal

production assets are not key factors in Albania’s energy security, impacts on these assets

were not taken forward as part of the cost–benefit analysis. However, it is clear from the

analysis outlined in this section that oil, gas, and coal production are vulnerable to

changing climate risks, and the issues identified here merit further consideration by the

decision makers responsible for these activities.

4. IDENTIFICATION OF ADAPTATION OPTIONS FOR MANAGING RISKS TO

ALBANIA’S ENERGY SECTOR

The key cross-cutting climate risks and opportunities related to energy security identified in the

previous section are that, over time:

 Annual energy demand may decline slightly (an estimated reduction approximately 0.1

percent per year, see Section 5.2).

 Winter energy demand will reduce and summer peak demand will increase.

 Energy supply from existing assets will decline, particularly in summer, leading to a shortage

in supply that would have to be filled to ensure energy security.

Adapting to climate change, to reduce vulnerabilities and risks and take advantage of

opportunities, will be increasingly important for the Albanian energy sector. Stakeholders

provided input on adaptation options applicable to the Albanian energy sector through a

workshop and series of meetings (Acclimatise et al., 2009b).

Detailed descriptions of the potential adaptation options, including cross-cutting actions and

individual actions for each energy asset class, are summarized in Annex 3, Tables A3.1 to A3.8.5

The adaptation option tables highlight which options are no-regret, low-regret, win-win, and

flexible (see Box 5 for definitions of these terms). These kinds of options are particularly useful

in devising decision strategies in the face of uncertainties about the future.

In essence, the adaptation options fall into three main groups:

1. Informational actions including: gathering and sharing additional meteorological and

hydrometeorological data; analysis and modeling of catchments that may be suitable for

hydroelectric power generation; working with neighboring countries to understand regional

risks from climate change and their implications for regional energy trading; further research

on climate change impacts through downscaling of global climate model data; and

researching the impacts of changing seasonal conditions and extreme climate events. Many

of these options are considered to be no-regret options. As such, it is considered that

undertaking these options would prove beneficial for a wide range of reasons, whatever the

extent of future climate change. Stakeholders in Albania should consider the no-regret

options as a priority. No further analysis has been conducted for these options, though further

details on one vital no-regret option, namely improved monitoring and forecasting of weather

and climate, are provided in Box 6, Annex 4 and Hancock and Ebinger (2009).

2. Institutional actions including: reviewing, upgrading, and enforcing design codes to require

new assets to take account of climate change; and reviewing the government prioritisation

policy for resources such as water in the face of climate change. It is anticipated that many of

these adaptation options would be subject to regulatory impact assessment prior to being

introduced. Therefore, no further assessment of these options has been carried out in this

report. However, further details are provided in Box 7, on weather coverage and insurance

instruments that could help mitigate the anticipated losses associated with climate variability

and extreme events.

5 Note that the adaptation options numbers listed in the Risk Register below (Table 5) correspond to the

adaptation option numbers in Tables A3-1 to A3-8.

3. Physical/technical actions: A number of potential engineering adaptation options have been

identified, including: amendments to the way existing LHPPs are operated; upgrades of

existing assets to optimize performance and minimize decline in power generation due to

climate change; and construction of new and diversified power generation assets.

The Risk Register presented in Table 5 summarizes the main climate-related risks before and

after adaptation, demonstrating how effective the adaptation actions could be in reducing risks. It

also summarizes the adaptation actions that could help to manage each risk. In developing the

risk-severity ratings after adaptation, it has been assumed that the adaptation actions would be

fully implemented. However, we add a note of caution: as mentioned in Section 2.3, Albania has

low adaptive capacity, which means that implementing these actions would require considerable

effort, coordination and, in some cases, funding.

Some 20 risks are identified in Table 5. The risks falling into each risk severity category before

and after full implementation of adaptation measures are outlined in Table 4. (For further details

on the risk categories, refer to Annex 2, Tables A2.1 and A2.2.)

As can be seen in Annex 2 (Tables A2.3 and A2.4), for a given risk, the adaptation options

considered could lead to a decrease in the likelihood of occurrence of a hazard and/or a decrease

in the magnitude of its consequence.

Box 5: Categorization of adaptation options for robust decision making under conditions of

high uncertainty, with some examples

No regret: Measures that deliver benefits that exceed their costs, whatever the extent of climate

change, e.g.:

 Investment in energy demand management

 Preparing for questions about adaptation from government, investors, analysts, lenders,

lawyers

 Funding baseline climate monitoring and regional climate models

 More holistic approaches to water cycle management in water-constrained locations

Low regret: Low cost measures with, potentially large benefits under climate change, e.g.:

 Allowing for heavier rainfall when designing new drainage system—make drainage

pipes wider; use Sustainable Drainage Systems which allow rainfall to percolate into the

ground, reducing runoff

Win-win: Measures that contribute to climate adaptation and also deliver other benefits, e.g.:

 Creation of salt-marsh habitat provides flood protection for coastal areas and also

contributes to nature conservation objectives

Flexible approaches/’Adaptive management: Keeping open / increasing options that will allow

additional climate adaptation in future, when the need for adaptation and performance of different

adaptation measures is less uncertain, e.g.:

 Flood management: Allow for future increases in defence height by making foundations

wider and deeper, but do not build higher defence immediately

Avoid maladaptive actions: Some actions will make it more difficult to cope with climate change

risks, e.g.:

 Inappropriate development in a flood risk area

Table 4: Number of Risks in Each Risk Severity Category, Before and After Adaptation

Number of Risks in Category

Risk Severity Category

Before Adaptation

With Full Implementation of

Adaptation Measures

Extreme

High

Moderate

Low

For most of the ―extreme‖ risks, the key adaptation options include: diversification of energy

into other forms of generation than hydroelectric power, working with neighboring countries to

understand regional risks and implications for regional energy trading, and improved data

collection and modeling to enable hydropower plant design and operation to be optimized.

Diversification of assets was also seen by most stakeholders engaged during this assessment as a

critical step for the Albanian energy sector. With this in mind, the high-level cost–benefit

analysis element of this assessment, presented in Section 5, has focused on looking at a diverse

range of asset classes that may be utilized to adapt to climate risks to supply and demand. The

economic cost–benefit analysis presented here is thus an example of a process that Albania could

use as it evaluates adaptation options. A more in-depth analysis, appropriate for the magnitude

and costs of the challenges presented by climate change, would consider a larger variety of

options and explore the costs and benefits in greater detail.

Box 6: A vital ‘no-regrets’ option for Albania—improved monitoring and forecasting of weather and

climate

As outlined in previous sections, hydropower provides about 90 percent of domestic electricity in Albania.

This buffers national economic development from fossil fuel price shocks and will help Europe as a whole to

meet its targets for reduction of greenhouse gas emissions. However, Albania‘s dependence on renewable

energy sources makes it vulnerable to the weather, especially because the rainfall on which Albania‘s

hydropower depends is among the most variable in Europe. Albania‘s vulnerability has been highlighted in

recent drought years (e.g., 2002 and 2007).

Improved weather monitoring and forecasting could bolster Albania‘s energy security, enabling planning for

water shortages, guiding the optimal tradeoffs among various water users in times of shortage, and supporting

management of reservoirs to extract the largest amount of energy per unit of flow. However, Albania‘s

national weather-monitoring network was damaged in the civil struggles of the 1990s and has been only partly

rehabilitated. Many stations and hydroposts are heavily depreciated, and telecoms do not support the data

reporting frequency that efficient management of hydropower requires. As a result, the network that records

rainfall, temperatures, and river levels is sparse and reports very little information in real time. Rainfall and

runoff could be qualitatively forecast to three days if modest resources were invested in obtaining and tuning

models; but in part because computing capacity is extremely weak, Albania uses the model output of

neighboring countries, which is not verified in detail nor continuously re-tuned to Albania‘s conditions.

Longer lead-time forecasts to seven days could be obtained from the European Centre for Medium-range

Weather Forecasting to support national forecasts and planning; although these are low-resolution they would

provide valuable guidance on regional water availability. Currently, Albania is not a full subscriber and has

only limited access. Seasonal forecasting via statistical models is having increasing success in some regions of

the world, but good success in Albania would need to draw on digitized historical data, which is not available

because much of Albania‘s historical data is not in digital form. Watershed models and maps of national

climate could be updated to support planning for the future, but today they provide only weak guidance

because they are out of date.

Wind farms, also of potential interest to Albania, are also weather-dependent. Their optimal design depends on

knowledge of the distribution of wind speeds; currently, a verified map of the wind resource for Albania does

not exist. Management of the transmission and distribution system can also be made more robust. Power is

generated in the Drin cascades of northern Albania while most consumers are concentrated in the south, so the

country‘s transmission and distribution system necessarily involves long transmission lines, exposed to severe

weather. Repairs of inevitable occasional damage would be more rapid if Albania were able to monitor severe

weather, pinpointing lightning strikes, heavy winds, and the other sources of damage. Finally, better weather

forecasting would enable Albania to make the most of its natural resources by improving the accuracy of

demand forecasts that build on knowledge of upcoming temperature and cloudiness to assess demand for

electricity.

As outlined in Section 2.2, climate projections from a range of climate models are in good agreement about

the extent of future increases in temperature for the South Eastern Europe region and they are also in general

agreement that future summer precipitation would decrease. They are valuable as a source of qualitative

information about the patterns of regional climate trends but further downscaling would provide more

localised data for energy asset management. It would be helpful to determine whether several more-robust

projections of changes in Albania‘s precipitation could be identified through a review of correlation of

modeled baseline climates against observed historical precipitation patterns, and to focus on downscaling an

ensemble of these.

All these functions are very weak in Albania today: monitoring, modeling, and forecasting. Albania‘s former

strengths in this area could be revived and expanded to bolster its energy security, which is so strongly linked

to its variable climate. As the climate changes, Albania is likely to see changes in the availability of renewable

energy sources. Increased skill in monitoring and forecasting the weather that measures out these resources

would enable Albania to adapt flexibly and rapidly to trends on all time scales.

(Further insights on this topic are provided in Annex 4 and Hancock and Ebinger (2009).

Box 7: Weather risk management through weather coverage and insurance instruments

Albania‘s economy is weather sensitive and vulnerable to man-made and natural disasters; some avoidable. In

the past 33 years, 62 percent of disasters were hydrometeorological in origin and in the past decade alone there

have been 2 significant periods of drought, 45 major landslips, and 3,767 forest fires. Projected changes in

climate—rising temperatures and reduced precipitation—could compound already adverse impacts on fiscal

stability and macroeconomic performance, businesses, and households.

Albania is taking steps to address its vulnerability through a US$9.16 million (equivalent) Disaster Risk

Management and Adaptation Project approved by the World Bank‘s Board in May 2008 (effective June 2009).

This project supports:

 Capacity building for emergency response and strengthening of disaster risk mitigation planning

 Provision of accurate, tailored hydrometeorological forecasts and services to weather sensitive sectors

(agriculture, energy, water resource management etc.)

 Development of building codes that address seismic risk

 Development of private catastrophe risk insurance for households, small and medium enterprises

Lending and technical assistance programs could be complemented by weather coverage and insurance

instruments that could help mitigate the anticipated losses associated with climate variability and extreme

events. Weather coverage is an emerging market instrument that pays on the basis of a measurable weather event

and does not require individualized loss assessment (as in the case of more traditional insurance). Customized

weather coverage is being used by hydroelectric utilities in Australia, the United States, India, and Canada to do

the following (WeatherBill 2009):

 Stabilize revenues and protect against income loss due to precipitation or temperature fluctuations affecting

power generation.

 Control costs associated with power purchases to address supply shortages arising from weather related

events (e.g., below average precipitation).

 Manage cash reserves, for example to ensure that reserve funds are not required to cover operating costs

when budgets are stressed due to successive drought years.

Such instruments can be accessed on the insurance market. The World Bank Group (WBG) also offers a range

of services to mitigate the impacts of disasters and weather events:

 Catastrophe Risk Deferred Draw-down Option (CAT DDO), a deferred development policy loan

offering IBRD eligible countries immediate liquidity up to US$500 million or 0.25% of GDP (whichever is

less) if they suffer a natural disaster.

 Sovereign Budget Insurance, advisory services to help countries access the international catastrophe

reinsurance markets on competitive terms; currently used by 16 Caribbean countries as parametric insurance

against major hurricanes and earthquakes.

 Insurance Linked Securities, a multi-country catastrophe bond to poll the risks of several countries and

transfer the diversified risk to capital markets is under development. WBG has experience in working with

Mexico to transfer earthquake risk to investors through such mechanisms (2006).

 Catastrophe Property Insurance, to create competitive insurance markets and increase catastrophe

insurance penetration.

 Indexed Based Weather Derivatives. In Malawi the World Bank provided intermediation services on an

index-based weather derivative. If precipitation falls below a certain level, a rainfall index reflects the

projected loss in maize production, and payout is made when production falls significantly below historic

averages.

(World Bank, 2008a; World Bank; 2009b; WeatherBill Inc, March 27, 2009.)

Table 5: Risk Register (For details on the rating system presented here (labeled 1 to 5 and A to E), see Annex 2, Tables A2.1 and A2.2)

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

Higher peak

demand in

summer due to

higher

temperatures

could lead to

lack of

capacity.

Catastrophic

Almost

Certain

Extreme

Develop shared understanding of

region-wide climate risks to

energy security; increase energy

trade; supply diversification;

supply and demand side

management / efficiency; optimize

current generation; make new

energy assets climate resilient

(Adaptation Options: 1, 7, 10 to

15).

Minor

Unlikely

Low

Less summer

electricity

generation

from

hydropower

facilities due

to reduced

precipitation

and runoff

could reduce

energy

security.

Catastrophic

Almost

Certain

Extreme

Optimize current water and power

generation management system,

implement engineering adaptations

as part of dam rehabilitation,

amend and implement design

standards to take account of

climate change, diversify power

generation, contingency planning

such as insurance back-up and / or

regional trading (Adaptation

Options: 7, 16 to 23).

Moderate

High

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

EU Carbon

trading

schemes add

cost to thermal

power

generation.

Major

Almost

Certain

Extreme

Diversify asset portfolio so that

thermal power remains a small

contributory element; seek ways to

offset carbon emission costs

through regional / global trading

(Adaptation option: 7).

Moderate

High

Changes in

seasonality of

river flows

(including

more rapid

snowmelt due

to higher

winter

temperatures)

combined with

mismanageme

nt of water

resources

could decrease

the operating

time for

SHPPs,

resulting in

decreased

production.

Major

Almost

Certain

Extreme

Collect and analyze hydromet data

for existing and potential basins;

require climate change aspects to

be considered in designs and

upgrades of new and existing

facilities, work with other users

(particularly in the agriculture

sector) to reduce potential future

competition for water resources;

consider insurance, upgrade

existing facilities to optimize

generation (Adaptation options: 24

to 30).

Minor

Moderate

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

Increased

CAPEX /

OPEX due to

climate

change could

lead to

reduced

shareholder

value.

Major

Likely

Extreme

Diversify assets; require

consideration of climate change in

contracts for new energy assets;

regional interconnections and

explore potential financial risk

management products (Adaptation

Option: 7).

Moderate

Likely

High

Higher peak

summer

demand across

the region

could increase

import prices

and reduce

supply.

Moderate

Almost

Certain

Extreme

Develop shared understanding of

region-wide climate risks to

energy security; diversify assets,

regional interconnections and

explore potential financial risk

management products (Adaptation

Option: 1, 7).

Moderate

High

Paucity of

hydromet data

makes it

difficult to

manage water

resources and

optimize

operation of

hydropower

Major

Almost

Certain

Extreme

Collect, model and analyze

hydromet data (Adaptation

Options: 1, 2, 16, 17, 24, 25).

Minor

Unlikely

Low

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

plants.

Sea level rise

could lead to

increased

coastal erosion

potentially

affecting

energy assets

in the coastal

region such as

ports for oil

export.

Moderate

High

Research impacts of rising sea

levels on coastal zone, implement

design codes with climate change

taken into account, identify assets

at risk, include climate resilience

in new design and rehabilitation of

existing assets (Adaptation

Options: 3, 6, 8, 31, 33, 34, 36).

Minor

Unlikely

Low

Lack of data

(impact of

climate

change on

wind patterns)

creates

uncertainty

about optimal

sites / design

for generation

using wind.

Moderate

High

Collect appropriate wind data and

complete mapping; research and

monitoring of climate change

impact on wind; incorporate

climate change assessment in

design requirements (Adaptation

options 37, 38, 39).

Insignificant

Rare

Low

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

Climate

change

increases risk

of competition

between water

users.

Moderate

Likely

High

Collect and analyze data, raise

awareness of competing interests,

and work together, particularly

with agricultural water users

(Adaptation Options 1, 2, 4, 5).

Moderate

Unlikely

Moderate

Dry periods

followed by

heavy

downpours of

rain would

exacerbate soil

erosion from

agricultural

land, leading

to increased

sedimentation

and reduced

output from

SHPP and

LHPP.

Moderate

Likely

High

Monitor and assess sedimentation

risk, rehabilitate existing assets,

work with other stakeholders to

manage future risks (Adaptation

Options: 17, 19, 25 and 27).

Moderate

Unlikely

Moderate

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

Mal-adapted

infrastructure

design if

climate

change not

built-in could

lead to

reduced

operation /

efficiency of

assets.

Moderate

Likely

High

Monitor impact of climate change

on dam security and look to

financial risk management

products to spread the risk

(Adaptation Options: 17, 21).

Minor

Unlikely

Low

Changes in

extreme

precipitation

lead to higher

costs for

maintaining

dam

operations /

security.

Moderate

Likely

High

Monitor impact of climate change

on dam security and look to

financial risk management

products to spread the risk

(Adaptation Options: 17, 21).

Moderate

High

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

Changing

temperature,

ground

conditions and

extreme

precipitation

could increase

contamination

risks

associated

with oil and

coal mining

facilities,

potentially

leading to

increased risk

contamination

of local water

course.

Moderate

Likely

High

Assess likely impact of climate

change, plan contingency for any

proposed / necessary intervention,

(Adaptation Options: 48 to 51).

Moderate

High

Reduced

precipitation

and increased

temperatures

can affect

Minor

Likely

High

Monitor river flows and emissions

to ensure abstractions and

discharge do not damage river and

avoid negative impacts by

considering impact of climate

Minor

Moderate

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

environmental

performance

of river water-

cooled TPP

abstracting

and

discharging

water into

local water

courses.

change in design of future assets

(Adaptation Options: 33 and 36).

Transmission

and

distribution

losses increase

due to summer

temperature

rise, resulting

in higher

effective

demand and

reduced

energy

security.

Insignificant

Almost

Certain

High

Reduce existing technical losses

(e.g., insulation of cables,

undergrounding of critical cables,

consider DC rather than AC for

long lines), manage commercial

losses (e.g., tariffs and metering),

amend and implement design

standards to take account of

climate change for new / upgraded

infrastructure (Adaptation Options:

3, 12, 14).

Insignificant

Moderate

Low

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

Concerns

about

unmanaged

climate risks

cause Albania

to be less

attractive to

foreign

investors.

Moderate

Unlikely

Moderate

Further data collection and

research on potential impacts of

climate change in Albania; ensure

regulations require climate change

assessment to be implemented in

design (Adaptation Options 4 to 9)

Minor

Unlikely

Low

Changes in

extreme

precipitation

and wind lead

transmission

disruption.

Minor

Moderate

Further assess possible risks to the

network, transfer risk to partners

with expertise to manage the

issues, develop contingency plans

(Adaptation Options 41 to 46).

Minor

Unlikely

Low

Loss of

productivity

for thermal

plants due to

higher air and

water

temperatures

and / or

Insignificant

Likely

Moderate

Collect and analyze data to

identify issues, understand and

manage existing risks, avoid risk

to new assets by considering at

design stage (Adaptation options:

32, 34, 36).

Insignificant

Moderate

Low

Rank

Risk

Description,

Event and

Consequence

Risk Severity Before Adaptation

Adaptation Actions

Risk Severity After Adaptation

Consequence

Likelihood

Risk Level

Before

Adaptation

Consequence

Likelihood

Risk Level

After

Adaptation

reduced ability

to abstract and

discharge

cooling water.

Increases in

landslips due

to heavy rains

resulting from

climate

change could

increase the

risk of loss of

integrity for

gas pipelines.

Minor

Rare

Low

Monitor integrity of existing low

pressure pipelines due to landslips

after heavy downpours and review

and upgrade design codes to

ensure assets are climate-resilient

(Adaptation Options: 49 and 50).

Minor

Rare

Low

5. COST–BENEFIT ANALYSIS OF ADAPTATION OPTIONS

5.1 OBJECTIVE OF THE COST–BENEFIT ANALYSIS

Based on discussions with stakeholders it was agreed that a high-level economic cost–benefit

analysis would be an appropriate method of examining options to manage the risks and

vulnerabilities to Albania‘s energy security in the face of climate change. Having subsequently

considered the impacts of climate change on energy security further, and given that

diversification of power generation assets was identified as a key adaptation option, stakeholders

agreed that the objective for the cost–benefit analysis be refined to address the following

question:

―What is the optimal technology (power generation asset) to supply the shortfall in

electricity that is directly caused by climate change?‖

Implicit in the word optimal in this question is the delivery of sustainable development. Also

implicit is the time period over which options should be considered. During discussions with

stakeholders, it was suggested that a 30-year period should be considered, however this was later

refined to 40 years (up to 2050) to tie in with climate modeling timeframes and a notable

threshold date.

5.2 ASSESSMENT OF SHORTFALL IN FUTURE POWER GENERATION DUE TO CLIMATE

CHANGE

To assess the range of energy generation technologies that could be used, it is first necessary to

identify what shortfall in power generation may result from climate change in Albania. The

calculations and projections below use as their starting point the most recent draft National

Energy Strategy (NES, Government of Albania, 2007). The draft National Energy Strategy

presents two scenarios, passive and active (described in Box 8 overleaf), and considers the

medium-term period out to the year 2019. Since the present assessment has a longer time horizon

than the draft NES, extending out to 2050, a number of assumptions have been made to build

supply and demand projections beyond the timescales of the NES. These assumptions are

detailed in Annex 8.

Step 1. Supply–Demand Projections Excluding Climate Change

In discussions undertaken during the workshops and subsequent meetings, stakeholders

highlighted that it was important to assess the impacts of climate change over a long planning

horizon; therefore, a time period from 2010 to 2050 was selected. But the draft NES for Albania

only provides projections for power supply and demand for the medium-term, from 2003 to

2019.

Therefore, as part of this assessment, the projected power demand described in the draft NES

was extrapolated beyond 2019 for each of the two demand-side scenarios that the draft NES

presents:

 The passive scenario, which involves no energy demand control or energy efficiency

measures)

 The active scenario, which includes implementation of energy efficiency measures such as

residential property insulation standards and installation of domestic solar water heating

The extrapolation of demand projections beyond the timeframe of the draft NES was based on

Albanian energy-expert opinion (Islami, 2009) and corresponds to annual growth rates in

demand of 2.8 percent initially, declining to 2.1 percent by 2050, in the passive projections; and

2.2 percent declining to 1.8 percent in the active projections. These demand growth projections

are illustrated in Figure 19 and are detailed in full in Annex 8.

From these demand projections, potential energy supply curves were generated that would meet

demand. Electricity typically cannot be stored but, rather, is produced instantaneously; in that

sense, supply and demand projections are the same line. Reconciliation is achieved as follows:

detailed supply projections are based on known potential energy assets included within the draft

NES, plus additional energy assets known to be under discussion within the Albanian energy

sector, plus energy imports at the level that achieves demand–supply balance without load

shedding (after 2013, when the draft NES predicts load shedding will cease). The use of

imported energy represents the demand that cannot be addressed with domestic sources.

5,000

10,000

15,000

20,000

25,000

30,000

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2012

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2020

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2028

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2032

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Year

GWh

Baseline Supply/Demand Active Supply/Demand

Figure 19: Projected electricity supply/demand for Albania from 2010 to 2050

Step 2. Superimposing the Impacts of Climate Change on Supply–Demand Projections

Based on the climate change risks identified for Albania (see Section 3, Annex 8 and Annex 9),

the active-scenario projections of supply and demand were modified. Section 3 highlighted the

anticipated impacts of climate change:

 Demand side:

o Summer cooling of residential and commercial properties will increase due to rising

summer temperatures.

o Winter heating of residential and commercial properties will decrease as winter

temperatures rise.

o Based on analysis of the above effects and combining these two phenomena results in

an estimated net effect of a reduction in annual demand of approximately 0.1 percent

per year. It is noted that this annual decrease may disguise a more significant impact

on energy security due to changing seasonal demand, with the summer peak demand

increasing and potentially becoming a greater controlling factor than current winter

peak demand (see Section 5.7 for more information on seasonality of impacts).

 Supply side:

o Reduce annual precipitation and increases in temperature, leading to lower runoff and

less hydropower generation. As outlined in Section 3, the impact of climate change

on large hydropower plants is estimated as reduction of their generation by 15 percent

by 2050. For small hydropower plans, the reduction is estimated as 20 percent by

2050.

Box 8: Active and passive scenarios in the draft National Energy Strategy, 2007

The draft National Energy Strategy uses two future scenarios (passive and active) to project Albania‘s electricity

supply and demand up until 2019. Both projections are based on economic growth in Albania of +5 percent GDP

per year.

The passive-scenario projection assumes the preservation and development of the present situation in terms of

supply and demand for energy in all sectors of the local economy. It projects continuation of electrical power

consumption as the dominating source of energy for space heating and water heating in the households and

services sector. This projection assumes that a considerable part of the future demand for electrical power shall be

covered by extension of the thermal generating capacities (based on marine petroleum, solar, fuel oil, and

imported natural gas) and hydropower energy.

The active-scenario projection assumes efforts to address the supply–demand imbalance that is expected to arise

under a passive scenario. It assumes the following objectives:

 Improving supply security

 Improving energy efficiency

 Diversification of energy resources

 Use of renewable resources

 Real pricing of electrical power

 Implementation of the regional electricity market

 Environment protection

The active-scenario projection assumes a focus on improving energy efficiency through:

 Greater use of domestic solar water heating

 Improved building standards (insulation, windows etc.)

 Lower energy appliances

 Alternative heating sources other than use of electricity

Although the active scenario envisions efforts intended to address current energy security concerns, many

of the actions included in the active scenario would also help to build resilience to the impacts of climate

change. The projections made underthe active scenario are dependent on the successful implementation of

the measures outlined above, which will be challenging. For the elements of the cost–benefit analysis

involving the active-scenario projections, it has been assumed that these measures are implemented as

described in the draft NES.

(Government of Albania, 2007)

o Reduce efficiency of thermal power plants and also transmission and distribution

networks. The efficiency reduction has been estimated as 1 percent for TPPs by 2050,

associated with rising temperatures. This estimate does not take into account any

impact on efficiency of thermal power plant operations due to environmental

management associated with cooling water discharge. Vlore TPP will be cooled using

seawater, and it is considered unlikely that its operations would need to change for

discharge to the marine environment. (However, if Albania develops river- or lake-

cooled TPPs in the future, these risks could be significant.) Losses from transmission

and distribution networks are also estimated as 1 percent by 2050.

o The projected reduction in cloudiness would mean that the output of solar power

plants would increase in the future. As outlined in Section 3, it is estimated that an

increase of 5 percent would occur by 2050.

The resulting predicted net reductions in supply (shortfall in power generation) due to climate

change are on the order of 580 to 740 GWhrs/annum (2 percent to 3 percent of total power

demand) by 2050, based on the extrapolated passive- and active-scenario projections

respectively. Interestingly, the shortfall caused by climate change in the active-scenario

projection is greater than that in the passive-scenario projection. This is because the active-

scenario projection assumes greater demand-side efficiency measures, less reliance on GHG-

emitting thermal plants, and a greater share of generation burden placed on hydropower plants,

which are more affected by climate change than other sources of electricity. However, an aspect

that should not be overlooked is the fact that many of the actions proposed as part of the active

scenario represent adaptation options: energy efficiency measures, diversification of assets, and

regulatory reform. Ensuring implementation of these measures would be an important part of a

strategy for Albania to manage climate-related risks and vulnerabilities to the energy sector. As

climate change impacts take effect in Albania, these ―adaptive-active‖ scenario options will have

increasing value. However, the benefits evident in the active-scenario projection are predicated

on successful implementation of energy efficiency measures, asset diversification, and other

measures mentioned in the draft NES.

As can be seen in Figure 20, the active- and passive-scenario projections track together over the

time period considered, with the energy shortage due to climate change slightly higher in the

active scenario than that in the passive scenario. As already mentioned, the draft National Energy

Strategy projections end at 2019. From 2020 onward, the shortage is projected using a different

methodology and a number of technologies are assumed either to come online or increase output.

This is the reason for the inflection in the active scenario line at 2020. (See Annex 7 for further

details.)

(100)

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Shortage (GWh)

Passive Scenario Shortage Active Scenario Shortage

Figure 20: Electricity shortage due to climate change

Superimposing the impacts of climate change on the annual supply–demand projections reflects

only part of the potential threat that Albania‘s energy sector faces from climate change. There is

a question regarding how the energy system will work during critical periods (very hot or dry

periods) and whether more-significant impacts may emerge under some circumstances that are

beyond the annual-average shortfall projected in Figure 20. For example, the shortfall projected

does not take account of the limited capacity for storage of water in reservoirs that serve LHPP

assets. If, due to climate change, runoff that fills the reservoirs comes in shorter, more-extreme

periods of wet weather that requires water to be spilled, followed by long dry periods and

shortage of water, the power generation from LHPPs could be less than projected above. This

issue is discussed further in Section 5.7. A recent study in Brazil indicated that where power

production was calculated based on projected annual-average rainfall/runoff data, climate change

would result in a 3 percent drop in power generation. When the same analysis was conducted

using more detailed seasonal data, it was projected that the drop in firm power production could

be as much as 30 percent (Schaeffer et al., 2009). At this stage, there are insufficient

hydrometeorological and climatological data available for Albania to enable an estimate of

future subannual rainfall and power-generation relationships. However, this could be researched

further by policy makers and technical managers.

5.3 OPTIONS TO MEET THE PROJECTED POWER SHORTFALL DUE TO CLIMATE CHANGE

IMPACTS

Having identified potential future shortfall in electricity supply due to climate change, and noting

that some measures that contribute to building climate resilience are already contained within the

active-scenario projection, this assessment looks at the costs and benefits of options for

diversification of Albania‘s electricity supply.

Before discussing these options, it is worth noting briefly the significant benefits of improving

energy efficiency. The Asian Development Bank estimates that if 1 million incandescent light

bulbs were replaced with compact fluorescent lamps (CFLs) at a cost of about $1.5 million,

electricity demand would be reduced by about 50 MW. It estimates that the cost of building a

new 50 MW power station would be at least $50 million, and that operating costs would add

another $2 million to $3 million per year. This demonstrates how cost-effective energy

efficiency measures can be, and further strengthens the argument for ensuring that the energy

efficiency measures in the draft NES are implemented.

For the cost–benefit analysis, eight reasonable and practicable technology-based options (asset

types) for filling the electricity shortfall were identified during the workshops. These selected

options are described in order of increasing estimated capital cost. Assumptions relating to the

parameters that were used to assess each option in the CBA are also outlined:

1. Import. The import of electricity from neighboring countries is considered to be a realistic

potential option. There is a premium associated with the cost of this power and prices

fluctuate on a daily basis. To assess the environmental and social effects associated with this

option in the CBA, only those global impacts that could potentially affect Albania were

considered. Water usage and emissions for this option were considered to be the same as for

the combined cycle gas turbine option. Impacts on ecosystems and disturbances to people

and property were not considered, as it was assumed that the regulatory authority in the

generating country has already taken these into account. It has been assumed that all

imported electricity is produced using combined cycle gas turbine (CCGT) technology,

although it is recognized that a range of electricity generation technologies are used in South

Eastern Europe (see Box 2, Section 2.1), including nuclear power, hydropower, other

renewables, and GHG-emitting thermal plants fueled by coal.

2. Use combined cycle gas turbine (CCGT) technology. A new-build CCGT-based power

plant would use natural gas, which is cleaner than coal but has several disadvantages, such as

dependence on foreign sources of fuel and relatively high GHG emissions in comparison

with renewable technologies such as hydropower. Supercritical pulverized coal technology

was not considered in detail in the CBA, but if supercritical pulverized coal technology were

used instead of a gas-fired CCGT, it would have different environmental costs: it has

approximately 200 percent of the water usage and 220 percent of the GHG emissions of

CCGT. CCGT is clearly the more sustainable thermal option in spite of costing

approximately 10 percent more than coal on a levelized basis.

3. Improve/update existing large hydropower plants (LHPPs). There is some capacity for

improvement in existing large hydropower assets, including actions such as optimizing data

collection and usage, reservoir/dam maintenance and reservoir management.

4. Improve/update existing small hydropower plants (SHPPs). Many of the small

hydropower assets in Albania are old, and technology and design have improved

considerably since they were installed. In many cases, improvements such as optimizing

turbine operation with respect to varying river flow regimes, widening intake and outfall

channels, resizing turbines/plant, and improving connections to the transmission network are

possible.

5. Install new small hydropower plants (SHPPs). There are a number of unexploited sites

where new run-of-river hydropower plants could be sited. These smaller plants generally

serve smaller communities and could be connected to local distribution networks as well as

the national transmission grid.

6. Develop wind power. At this stage, there is no wind-power electricity generation in Albania,

although, as outlined in Section 2, a number of potential projects are currently under

consideration in Albania‘s coastal areas.

7. Use concentrated solar power. Concentrated solar power (CSP) captures solar energy

through a large array of mirrors, directing light toward a brine solution or other thermal

receptor that converts the solar energy into electricity. There are currently no CSP plants in

Albania. However, there are several located in the Mediterranean region in areas with similar

solar characteristics to those of Albania.

8. Install new large hydropower plant (LHPP). This option represents the building of a

completely new dam and reservoir to exploit the remaining generation potential in Albania‘s

hydrological system.

In undertaking the CBA, potential constraints on the implementation of technologies have been

considered:

 It is considered that, subject to approval, there are no physical constraints on the number of

thermal power plants that could be installed.

 With respect to wind power, there are insufficient data at present on wind speeds in Albania

at turbine operating heights. However, it is assumed that there is adequate wind potential for

the purposes of the CBA.

 In the case of CSP, technology is developing in this area and a number of stakeholders felt

that this technology might become more feasible in the future, perhaps by 2040 and beyond.

Aspects considered in relation to current use of CSP were:

I. The technology is relatively new.

II. The capital costs are higher compared to other technologies.

III. There is not enough operating experience accrued worldwide to provide real data for

operating and maintenance costs.

IV. It involves higher technological, schedule and financial risks.

It is expected that by 2040 the capital costs for CSP would be comparable with other

technologies and sufficient experience worldwide would be developed that would reduce the

current risks associated with CSP. For the purposes of the CBA, best estimates of technology

costs (CAPEX and OPEX) have been used in the analysis, though it is recognized these may

be reduced if/when the technology advances.

 With respect to hydropower, much more data are available. METE stated during meetings

that the current estimate of Albania‘s hydropower generation capacity is 3,200MW total for

LHPP and SHPP (Tugu, 2009). Of this, there is currently 1,445MW of LHPP and 15MW

SHPP installed capacity. The future supply projections developed in this assessment are

based on development of a further 1,150MW LHPP and 390MW SHPP, thus giving a total

installed capacity of 3,000MW by 2050. These values are estimated before the impact of

climate change has been taken into account, which it is predicted would reduce hydropower

potential in Albania. Therefore, there may be a significant physical constraint on further

potential capacity for hydropower generation, beyond those facilities already included in the

future projections. However, given the uncertainty surrounding total potential for

hydropower generation in Albania, and that estimates may be substantially modified if

additional basin hydrometeorological data and modeling were available, further development

of both LHPPs and SHPPs have been considered for the purposes of the CBA.

Importantly, to compare the costs and benefits of all the different assets on a like-for-like basis, a

quantity of power was chosen, 350 GWh, which could meet the estimated climate change-

induced shortage for 20 years. All of the generation capacity is not required at once, but rather

the need increases over the assessment period. Some assets would probably not be able to fill the

entire gap from beginning to end. Additionally, the assets under study have different expected

periods of service. Twenty years represents a period of time for which energy needs could be met

by the technologies under consideration. For the second 20 years to 2050 (the timescale under

consideration for climate change risks in this assessment), the additional generation needs could

be reexamined. This analysis thus considers what could be done in the immediate future,

providing guidance as to what may be good options.

It is important to note that the use of a normalized quantum of a particular asset that could

provide 350 GWh per year is hypothetical and a simplification, in the sense that installing this

amount of capacity may be unrealistic in most cases. For instance, economies of scale dictate

that a 50 MW thermal plant (which would provide about 350 GWh) would generally be less

feasible on a financial basis than a larger unit. Furthermore, to complete a high-level CBA, it has

been necessary to make broad assumptions about the specific locations where future assets may

be sited and also of the various options, their costs, and their impacts on society and the

environment. In addition, it should be noted that the options would themselves be susceptible to

climate change. The most notable impacts would be on the SHPP and LHPP options, as these are

most sensitive to climate change (see Sections 3.3 and 3.2), though the efficiency of TPP is also

slightly reduced as temperatures rise (see Section 3.4). In contrast, there may be benefits for

future solar power production due to reduced cloud cover in summer in the future (see Section

2.2). Since the available cost and benefit data are relatively high-level, further analysis of these

impacts on the options is not included in the scope of the CBA. Thus, the options considered in

this assessment are generic and indicative rather than definitive. However, it is considered useful

and informative to undertake a high-level CBA for these technologies, to provide an indication

of what the key issues are, and to identify where further data could be used to reduce uncertainty

or confirm a chosen course of action.

The eight power technology options were evaluated on the basis of eight parameters that were

determined based on the outcome of workshops and discussions with stakeholders. Parameters

were chosen that reflect sustainable-development performance aspects—that is, financial, social,

and environmental aspects of the different options. The parameters selected are detailed next.

5.4 BENEFIT CATEGORIES/PARAMETERS USED IN THE COST–BENEFIT ANALYSIS

In a complete economic analysis, the benefits of a given course of action are compared to the

cost. Actions that result in a net overall positive benefit to society as a whole are deemed

economic and sustainable.

The approach for this analysis is to attempt to capture the maximum likely benefits and dis-

benefits (i.e., costs) that would accrue to both the power producers (private benefits/dis-benefits)

and to society (external benefits/dis-benefits), for each of the various alternatives being assessed.

To do this, a conservative approach (from the economic point of view) has been adopted, with

each external (societal) monetizable benefit valued using a method that would tend to overstate

(rather than understate) the benefits. In addition, a qualitative examination of some likely

nonmonetizable benefits is also included. Thus, in the CBA, likely costs are compared with

conservatively high benefits, or disbenefits, as the case may be. In adopting this approach, the

report is biasing the economic analysis toward the societal position. This is advantageous

because it assures that the external perspective is fully considered and valued, and helps to

deflect any possible criticism that the analysis favours the proponent.

The parameters/potential benefits considered are summarized next and described in more detail

in Annex 5.

Financial Parameters

Financial parameters reflect a number of key issues identified at the workshops. An obvious

issue is the cost per unit of electricity produced. Although social and environmental aspects are

also important, the cost of producing electricity plays heavily on the viability of a given asset

type. Loss of production is also reflected in the financial parameters, specifically revenue from

electricity sold. The possibility that an asset type may not be able to fill the electricity shortage is

included in the model by virtue that it would have lower associated electricity revenue.

1. Capital Expenditure. Capital expenditure is the financial expense required during the

construction of the plant. It represents investment in the fixed assets that are used to generate

electricity. The value of land is also included in capital expenditure figures.

2. Operating Expenditure. Once the plant has been built, ongoing expenditure is required to

keep the plant operating. These costs comprise spares, maintenance, fuel, and other ongoing

costs required to keep the plant operating. Operating expenses vary depending on asset type

and depend on factors such as the location of the asset (more isolated assets are more

expensive to supply) and the age of the technology (newer technologies are often more

expensive to maintain).

3. Electricity Revenue. The revenue received through the sale of produced electricity

represents both the value of the production of the electricity and its contribution to

macroeconomic activity. Electricity revenue is based on the stated market price of 8.23 Lek

per kWh (USD 0.085 per kWh) (Tugu, 200). This parameter also represents a portion of the

benefits to the economy through a contribution to GDP.

Environmental Parameters

In the workshops environmental parameters were also identified as high priority issues to be

taken into account when deciding which type of power assets to build. Greenhouse gases, other

emissions, water and ecosystems were included as parameters in the CBA. In addition to

determining a base case monetary value for these parameters, a potentially realistic maximum

(high case) monetary value for these parameters was also determined, as shown in Table 6.

1. Value of water. Water in many forms (as a resource, in precipitation, in storms) is a key

factor in the risks associated with climate change. In Albania especially, where a large

proportion of electricity generation is based on water flows, it is important to account for

water usage and availability when looking at the different generation options. In this

economic CBA, the base value of water was based on the rate charged to an enterprise

consumer in Albania, 90 Lek per m3 (USD 0.93 per m3). This price is based on information

from Tirana Municipality (2006). It is noted that, other than for concession costs for new

small hydropower plants, hydropower generators do not currently have to pay for water that

they use. However, inclusion of this value in the analysis takes account of the fact that there

may be cost in the future, as water becomes more highly valued by society.

2. Carbon dioxide and other greenhouse gases (GHGs). CO2 is the well-known greenhouse

gas that is traded in markets around the world. The base value used in this analysis was based

on the European Trading Scheme market spot price, €15.80 per tonne (USD 21.55 per tonne)

(11 May 2009). Other studies, such as the Stern Review (Stern, 2006), use detailed models to

project the cumulative economic impact of additional units of GHG, called the social cost of

carbon (SCC), estimated at approximately USD 75 per tonne CO2-e. This value was used in

the evaluation of the high case (see Table 6). Other emissions that were considered were

particulate emissions and NOx. After research, none of the generation asset types were

determined to have significant emissions of particulate matter, so it was not monetized or

explicitly included in the model. There are limited emissions of NOx from the CCGT plant

option, and these emissions were valued at USD 62 per tonne based on the U.S. EPA auction

of NOx emissions permits. Due to the limited scope of the study, some GHG emissions were

not included. The GHG emissions caused by the decomposition of organic matter during the

creation of a reservoir for a large hydropower plant and emissions during transportation of

materials for construction of the various generation assets are two examples.

3. Value of ecosystems (loss of ecological services). Building a power plant on a greenfield

site destroys or converts ecosystems to other uses. For the CBA, it was assumed that

hydropower plants were built in mountainous ecosystems and all other asset types were

constructed in coastal ecosystems. Based on published studies, the ecosystem services for the

mountains were valued at USD 30 per hectare (UNEP, 2001) and coastal ecosystems were

valued at USD 117 per hectare (Department of Natural Resources, 2004). The analysis

included loss of ecological resources, specifically the loss of mountainous or coastal

ecosystems, due to clearing associated with activities directly related to the power generation

options being considered.

Social Parameters

The economic CBA takes into account an aspect of social concerns through a parameter that

describes the overall disturbance to people and property caused by new constructions. There

were several other social aspects identified as important in the workshops that could not be

generalized and therefore were not included within the scope of this high level analysis;

examples are impacts on tourism, recreational benefits of some asset types (e.g., reservoirs) and

political implications of constructing a new power asset in a region or area where public

dissatisfaction is high.

1. Disturbance of people and property. This aspect has been valued using an approach that

has been previously widely used for assessing the disturbance from wind farms (Ladenberg,

2001). This value was pro-rated for the other asset types based on the population density of

the area and the footprint of the asset at hand. It is clear that there are other disturbances,

such as recreational benefits, and importantly for Albania, impacts on tourism. This is an area

for further study when more information about specific proposals is available. Other

important aspects are mentioned below.

2. Discount rate. In economics, it is common to assume that having something now is worth

more than getting it in the future. This is the basis for interest on bank accounts. To account

for the fact that expenditure today precludes other uses of the money, a discount is applied to

future cash flows. The amount of this discount rate has an effect on the present value of

future cash flows. In this assessment, a base discount rate of 4.5 percent has been used. This

discount rate has been adopted as the base value following discussion with the World Bank‘s

energy economist in Albania. The value is higher than the social discount rate used in other

developed European economies (e.g., the United Kingdom uses 3.5 percent) and reflects the

higher potential growth rates that a developing economy, such as Albania‘s, may experience.

The choice of discount rate can be contentious, especially in the context of environmental

and social benefits that occur many years in the future. Whereas environmental benefits for

future generations may not be considered as less valuable than the same benefits for the

current generation, in the context of purely financial investments, such as savings accounts,

benefits now are much more highly valued than later benefits. This causes a divide between

the discount rate used for public projects and the private discount rate used by investors when

making investment choices. The power sector necessarily combines a number of stakeholders

with interests in both the private financial and the public social/environmental performance

of investments. A project that is attractive from a purely private financial point of view may

not be interesting from a public point of view (or vice versa). Therefore, for this assessment

the impact of discount rate on the outcome of the CBA is explored through sensitivity

analysis, to understand the effects that discount rate assumptions may have on the relative

performance of different options.

Important Aspects for Further Study

As many parameters as feasible have been included within the scope of the high-level CBA

assessment. However, it is important to note that there are several important aspects that either

could not be included or were not included to the full extent possible in principle.

Water, by nature of its multiple forms and uses, is a particularly complicated aspect to consider

in policy decision making. In future studies, the alternative possible uses of water (e.g.,

irrigation) should be considered. There are also nonuse and ecological values to consider. Not

every use of water accrues all of these values. For instance, using water to cool a turbine through

evaporation precludes its use for irrigation, whereas water that has passed through a hydropower

turbine may still be available of downstream irrigation.

Each asset type will have a different impact on the surrounding ecosystems. Furthermore,

different locations will have different types of ecosystems of different values. Outside a highly-

general study, greater ecosystem impact information is required to consider properly the full

costs and benefits of various options.

Broader economic impacts are also important. Again, across various assets, the exact impact that

constructing a given facility will have on gross domestic product and employment will depend

on the number of people that particular facility takes to operate, the type of training required and

the legal structure of the operating company. Although these effects could only be superficially

covered in this assessment, they are suited for inclusion in a more detailed and specific future

study.

Vulnerability to natural disasters and increased climatic vulnerabilities is another parameter that

was identified as important at the workshops, but has only been incorporated in the CBA through

sensitivity testing (see Section 5.6). Further study could expose potentially-critical hidden

vulnerabilities that would need to be incorporated into policy decisions.

A summary of the base case and high case parameter values used in the CBA is presented in

Table 6.

Table 6: Base Case and High Case Parameter Value Assumptions

Benefit Category

Units

Base (USD)

High

(USD)

Value of water

0.93

3.00

Carbon dioxide and other

GHG emissions

Tonne

21.55

75.00

NOx emissions

Tonne

62.00

Value of ecosystem

(mountain)

/ha/yr

200

Value of ecosystem (coastal)

/ha/yr

117

200

Disturbance of people and

property

/hh/km2/yr

1.82

5.00

5.5 RESULTS OF THE COST–BENEFIT ANALYSIS

Given the financial, environmental and social base values discussed in the previous section, the

results of the CBA for the base values only are presented below. The charts (Figures 21 and 22)

provide the net present value (NPV) results in current (2010) U.S. dollar terms for each of the

technology options under consideration.

Net Present Value of Options

-200

-100

100

200

300

400

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figure 21: NPV using base case assumptions

Figure 22 illustrates the NPV results broken down by each internal and external parameter value.

Breakdown of Costs and Benefits by Option

100

200

300

400

500

600

700

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

IMPORT LHPP

Update

CCGT ESHPP

Update

New

SHPP

WIND CSP New

LHPP

Option

MUSD

CAPEX Electricity Benefit

GHG Ecosystem Impact (Coastal)

Ecosystem Impact (Mountain) Water

NOx Disturbance of People

OPEX

Figure 22: Breakdown of NPV of options by parameter

The options are sorted from greatest to least capital expenditure, going from left to right. In

general, options with an NPV less than zero are not considered economic/sustainable. Options

with an NPV greater than zero are economic/sustainable. The higher the NPV the more

sustainable is the option. The three most-sustainable options identified are as follows:

1. Enhancements to existing large hydropower assets

2. Enhancements to existing small hydropower assets

3. The building of new small hydropower plants

Within the scope of this CBA, two options appear unsustainable within the context (i.e., to fill

the future shortfall in electricity supply due to the impacts of climate change) and boundaries of

this assessment, namely: building new large hydropower plants, and importing power. However,

in this particular analysis the relative ranking of the options is more important than the specific

NPV of any particular option. Due to the high-level nature of this analysis, other possible

benefits that may be very relevant when considering a specific project have not been considered.

In a detailed analysis phase, careful consideration of all possible benefits may well mean that the

two unsustainable options may, in fact, be sustainable in certain contexts. This is especially

important to note in the case of ―New LHPP.‖ Although in the context of this analysis the net

present value is below the breakeven point (zero), this should not imply that the options should

never be undertaken. Nevertheless, these results provide useful information by way of

illustrating a high-level comparison of the options.

The breakdown chart in Figure 22 shows that by far the biggest costs are capital expenditure

(CAPEX) and operating expenditure (OPEX). This is unsurprising, as most of the options are

based on renewable fuels, which have fewer external costs than traditional generation asset types

such as coal-fired power plants. The nonrenewable option, CCGT, is a low-carbon source of

energy and thus also has limited environmental impact.

Importing electricity has the biggest operating expenditure, because the electricity is purchased

from the regional grid, and thus, the price reflects recapture of foreign capital expenditures,

operating expenditures, and the profits of the other generating assets. However, this should not

be taken as evidence that imports do not play an important role in Albania‘s energy mix. This

assessment is concentrating only on the shortage due to climate change, which is one piece of a

larger energy context. Imports are sometimes necessary to fill short-term shortages and avoid

load shedding. Furthermore, this analysis was based on a one-time snapshot of market prices,

where import cost is higher than domestic sales revenue in Albania. In reality, there are a number

of measures that could help manage the cost of imports. Financial tools such as options or long-

term contracts could hedge against price movements and keep imports viable for appropriate

uses. However, the results of this analysis suggest that for the gap caused by climate change,

another source of electricity may be preferable.

As mentioned in Section 5.3, supercritical pulverized coal technology was not considered in

detail in the CBA. A cursory analysis based on general knowledge of the relationship between

the cost, GHG emissions, and water usage of supercritical coal and CCGT technologies indicates

that although coal technology is less sustainable than CCGT, it ranks relatively the same

amongst all the other options. That is, it would likely be the fourth most sustainable option

behind the three options just identified.

5.6 SENSITIVITY ANALYSIS

Any CBA analysis of this type is inherently subject to uncertainty. Cost estimates provided are to

±30 percent accuracy, and the valuation and estimation of benefits is subject to even larger

changes, as discussed in Annex 5. However, the aim of the analysis is not to reveal ―absolutes‖

in terms of dollars, but better and worse decisions overall, when comparing the range of possible

decisions that could be made.

From this perspective, sensitivity analysis is important because it allows the overall conclusions

of the analysis to be tested across a wide range of parameter inputs. If a decision is favourable or

economic over a wide range of parameter inputs, compared to other possible decisions, then

despite the overall uncertainty in the actual dollar figures, the decision can safely be identified as

superior to the alternative options. This is particularly useful when considering the sustainability

of options. By definition, sustainability is concerned with the future, which is inherently

uncertain. By varying key input parameters over a wide but reasonable range, the implications of

a range of possible futures can be examined.

The overall sensitivities are presented in the tornado chart in Figure 23. The sensitivities are

normalized so the most sensitive option/parameter combination is 1.0 and less-sensitive

options/parameter combinations have shorter lines, with values less than 1.0.

The parameter to which every option is sensitive is the electricity benefit, which is the value to

the producer and society for use of electricity. GHG and water value is significant for large

hydropower options, and GHG emission costs are significant for CCGT and import options.

Figure 23: Tornado chart showing sensitivity of NPV for each option to variations in the

values of each parameter

One possible parameter case, using the high-case values summarized in Table 6, is presented in

Figures 24 and 25. In this case, the values of water, carbon dioxide and other GHGs, and fuel for

the CCGT are increased to represent a high scenario under the effects of climate change.

Net Present Value of Options

-400

-300

-200

-100

100

200

300

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figure 24: Net present value of options under high parameter assumptions

Breakdown of Costs and Benefits by Option

100

200

300

400

500

600

700

800

900

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

Cost

Benefit

IMPORT LHPP

Update

CCGT ESHPP

Update

New

SHPP

WIND CSP New

LHPP

Option

MUSD

CAPEX Electricity Benefit

GHG Ecosystem Impact (Coastal)

Ecosystem Impact (Mountain) Water

NOx Disturbance of People

OPEX

Figure 25: Breakdown of costs and benefits, high parameter case

The value of water primarily affects the large hydropower assets. Dams increase the surface area

by which water can evaporate, causing water losses. With a higher value of water, the water

usage of the large hydropower assets becomes a greater issue to society as a whole, and therefore

this option becomes less attractive.

Increase in the value of CO2 and other GHGs and fuel for the CCGT creates a marked decrease

in the viability of the CCGT option. Increasing the value for CO2, fuel costs, and water is akin to

making the assumption that these commodities are going to be increasingly valuable in the future

under climate change. It should be noted that although Albania is not yet subject to a carbon

trading system such as that adopted in the European Union (EU), it is important that the pricing

of carbon is taken into account now, as Albania aims for inclusion in the EU, so in the future

explicit GHG emission levies may apply. The reaction of the CCGT option in this analysis to this

change in parameter values suggests that further study is warranted when considering CCGT.

In this high-parameter case, small hydropower and updating existing hydropower are still viable

options, and solar power begins to show relative advantages as well. These renewable options

are not as vulnerable to fluctuations in fuel costs, increases in the value of CO2 and other GHGs,

or increases in the value of water.

Another set of parameters was designed to explore the effect that increasing frequency of

extreme events may have on the availability of electricity from various sources. The primary

source of risk is the vulnerability of power transmission assets to wind and lightning strikes.

Although transmission lines are generally designed to withstand storms, repairing lines that are

more remote is more difficult, meaning that assets that require longer transmission distances,

such as hydropower and import, are more vulnerable. To set up this scenario, a penalty was

placed on long-distance transmission assets—that is, all hydropower assets and the import

option. For the base value, it was assumed that in the second 20 years of the analysis, these assets

are unable to supply the needed power for one week per year, due to extreme events. By

adjusting this factor up and down, the significance of this effect on the relative ranking of the

options is revealed. The results of this extreme event scenario are illustrated in Figure 26.

It can be seen that the effects on the ranking of options are relatively minor, in spite of the effect

having an approximately USD$8 million penalty. This indicates that in spite of the increased

risk, the other parameters are more important to the relative ranking. It is important to note that

this is based on the assumptions made, and that further study may reveal cases where

transmission vulnerability may be an important consideration.

A more-significant effect was investigated; i.e., long transmission assets being put out of service

for a month per year. Depending on the availability of resources in Albania and the remoteness

of the terrain, this effect is a possibility. Figure 27 shows the results of one month of shortage for

long transmission assets for every year of the final 10 years of the assessment period. However,

interestingly, even when the long transmission assets are further penalized and are taken out of

service for a month every year, the effect is not enough to change the conclusions of this high-

level CBA analysis.

Net Present Value of Options

-200

-100

100

200

300

400

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figure 26: Costs vs. benefits for the extreme storm case (1 week per year outages)

Net Present Value of Options

-300

-200

-100

100

200

300

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figure 27: Costs vs. benefits for the extreme storm case (1 month per year outages)

A final case illustrates the effect that length of time can have on the analysis, whereby the

timeline is extended from 20 years to 50 years (see Figure 28). All base-case parameter values

are used. It should be noted that many of the assets would not last until 2050 without extensive

reinvestment. However, this case illustrates the consequences of the time and discount rate

assumptions.

Under this scenario, all options except import (discussed above) have greater value to society

because they are providing value for a longer period of time. Eventually, the ongoing benefits

outweigh the one-off investment costs.

Net Present Value of Options

-300

-200

-100

100

200

300

400

500

IMPORT Enhance

Extg.

LHPP

CCGT Enhance

Extg.

SHPP

New

SHPP

WIND CSP New

LHPP

USD millions

Figure 28: Costs vs. benefits for 50-year duration analysis

Figure 29 presents the sensitivity of the various options to changes in the discount rate in the

range 0 percent to 20 percent. The NPV is represented by the vertical axis and the discount rate

increases along the horizontal axis from left to right.

The chart illustrates that in general, over a range of different discount rates that would typically

be used for public decision making, the relative ranking of the options does not change, with the

―Update LHPP‖ option returning the greatest NPV. However, as the discount rate increases

toward ranges that represent typical investment thresholds for private investors, ―Import‖

becomes a relatively more attractive (though still NPV-negative) option. Additionally, when the

discount rate is larger than 16.2 percent ―CCGT‖ becomes marginally more attractive than ―New

SHPP.‖ ―CCGT‖ has higher operating costs. However, the effect of the future operating costs on

―CCGT" in comparison with ―New SHPP‖ is such that NPV for ―CCGT‖ is diminished at higher

discount rates.

Figure 29: Sensitivity of options to discount rate

Another interesting parameter for the sensitivity analysis is the value of carbon dioxide and other

GHGs. Varying the CO2 price over a range of values is illustrated in Figure 30.

Figure 30: Sensitivity of options to carbon dioxide and other GHGs

As expected, the economics of a group of renewable assets are generally insensitive to the value

of carbon dioxide and other GHGs. Those options that are sensitive to increasing value are

―CCGT‖ and ―Import‖ (the latter assumed to be generated via CCGT), due to the fact that they

both use fossil fuels. The higher the value placed on carbon dioxide and other GHGs, the more

unfavorable the ―Import‖ and ―CCGT‖ options become in relative terms.

The sensitivity of the options to water value is shown in Figure 31. The LHPP options exhibit the

largest sensitivity to the value of water. ―New LHPP‖ remains the least favorable option under

conditions where the value of water is greater than USD 0.71/m3. However, even at lower values

(down to zero) ―New LHPP‖ does not become favorable in comparison to any of the other

options except ―Import.‖ The value of water also has a large impact on the relative attractiveness

of ―Update LHPP‖; the higher the value of water, the more appealing are alternative options.

As mentioned already, due to the high-level nature of this analysis, other possible benefits that

may be very relevant when considering a specific project have not been considered.

Figure 31: Sensitivity of options to the value placed on water

5.7 USING THE RESULTS OF THE COST–BENEFIT ANALYSIS TO SUPPORT DECISIONS TO

MANAGE THE ALBANIAN ENERGY SECTOR IN THE FACE OF CLIMATE CHANGE

The high-level cost–benefit analysis examined eight options to provide equivalent power

generation of 350 GWh per year for the next 20-year planning horizon, where existing

technology and current asset life span remains most relevant. This analysis therefore ranks the

options based on a common measure. On the one hand, it is recognized that the projected

shortfall in energy supply due to the impacts of climate change will gradually increase over time,

and that some technical options are more flexible in their implementation and may be more

economic where an incremental increase in supply capacity is preferred (e.g., gradual

implementation of small hydroelectric or wind power schemes). On the other hand, it may be

considered that larger plants built early in the planning period may provide additional returns.

These considerations could be examined in further detail by future studies, but are beyond the

scope of the current assessment.

In addition, to fill the projected energy shortfall, the CBA indicates that the most economic/

sustainable options to consider are enhancing existing small and large hydropower schemes and

development of new small hydropower schemes. However, it is recognized that there may be a

limit to the amount of additional hydropower generation capacity within Albania. METE

estimates that there is capacity for only 3,200 MW installed HPP in Albania (Tugu, 2009), and

there may be insufficient additional capacity, beyond that used in the projections for supply to

2050, to accommodate all additional requirements due to climate change. Therefore the results of

the CBA could be used to some extent to prioritize adaptation measures, starting initially with

upgrading existing facilities, moving on to exploiting remaining small hydroelectric power

opportunities, before consideration of other assets that may be less economic/sustainable.

Important Notes

As noted above, this analysis addresses only a small part of the larger context of the effects of

climate change on Albania‘s energy sector. Additionally the high-level nature of the assessment

means that in specific situations the results of a CBA could be different. Several constraints and

limitations on the CBA are worth mentioning.

First, the environmental and social effects of the construction phase for energy assets were not

considered; only the financial aspects. Although the construction of a power plant is a resource-

intensive undertaking, it is difficult to make a general qualification about social and

environmental impacts without studying a specific project. For instance, in some cases the

construction of an equivalent capacity hydropower facility may cause more CO2 emissions than

constructing a thermal power plant, especially during the construction of a dam. However, in

other cases—for instance, if a thermal plant were sited in an environmentally valuable area—its

construction may have the greater impact.

Another issue that is not addressed directly in this economic cost–benefit assessment, but that

would need to be addressed in further analysis, is the political and business climate in Albania.

This includes factors such as Albania‘s ability to attract investment funds and obtain necessary

permitting.

Many of the effects of climate change are seasonal in nature, though this analysis does not

account for this, as the available data on seasonal water flows and energy production are sparse.

However, it is worth noting the range of effects climate change may have on seasonal

performance of energy assets, in particular HPPs. Not only may climate change affect the

quantity of precipitation at any given period of the year, climate change may also influence the

timing of changes. For instance, it was noted by Albanian energy sector stakeholders that

existing SHPPs rely on runoff generated by spring and summer melting of the snow pack in the

mountains. This runoff extends the period that the SHPP are able to operate. Although

insufficient data were available for this assessment to determine the possible changes in

snowmelt, it is anticipated that the timing and rate of spring melt may increase runoff and the

risk of spillover of LHPP dams, which means that less water would be available for power

generation if reservoirs were not sized adequately.

To provide some illustration of the seasonal effects associated with power generation in Albania,

historical monthly river flow rates into the Fierze Reservoir on the Drin River and power

generation in the Drin Cascade were reviewed. Seasonal variations were examined for a

relatively wet year (2006, Figure 32) and a relatively dry year (2007, Figure 33), from datasets

provided by KESH. It should be noted that the flow rate presented on the graphs is the rate of

inflow into Fierze reservoir and that the power generation—Drin total is the combined power

generation for Fierze, Koman, and Vau i Dejes hydropower plants. The demand data presented

are the demand that was met, and not necessarily the demand that may have existed if there had

been unrestricted supply (i.e., had there been no load shedding, demand might have been

greater).

Although it is recognized that operation of dams and power generation from hydropower plants

is potentially complex, a number of observations about the potential impacts of seasonality and

possible future climate change impacts can be made based on these data.

Figure 32 (wet year) indicates that river flows are highly seasonal, with the winter and spring

months having the greatest flow. In the wet year, power generation is more correlated with river

flows than in the dry year. Generation appears to be independent of demand, as throughout the

year demand exceeds generation, except for a short period during the spring.

Correlation of Inflow rate and Power Generation for Drin Dam Cascade

Wet Year

100

150

200

250

300

350

400

450

500

Oct

2005

Nov

2005

Dec

2005

Jan

2006

Feb

2006

Mar

2006

Apr

2006

May

2006

Jun

2006

Jul

2006

Aug

2006

Sep

2006

Monthly Average Flowrate (m3 sec-1)

100000

200000

300000

400000

500000

600000

700000

800000

Monthly Power Generation (MWhrs)

Monthly Average Flowrate Monthly Power Generation - Fierze

Monthly Power Generation - Drin Total Monthly Demand

Figure 32: Rainfall and Drin Dam Cascade generation in a wet year (October 2005 to

September 2006)

Figure 33 shows a dry year. Seasonal variations are still apparent but are much less well defined.

Generation is also less correlated with flow rate, and again generation appears to be independent

of demand. At the beginning of the period examined (October 2006), generation increases,

almost in anticipation of the increased flow rate seen in November and December. However,

generation quickly levels off to a much lower level than in the corresponding months of the wet

year.

Correlation of Inflow rate and Power Generation for Drin Dam Cascade

Dry Year

100

150

200

250

300

350

400

450

500

Oct

2006

Nov

2006

Dec

2006

Jan

2007

Feb

2007

Mar

2007

Apr

2007

May

2007

Jun

2007

Jul

2007

Aug

2007

Sep

2007

Monthly Average Flowrate (m3 sec-1)

100000

200000

300000

400000

500000

600000

700000

800000

Monthly Power Generation (MWhrs)

Monthly Average Flowrate Monthly Power Generation - Fierze

Monthly Power Generation - Drin Total Monthly Demand

Figure 33: Rainfall and Drin Dam Cascade generation in a wet year (October 2006 to

September 2007)

Interpretation of this limited dataset indicates that, as expected, hydroelectric power generation is

seasonal and strongly influenced by runoff. When the potential power generation is calculated by

dividing the inflow rate by the efficiency factor that KESH reports for the Fierze dam (1.04

m3/kW in 2008) (Stojku, 2009), it is seen that potential power generation of the Drin cascade

closely follows the seasonal pattern, with periods of excess and periods of deficit. This is as

expected for a dam storage facility. The climate change projections indicate that future summers

will become drier in Albania, runoff from snow melt may occur more rapidly and earlier, and

summer energy demand will increase. As a result, these seasonal fluctuations will likely become

more pronounced and may negatively impact Albania‘s energy security. It is therefore important

to consider these aspects when interpreting the need for diversification of assets and the

conclusions of the cost–benefit analysis. Future studies would be useful, to examine in more

detail the seasonal effects on energy security associated with climate change.

6. NEXT STEPS TO IMPROVE THE CLIMATE RESILIENCE OF ALBANIA’S

ENERGY SECTOR

Given the risks and adaptation actions highlighted in the previous sections, there are a number of

steps that could be considered to build the resilience of Albania‘s energy sector to cope with

climatic variability and change. Many of these are no-regrets actions that would improve

Albania‘s energy security even without climate change, and some are included in the draft

National Energy Strategy active scenario. Many others are generally low cost, though clearly

where financial resources are constrained, even low-cost measures could be difficult to fund.

They fall into the three categories outlined in Section 4:

1. Informational

2. Institutional

3. Physical / technical

The steps, along with suggested timescales for commencing them, are as outlined next. Further

details on these actions are provided in Annex 6. The annex highlights which actions are no-

regrets and which are already included in the draft National Energy Strategy active scenario.

In Year 1, Albania could consider:

 Improving meteorological and hydrometeorological monitoring, modeling and forecasting

capabilities, and communicating that information effectively to energy sector stakeholders, to

support energy sector planning and management

 Further research on climate change impacts on the energy sector, through downscaling of

global climate model outputs, and researching the impacts of changes in seasonal climate

conditions and extreme climatic events

 Initiating dialogue and research with partners in South Eastern Europe to develop a shared

understanding of regional risks from climate change to energy security, and to discuss the

implications for energy prices and trade

 Mapping out detailed plans to address issues in Years 2 to 5 and onward

In Year 2, emphasis could be placed on beginning to develop policy, regulatory and other

management options to manage climate risks, including:

 Improving and exploiting data on reservoir use, margins and changes in rainfall and runoff,

to improve operational management of existing reservoirs

 Developing incentives for energy efficiency measures to reduce demand

 Enforcing measures to reduce technical and commercial water and energy losses

 Engaging with water users in the agricultural sector, to devise agreed strategies for managing

shared water resources

 Incorporating assessments and management of climate risks into energy sector contracts,

environmental impact assessments and other policy instruments for new facilities

 Developing tariffs and incentives to promote climate resilience of energy assets

 Structuring Power Purchase Agreements with neighboring countries that take account of

climate change risks

 Reviewing and upgrading Emergency Contingency Plans

 Investigating weather coverage and insurance instruments

In Year 5, progress could be made in the following areas:

 Ensuring that new energy investments and rehabilitation of existing assets are building in

resilience for projected climate changes

 Diversifying energy asset types, taking account of climate change

 Reducing technical and commercial losses from the transmission and distribution network

 Demonstrating progress on demand-side energy efficiency

 Having improved regional interconnections in place, and ensuring that regional partners have

a shared plan in place for regional energy security in the face of climate change

 Testing Emergency Contingency Plans

 Ensuring that the measures commenced in Years 1 and 2 are making progress and being

implemented successfully

As noted, a number of these actions are already recognized by the government or identified for

action, and are described in the draft National Energy Strategy‘s ―active‖ scenario (Government

of Albania, 2007). Nevertheless, they have been highlighted here because they contribute to

improving climate resilience.

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ANNEX 1: METHODOLOGICAL APPROACH TO THE ASSESSMENT

A1.1 ANALYSIS OF OBSERVED CLIMATIC CONDITIONS AND DATA ON FUTURE CLIMATE

CHANGE

A considerable amount of research has been undertaken by climate experts in Albania to

describe observed climatic conditions and trends, and this research was utilized in this

assessment to provide a context for the existing vulnerabilities of the energy sector and as a

baseline against which climate change will be felt (Bruci, E. 2008; Bruci, E. 2009).

To understand potential future changes in climate for Albania and South East Europe more

generally, data from nine global climate models (GCMs) that formed part of the

Intergovernmental Panel on Climate Change Fourth Assessment report (IPCC AR4) were

evaluated (Acclimatise, 2009). Projections of changes in the following climate variables were

developed and mapped:

• Temperature

• Precipitation

• Wind speed

• Relative humidity

• Cloudiness

• Sea surface temperature

• Sea level rise

It should be noted that most global climate models operate at a coarse spatial resolution (2.5o 

2.5o is typical) that is insufficiently detailed for risk assessments and adaptation planning in

small countries. As a result, methods have been developed to downscale the climate information

to finer resolution, though these have only been applied in a small number of locations and often

only provide results for the end of the century. In the absence of coordinated efforts to undertake

climate downscaling for Albania, the global models, when studied at the regional scale, offer the

best currently available guide to future Albanian climate conditions.

It is clear that Albania would benefit from additional investment in downscaling of large-scale

global climate models to scales of more relevance to river basin planning.

A1.2 GEOGRAPHICAL INFORMATION SYSTEM (GIS) MAPPING

To provide a visual tool to facilitate discussions at Workshop 1, graphics presenting climate

change data were input into a GIS, to provide an overlay of climatic hazards against energy

assets. These maps were developed in both ArcGIS and GoogleEarth. A sample of the GIS

output is shown in Figure A1.1. The complete output is available and has been provided to

energy sector stakeholders in Albania.

Figure A1.1: Sample GIS output.

A1.3 WORKSHOP 1: HANDS-ON VULNERABILITY, RISK, AND SWOT ANALYSES WITH

ENERGY SECTOR STAKEHOLDERS IN ALBANIA

A first workshop discussed climate risks and vulnerabilities of Albania‘s energy sector, leading

to the development of SWOT (strengths, weaknesses, opportunities and threats) analyses

(Acclimatise et al., 2009a). It was held on March 10, 2009, and brought together more than 60

key stakeholders in Albania‘s energy sector, including government ministries and agencies,

utilities and corporations, private companies, expert consultants, university academics and

NGOs, as well as energy sector experts from the World Bank and other international

organizations. The objective of the workshop was to develop a shared understanding among

these stakeholders of the climate risks and vulnerabilities of Albania‘s energy sector.

The workshop was opened by Ms. Camille Nuamah (World Bank), Dr. Suzana Guxholli

(Council of Ministers), and H. E. Lufter Xhuvelli (Minister of Environment, Forests and Water

Administration).

Plenary sessions were followed by four breakout group discussions on various aspects of

Albania‘s energy sector that could be vulnerable to climate risks:

1. Hydropower plants and energy demand

2. Other forms of energy generation: thermal power plants and renewable energy

3. Electricity transmission and distribution and small hydropower plants

4. Fossil fuel supply and transmission / transportation

Each of these working groups focused their discussions around three key areas:

1. Overall strategies and objectives for Albania‘s energy sector

2. Climatic vulnerabilities of existing and planned energy sector assets

3. Climate change risks

A Business Risk Pathways Model was used in the workshop to help facilitate working group

discussions. This took the form of a diagram presenting the linkages between changing climate

hazards and their consequences for the performance of the energy sector (Figure A1.2). This tool

was subsequently used to provide the criteria for assessing the significance of climate change

risks to the energy sector (see Annex 2 for further details). Building on the outcomes of the

workshop and meetings, SWOT analyses were developed for each of the breakout group themes.

Directly after the first workshop, meetings were held with energy-sector experts from

government, the private sector, research and academic institutions and NGOs, at which the risks

and vulnerabilities identified during the workshop were discussed in greater depth.

Figure A1.2: Acclimatise Business Risk Pathways Model, adapted for Workshop 1.

A1.4 ANALYSIS OF CLIMATE RISKS FOR REGIONAL ENERGY MARKETS IN SOUTH EAST

EUROPE

Albania‘s draft National Energy Strategy (2007) places emphasis on Albania increasing energy

trade with its neighbors in South East Europe as a way of helping with security of energy supply.

Hydropower is widely used throughout the region, and the climate change projections indicate

that the whole region could experience higher temperatures and reduced summer precipitation in

future. However, it is not clear that all parts of the region would experience wet or dry seasons or

years at the same time. A brief analysis of energy generation types across the region was

undertaken, considering how climate risks could affect them and questioning whether careful

selection of an ensemble of hydropower investments could help to diversify risk (Ponari et al.,

2009).

A1.5 DEVELOPMENT OF HIGH-LEVEL QUALITATIVE AND QUANTITATIVE ASSESSMENTS OF

CLIMATE CHANGE RISKS TO ENERGY ASSETS

While the first workshop and associated meetings were helpful in identifying the key risks and

vulnerabilities of the energy sector, it was not possible within the time available at the

workshops and meetings to develop high-level quantitative estimates of the risks to each energy

asset type, nor was it achievable to evaluate the significance of each of the risks. These estimates

were required as input to the CBA. Instead, high-level quantitative estimates of risk and risk

ratings were developed based on engineering expertise and a review of relevant literature.

Estimating climate change impacts on hydropower plants and other energy assets

An in-depth approach to quantifying the impacts posed by climate change for large hydropower

plants (LHPP) would involve hydrological modeling using downscaled climate change scenarios,

and subsequent modeling of the impacts of changes in river flows on hydropower plant output.

However, this approach would take considerable research effort and time, which is beyond the

scope of this high-level assessment. Instead, quantitative estimates were developed drawing on

the following information and data:

 Modeling of the relationships between changes in climate (precipitation and temperature) and

changes in river flows for several catchments Albania (Islami et al., 2002; Bogdani and

Bruci, 2008; Islami and Bruci, 2008)

 A correlation undertaken of annual average inflows to Fierze hydropower plant on the Drin

Cascade (Annex 8) and consequent electricity generation, together with a similar correlation

for power production from LHPP on the Mati River (Islami and Bruci, 2008)

 Recent research undertaken in Brazil, which used regional climate modeling data to project

impacts on output from Brazil‘s hydropower plants (Pereira de Lucena et al., 2009; Schaeffer

et al., 2009)

These information sources were analyzed and a paper was produced, providing a high-level

estimate of climate change impacts on generation from LHPP (Annex 8). This estimate was

subsequently used in the cost–benefit analysis.

Estimates of the climate change impacts on other energy assets were developed drawing on

climatological and engineering expertise and on the relationships between climatic factors and

asset performance (Annex 9). In some cases, the relationships between average climatic

conditions and energy assets are straightforward and well-established in the engineering sector

(e.g., impacts of increases in temperature on efficiencies of gas turbines).

It is worth noting again that it is not the purpose of this analysis to assess in detail all of the

impacts of climate change on Albania‘s energy sector. Instead, this analysis provides high-level

(semi-quantitative) assessments to identify key risk areas where subsequent more in-depth

analyses could be focused. In particular, data are not available on future changes in extreme

climatic events, which could have significant consequences for the sector. Furthermore,

knowledge and data on the detailed design characteristics of Albania‘s energy assets, particularly

in relation to proposed new assets, would be needed.

Evaluating the Significance of Risks

The significance of a risk is rated according to the probability of a hazard occurring and the

magnitude of its consequence. A risk rating system for Albania‘s energy sector was developed

using the tool presented in Figure A1.2. This rating system is detailed in Annex 2, Tables A2.1

and A2.2.

Drawing on the quantitative estimates described, and using expert judgement, a desk-based

exercise was undertaken to assign a rating to each of the risks. These ratings were tested and

revised in collaboration with stakeholders during the second workshop. The resultant risk maps

are presented in Annex 2, Tables A2.3 and A2.4. Further detail is provided in Sections 3 and 4.

A1.6 WORKSHOP 2: ADAPTATION AND COST–BENEFIT ANALYSIS WITH ENERGY SECTOR

STAKEHOLDERS IN ALBANIA

A second workshop and associated meetings, held on April 21–23, 2009, discussed adaptation

measures to address the potential risks and vulnerabilities identified in the first workshop, and set

out the framework for an assessment of their costs and benefits (Acclimatise et al., 2009b).

Workshop participants included a cross-section of more than 25 stakeholders from the

government, key agencies and institutions, academia, the private sector and NGOs.

The second workshop involved five steps:

1. Agreeing the objective for the cost–benefit analysis of the energy sector

2. Confirming the key risks posed by climate change

3. Agreeing the boundaries / limits and constraints of the CBA

4. Identifying adaptation options to meet the objective

5. Discussing the range of parameters to be used to evaluate the performance of adaptation

options in the CBA

The workshop agreed that the objective of the high-level CBA was to address the following

question:

―How can we best manage Albania’s future security of energy supply in the face of a

changing climate?‖

Best was defined as ―an optimal balance between financial, environmental and social

objectives.‖

The workshop also agreed on the key adaptation option to be assessed as part of the CBA,

namely, diversification of power generation assets. It was confirmed that the CBA would be a

high-level assessment, utilizing readily available data and international normative valuations for

selected aspects. Additional detailed study of external costs and benefits was excluded from the

scope. Constraints associated with implementation of possible adaptation options were also

discussed, such as the limits of potential capacity for additional hydropower in Albania and

availability of fuel for thermal power plants, as well as key parameters that should be considered

when undertaking the CBA, including costs of carbon dioxide emissions and economic value of

water.

Directly after the workshop, further meetings were held with energy sector stakeholders from

government, the private sector, research and academic institutions, and NGOs, during which the

parameters for evaluating the adaptation options in the CBA were prioritized, and data on costs

and benefits were obtained. In addition, a meeting was held with a group of engineering students,

to consult on the assessment and hear their opinions about the most important parameters for the

cost–benefit analysis.

Following from the workshop and meetings, the CBA approach and options to be assessed were

further refined to provide the most value as an output from this assessment.

A1.7 HIGH-LEVEL COST–BENEFIT ANALYSIS (CBA)

As already outlined, during the second workshop, stakeholders discussed how the Albanian

energy sector could be adapted to manage the potential risks to energy security from a changing

climate. The CBA aimed to assess key sustainable development aspects (i.e., financial, social,

and environmental aspects) that could be considered when assessing the optimal way in which

adaptation could be implemented.

An economic model for assessing the benefits of environmental and social protection has been

presented in Hardisty and Ozdemiroglu (2005). The WorleyParsons EcoNomics™ process that is

based on this method was used. It explicitly describes and measures sustainability aspects in

economic terms, by monetizing external costs and benefits and adding these to the conventional

internal or private costs and benefits of a proposed project or action. Economic theory was then

used to calculate the net present value (dollar value in today‘s money) of options that incur costs

and benefits over a period of time (the planning horizon). This cost–benefit analysis approach is

the basis upon which analyses of the adaptation options have been carried out (see Section 5).

While the WorleyParsons EcoNomics™ process was used for this assessment, the approach is

repeatable using standard methods.

A more detailed explanation of the CBA process is provided in Annex 5.

ANNEX 2 RISK ASSESSMENT BACKGROUND AND RATIONALE

Table A2.1: Scale for Assessing Likelihood of Occurrence of Hazard

Likelihood Category

Rare

Unlikely

Moderate

Likely

Almost certain

Highly unlikely

to occur

Given current

practices and

procedures, this

incident is

unlikely to

occur

Incident has

occurred in a

similar country

/ setting

Incident is

likely to occur

Incident is very

likely to occur,

possibly several

times

5% chance of

occurring per

year

20% chance of

occurring per

year

50% chance of

occurring per

year

80% chance of

occurring per

year

95% chance of

occurring per

year

Table A2.2: Scale for Assessing Magnitude of Consequence

Magnitude of Consequence

1 -

Insignificant

2 -

Minor

3 –

Moderate

4 –

Major

5 -

Catastrophic

Engineering /

Operational

Impact can be

absorbed

through normal

activity

An adverse

event that can

be absorbed

with some

management

effort

A serious event

that requires

additional

management

effort

A critical event

that requires

extraordinary

management

effort

Disaster with

potential to

lead to shut

down or

collapse of the

asset / network

Safety and

Health

First aid case

Minor injury,

medical

treatment case

with/or

restricted work

case

Serious injury

or lost work

case

Major or

Multiple

Injuries,

permanent

injury or

disability

Single or

multiple

fatalities

Environment

 No impact

on baseline

environment

 Localized

to point

source

 No

recovery

required

 Localized

within site

boundaries

 Recovery

measurable

within 1

month of

impact

 Moderate

harm with

possible

wider effect

 Recovery in

1 year

 Significant

harm with

local effect

 Recovery

longer than 1

year

 Failure to

comply with

regulations /

consents

 Significant

harm with

widespread

effect

 Recovery

longer than 1

year

 Limited

prospect of

full recovery

Social

No impact on

society

Localized,

temporary

social impacts

Localized,

long-term

social impacts

 Failure to

protect poor

or vulnerable

groups

 National,

long term

social

impacts

 Loss of

social license

to operate

 Community

protests

Financial (for

single extreme

event or

annual

average

impact)

<€100,000

€100k–€500k

€500k–€5m

€5m–€10M

>€10m

Energy

Security: Lost

Production /

Load

Shedding

Up to 1 hr

1 hr–3 hrs

3 hrs–12 hrs

12hrs–3 days

> 3 days

Reputation of

Government /

Political

Context

Localized

temporary

impact on

public opinion

Localized,

short term

impact on

public opinion

Local, long-

term impact on

public opinion

with adverse

local media

coverage

National,

short-term

impact on

public opinion;

negative

national media

coverage

National, long-

term impact

with potential

to affect

stability of

government

Table A2.3: Risk Mapping (Before Adaptation)

Consequence

Insignificant

Minor

Moderate

Major

Catastrophic

Likelihood

Almost

Certain

95%

3 4 7

1 2

Likely

80%

10 11 12

13 14

Moderate

50%

8 9

Unlikely

20%

Rare

Table A2.4: Risk Mapping (After Adaptation)

Consequence

Insignificant

Minor

Moderate

Major

Catastrophic

Likelihood

Almost

Certain

95%

Likely

80%

Moderate

50%

16 19

4 15

2 3 6 13

Unlikely

20%

1 7 8 12

17 18

10 11

Rare

Note: The risks are presented in the maps above using the ―Risk Code No.‖ noted on Table 3.

ANNEX 3: ADAPTATION OPTIONS

Table A3.1: Adaptation Options that Apply to All Energy Asset Classes

No.

Adaptation Type

Potential Adaptation Actions Applicable to All

Energy Asset Classes

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

Building Adaptive Capacity

Research and analysis

 Climate risk assessments and cost-benefit analyses

(CBA) could be further developed and

incorporated into energy sector planning and asset

design.

 Higher resolution data on future climate variability

and climate change for Albania and the wider

South East Europe region could be developed

 Develop more risk-based integrated climate

change impact assessments, including cross-

sectoral assessments exploring the interactions

between water, agriculture, and energy.

 Undertake research on the impacts of extreme

climatic events on energy assets.

 Keep track of new developments in climate change

research of relevance to the energy sector.

 Re-invigorate participation in World

Meteorological Organization.

 Join European Center for Medium-range Weather

Forecasting.

 Join EUMetnet, expand contribution to European

consolidated observing system (EUCOS), prepare

to join other European meteorological institutions

(EMIs) and consider supporting EU COST.

 Contribute research on climate change and support

European Meteorological Society.

 Work in partnership with South Eastern Europe

region to develop shared understanding of climatic

 Would require funding and collaboration between

policy makers / regulators and energy sector

developers and operators as well as technical

experts (e.g., climatologists, hydromet service

providers).

 Albania would need to collaborate with other

national governments in the region.

No-regret

No.

Adaptation Type

Potential Adaptation Actions Applicable to All

Energy Asset Classes

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

vulnerabilities and risks, and their implications for

regional energy security, pricing and trade.

Data collection and

monitoring

 Monitor impacts of climatic factors on energy

sector performance.

 Continuously monitor and update regional weather

and water resource availability.

 Monitor and forecast regional energy demand and

availability of shared energy from regional

sources, and hydropower available within Albania

that draws on shared resources (e.g., Lake Ohrid)

that could be affected by upstream energy users.

 Share weather monitoring and forecasting data

between Institute or Energy, Water and the

Environment, Military Weather Services and the

National Air Traffic Agency.

 Repair and adapt existing automated climate

stations to provide continuous reporting, using for

example solar panels to power them.

 Share data regionally in return for regional

information exchange. Data on precipitation and

runoff could be shared with regional neighbors,

given that Albania‘s rivers are shared with Greece,

Macedonia and Kosovo.

 Reestablish monitoring and analysis of the

watersheds. At the moment, seasonality of the flow

and its trends are unclear. Contingency planning

could be less expensive if this information were

available.

 Government (including Ministry of Environment),

KESH and hydromet service providers.

 Would require collaboration internationally.

 Would need funding for participation in regional

meteorological collaborative efforts, membership

in, for instance, ECMWF, EUMetsat, EUMetnet

and ICEED.

 Funding would be a potential barrier, together with

loss of hydromet capacity

No-regret

Changing or developing

regulations, standards,

codes, etc.

 Consider amending regulations to require

developers to consider climate change in proposals

and energy sector contracts

 Develop tariffs and incentives to promote climate

resilience of energy sector.

 METE, Ministry of Environment and ERE.

 Barriers: would require developers to have access

to information on climate change (above), and to

be able to interpret this data (i.e. must be tailored

to users); it would require regulators to be

Low-regret

No.

Adaptation Type

Potential Adaptation Actions Applicable to All

Energy Asset Classes

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

 Consider amending regulations to capture climate

change costs in energy price and the price of water.

 Review and upgrade (as necessary) design codes

for assets and infrastructure to support their

climate-resilience.

 Incorporate climate risk and adaptation assessment

in Environmental and Social Impact Assessments

for new energy facilities.

conversant with climate change risks and impacts

and have capacity to assess submissions.

 Enforcement of new codes for infrastructure could

be an issue. Codes would need to be aligned with

EU standards.

 Costs of making new assets climate change

resilient could be shared between Government and

developers (KESH and private sector).

 Would require high-level commitment and

mechanisms for enforcement.

Awareness-raising and

organizational

development

 Awareness of climate change and its impacts could

be raised and championed in government on a

multisector basis.

 Committee or collaborative organization could be

established to oversee action on climate resilience.

 Capacity would need to be built in all sectors

(public and private institutions).

 Perceptions would need to be changed, so that

climate change is not seen as simply an

environmental issue.

 Government, regulators and other public bodies

(universities).

 Government would bear the cost. International

adaptation funds or other international support

could potentially be drawn upon.

 Potential barriers: ownership, commitment,

funding.

No-regret

Working in partnership

 Regional cooperation could be initiated to develop

climate-resilient management plans for shared

watersheds.

 Energy-sector stakeholders and organizations

dependent on the energy sector could work in

partnership to understand climate change risks and

develop adaptation measures.

 Partnership working could help to avoid

competition between different organizations‘

adaptation strategies.

 Joint initiatives involving the Government, energy

industry, hydromet services, academics / research

institutes, other users of water and energy and

consumers.

 It could be useful to establish whether there is an

existing industry organization that could champion

this.

 National government could lead on engaging with

national governments in the region.

No regret

No.

Adaptation Type

Potential Adaptation Actions Applicable to All

Energy Asset Classes

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

Delivering Adaptation Actions

Accept impacts and bear

(some) loss

 Consider establishing a process to ensure that

future development design takes account of

climate change effects.

 Identify key assets at risk from climate change and

plan for their future management.

 National government, operators (KESH and OST)

and regulator (ERE).

Low-regret

Spread/share impacts

 Draft National Energy Strategy promotes

diversification into TPP and other renewables, as

well as regional energy trading, which could help

provide improved energy security.

 Regional energy trading could help to spread risks

of climate-related disruptions to supply.

 The Albanian government would need to attract

external private investors.

No-regret

 Diversifying the location of energy assets could

help avoid concentrating assets in at-risk locations.

 Government could set the strategy.

Other

 Consider the use of weather insurance to cover

potential risks.

 Where available, consider using other financial

products that lay-off risk, such as Alternative Risk

Transfer mechanisms (ART) including risk bonds,

futures, derivatives, swaps, and options.

 Operators (KESH, OST, private).

Other

Avoid negative impacts

 New energy assets could be designed to be

climate-resilient.

 Rehabilitation of existing assets could provide an

opportunity to build in climate-resilience.

 Operators (KESH, OST, private).

 Barriers: lack of awareness and information on

which to act.

 Costs and coordination issues would need to be

considered.

Low-regret

 Engineering solutions could improve efficiency of

generation, transmission and distribution, and use

of water and energy.

 Contingency planning could support a response to

increasing risk of heat waves and drought.

 Engineers, driven by government.

 Government and operators.

No-regret

 Consider location of new energy assets

 Support implementation of improved design

 Government and operators.

Low-regret

No.

Adaptation Type

Potential Adaptation Actions Applicable to All

Energy Asset Classes

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

standards for new assets

 Continue the existing efforts to improve efficient

use of water resources in the agriculture sector,

and reduce technical and commercial water losses.

 Government and farmers.

Win-win

Exploit opportunities

 Climate models are generally in good agreement

over Albania regarding changes in temperature and

summer precipitation, providing a useful basis for

analysis of sensitivities of energy assets and

development of climate resilience.

 There is significant potential to improve energy

efficiency (demand and supply side).

 Government could set standards for energy

efficiency.

 Barriers: funding and enforcement.

No-regret

 Identify and consider developing energy

technologies that are favored by future climate

change conditions, e.g., increased solar potential

due to increased sunshine hours.

 Asset developers (KESH and private sector.

Low-regret

 TPP are not as climatically vulnerable as many

other forms of energy generation.

 Government could set the strategy.

 Delivered by operators (KESH and private).

Other

Table A3.2: Adaptation options—Energy Demand and Demand-side Energy Efficiency

No.

Adaptation Type

Potential Adaptation Actions for Energy Demand

and Demand-Side Efficiency

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

Building Adaptive Capacity

Research and analysis

 Develop better understanding of the relationships

between climate-related factors and energy

demand.

 Develop better understanding of the change in

demand and change in residential and

nonresidential sectors due to climate change.

 Undertake cost–benefit analyses of adaptation

 Energy sector experts work with met / hydromet

service providers.

No-regret

No.

Adaptation Type

Potential Adaptation Actions for Energy Demand

and Demand-Side Efficiency

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

measures.

Data collection and

monitoring

 Monitor peak demand for space cooling in

summer.

 METE and KESH.

No-regret

Changing or developing

regulations, standards,

codes, etc.

 Consider amending regulations, standards, codes

of practice to ensure they are resilient to / take

account of changing climatic conditions.

 Support enforcement of regulations/ codes for

energy efficiency in new buildings.

 Consider use of tariff instruments to support

energy efficiency and change consumer behaviour.

Identify ways to regulate energy efficiency in

existing buildings.

 Government and regulator.

 .

 Regulations/ codes would require alignment with

EU standards.

 Would require high-level commitment and

mechanisms for enforcement.

 Investment in existing building upgrades could be

incentivized by government.

 Enforcement of new codes could be an issue.

Low-regret

Delivering Adaptation Actions

Accept impacts and bear

(some) loss

 Be prepared for increase in summer energy

demand for cooling.

 Government and energy sector operators (KESH

and private)

No-regret

Avoid negative impacts

 Improve domestic, commercial, and industrial

energy efficiency.

 Tackle and reduce commercial losses, for instance

through use of tariffs and incentives.

 Government, regulator, and CEZ.

 Barriers: lack of funding to deliver energy

efficiency measures, inertia whereby consumers

are slow to make changes.

 Incentives could be considered such as grants /

rebates for energy efficiency measures.

No-regret

 Install alternative fuel sources (other than

electricity) for heating buildings.

 Building owners.

 Barriers: insufficient service alternatives to

electric power heating.

Other

Exploit opportunities

 Significant potential to improve energy

efficiency.

 Government could provide incentives such as

grants / rebates for energy efficiency

measures.

No-regret

 Higher solar radiation (due to projected less

cloud cover with climate change) increases

opportunities for domestic and commercial

solar water heating.

 Geothermal energy resources could be used for

 Building owners.

Low-regret

No.

Adaptation Type

Potential Adaptation Actions for Energy Demand

and Demand-Side Efficiency

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

domestic and commercial heating and cooling.

Geothermal energy is not climatically

vulnerable and could potentially help increase

climate resilience.

Table A3.3: Adaptation Options—Large Hydropower Plants (LHPP)

No.

Adaptation Type

Potential Adaptation Actions for Large

Hydropower Plants (LHPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

Building Adaptive Capacity

Research and analysis

 Develop better understanding of the relationships

between climate-related factors and the

performance of LHPP assets.

 Develop watershed-based hydromet data gathering

to optimize operation of existing LHPP and

characterize other potential basins for new LHPP.

 Develop better understanding of impact of climate

change on frequency and severity of drought and

storm periods.

 Study the feasibility of building pump and storage

plants.

 Explore opportunities to improve weather/ climate

information services (seasonal forecasts, etc.)

 Consider local downscaling of climate change

scenarios benchmarked against past experience of

climate and assess impacts on LHPP performance.

 Develop more risk-based integrated climate

change impact assessments to help optimize use of

LHPP, including the impacts of extreme climatic

events.

 Collaboration between policy makers/ regulators

and energy sector developers and operators as well

as hydromet service providers.

 Barriers: lack of capacity of hydromet services

(financial, human, institutional, etc.).

 National government could work with other

national governments to understand cross-border

issues.

No-regret.

No.

Adaptation Type

Potential Adaptation Actions for Large

Hydropower Plants (LHPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

 Perform analysis looking at cross-sector and cross-

border impacts of climate change in relation to

water management for LHPPs.

Data collection and

monitoring

 Monitoring to focus on more vulnerable assets,

e.g., existing and planned LHPP.

 Monitor sedimentation of hydropower facilities to

confirm operational lifetime aspects are correctly

assessed in light of climate change, in the Drin

cascade particularly. Sedimentation has not been

measured for more than 40 years.

 Monitor dam security.

 KESH and other operators could monitor impact of

climatic factors.

 KESH and the Large Dam Safety Board could

examine sedimentation.

 Limited historical topographical data may make

sedimentation assessment difficult.

No-regret

Changing or developing

regulations, standards,

codes, etc.

 Consider amendments to regulations to require

LHPP developers to consider climate change in

proposals and energy sector contracts.

 Consider amending design standards for LHPP to

ensure assets are climate-resilient over their

lifetimes.

 Consideration how climate concerns could be built

into long-term LHPP contracts.

 Strengthen efforts to control illegal logging, which

increases risks of soil erosion and consequent

sedimentation of reservoirs.

 Ensure that regulations on dam safety are

implemented.

 Government and LHPP operators.

 Costs would be borne by operators.

Low-regret

Working in partnership.

 Holders of existing and future hydromet data could

work in partnership with LHPP operators.

 Hydromet data holders and LHPP operators.

 Barrier: hydromet data may be viewed as a

valuable asset and not willingly shared with other

parties.

No-regret

Delivering Adaptation Actions

Accept impacts and bear

(some) loss.

 Be prepared for more frequent drought and storm

events as well as changing hydrographic profiles

for basins.

 LHPP operators.

No-regret

Spread/share impacts.

 Share cost of adapting existing assets.

 Government, utility operators.

Other

No.

Adaptation Type

Potential Adaptation Actions for Large

Hydropower Plants (LHPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

Avoid negative impacts.

 Increase LHPP-installed capacity, ensuring that

new assets are designed to be climate change-

resilient.

 Consider raising the dam crest on Fierze.

 Consider increasing the capacity of spillways on

Fierze and Komani dams.

 Consider development of a pump storage scheme

on Drin river cascade.

 Government, utilities.

 Barriers: lack of awareness and information on

which to act, costs, coordination.

 Feasibility studies would be needed for all

engineering adaptation options.

Other

 Establish whether proposed locations for new

LHPP would be sustainable in the face of climate

change risks to water resources.

 Improve existing asset efficiency through measure

such as: clear / redesign trash racks, upgrade

turbines and generators, replace equipment to

reduce water losses (shut-off valves), improve

apron below dams to reduce erosion, use improved

hydromet data to optimize operation.

 Strengthen contingency planning for operation

during periods of extreme drought

 Government, utilities, and private developers.

No-regret

Exploit opportunities

 Rehabilitation of existing dams (options noted

above).

 Government and utilities.

No-regret

100

Table A3.4: Adaptation Options—Small Hydropower Plants (SHPP)

No.

Adaptation Type

Potential Adaptation Actions for Small Hydropower

Plants (SHPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

Building Adaptive Capacity

Research and analysis

 Develop better understanding of relationship

between snowfall, snowmelt and SHPP generation.

 Develop higher resolution data on future snowfall

and snowmelt projections.

 Assess the future relationship between SHPPs and

demand for water from other users (e.g.,

agriculture).

 Develop watershed based hydromet data gathering

to better inform future water use.

 Explore opportunities to improve weather/ climate

information services (e.g., seasonal forecasts).

 Consider local downscaling of precipitation and

temperature using an ensemble of GCMs,

benchmarked against their ability to predict

observed precipitation.

 Develop more risk-based integrated climate

change impact assessments, including the impacts

of extreme climatic events.

 Perform analysis looking at cross-sector and cross-

border impacts in relation to water management.

 Collaboration between policy makers/ regulators

and energy sector developers and operators as well

as hydromet service providers.

 Barriers: capacity of hydromet services (financial,

human, institutional, etc.)

 National government could collaborate with other

national governments to understand cross-border

issues.

No-regret

Data collection and

monitoring

 Monitoring to focus on more vulnerable assets,

e.g., existing and planned SHPP.

 Monitor changes in snow and river flows for their

impacts on SHPP production.

 Hydromet service providers and SHPP owners.

No-regret

Changing or developing

regulations, standards,

codes, etc.

 Consider amending regulations to require SHPP

developers to consider climate change in proposals

and energy sector contracts.

 Consider amending design standards for SHPP to

ensure they are climate-resilient over a facility‘s

lifetime.

 Government, regulator (ERE) and SHPP owners.

Low-regret

101

No.

Adaptation Type

Potential Adaptation Actions for Small Hydropower

Plants (SHPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

 Consider how climate change could be built into

long-term SHPP contracts.

 Consider how regulations could support water

resource allocation for energy generation as well

as other users.

Working in partnership

 Improve watershed management together with

agricultural water users. Support delivery of

medium-range (3 to 10 day) forecasts for farmers

to build partnership, buffer potential conflicts over

water availability and support coordination on

water use.

 Hydromet service providers, farmers, and SHPP

owners.

 An institutional decision would be needed to

support information flow to irrigation users.

Win-win

Delivering Adaptation Actions

Spread/share impacts

Avoid negative impacts

 Consider whether proposed locations for new

SHPPs would be sustainable in the face of climate

change risks to water resources and competition

from other water users.

 Improve management of water resources (e.g.,

reduce technical and commercial losses).

 Improve efficiency of water use in agriculture

sector (much progress on this has been achieved

recently).

 Contingency planning for operation during periods

of extreme drought.

 Improve efficiency and performance of existing

SHPP through measures such as replacing old

turbines, purchasing larger turbines or by replacing

the turbine‘s runners with more efficient ones;

increasing turbine name-plate output through a

detailed hydrological study that would support to

better usage of the flow; digging wider channels;

replacing/rehabilitating other equipment (e.g.,

stop, control and shut-off valves). Generally,

 Regulator, OST, and SHPP developers.

 Barriers: lack of awareness and information on

which to act; costs and coordination; Access to

finance for asset improvement sand new SHPP

investments.

 Review the use of guarantees to support the

owners of SHPP in accessing capital.

No-regret

102

No.

Adaptation Type

Potential Adaptation Actions for Small Hydropower

Plants (SHPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

improvements could be achieved by replacing/

rehabilitating each piece of equipment in the

SHPP.

 Assess whether the transmission grids are able to

carry power generated by SHPPs.

 Develop water storage capacity for SHPPs to

support for longer periods of operation.

 Regulator (ERE) and SHPP owners, working with

farmers.

Low-regret

Exploit opportunities

 Upgrade existing SHPP facilities.

 SHPP could play a role in providing local

electricity supply in remote areas, more prone to

transmission failure during extreme climatic

events that are predicted to increase.

 SHPP owners‘ association, METE, and AKBN.

 Barriers: Feed-in tariff for existing SHPP is less

than new SHPP; linking SHPP to the transmission

system can take time.

No-regret

Table A3.5 Adaptation Options—Thermal (Fossil Fuel) Power Plants (TPP)

No.

Adaptation Type

Potential Adaptation Actions for Thermal Power

Plants (TPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

Building Adaptive Capacity

Research and analysis

 Develop risk-based integrated climate change

impact assessments when siting and designing

TPPs. For coastal facilities consider sea-level

change and coastal storm surge in the assessment.

For river-cooled TPP, assess flood risk and

availability of cooling water and environmental

impacts during periods of low flow or high

temperatures.

 Would require collaboration between policy

makers/ regulators and TPP developers and

operators as well as technical experts; and funding.

 Could assist in understanding and anticipating

risks, and integration of risk management into

sector operations.

 Could take time to achieve international standards.

No-regret

Data collection and

monitoring

 Monitor impacts of climatic factors on

performance of TPP (e.g., reduction in efficiency

during high-temperature periods)

 If new TPP are river-water cooled, monitor river

flows to ensure abstraction and discharges do not

 TPP operators

No-regret

103

No.

Adaptation Type

Potential Adaptation Actions for Thermal Power

Plants (TPP)

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

damage the river water environment during

periods of low flow.

Changing or developing

regulations, standards,

codes, etc.

 Consider amending regulations to require TPP

developers to consider climate change in proposals

and energy sector contracts.

 Review and upgrade (where necessary) design

codes for TPP assets and associated infrastructure

(buildings, pipelines, roads, etc.) to ensure their

climate resilience.

 Integrate climate risk assessment, including

changes in sea level, storm surges and coastal

erosion in the design of new coastal infrastructure.

 Regulator and TPP developers.

Low-regret

Delivering Adaptation Actions

Accept impacts and

bear (some) loss

 Assess potential impact, if any, of changing sea

levels and coastal erosion on the proposed site for

the Porto Romano TPP.

 Government, regulator and developer.

 Barriers: information.

No-regret

Spread/share impacts

 Typically insurance for TPPs would cover usual

risks such as earthquake, flood and fire. TPP

developers could engage with insurers to discuss if

risks could change as a result of rising sea levels

and coastal erosion.

 TPP owners.

Other

Avoid negative impacts

 Consider whether proposed coastal locations for

new TPP would be sustainable in the face of

climate change risks (sea-level change, erosion).

 If river-water-cooled TPP are considered in the

future, ensure that their abstraction and discharge

requirements would not adversely affect river

environments, noting that river flows would likely

decrease in the summer. Develop contingency

plans to manage potential risks.

 To manage the impacts of rising temperatures on

TPPs, technical adjustments could be made. For

example, condensers could be enlarged and/or

cooling water flow rates could be increased.

 Government and TPP developers.

 Barriers: lack of awareness and information on

which to act; costs and coordination.

No-regret

104

Table A3.6: Adaptation Options—Other Renewable Energy Sources

No.

Adaptation Type

Potential Adaptation Actions for Other Renewable

Energy Sources

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

Building Adaptive Capacity

Research and analysis

 Map wind resources, in the Karabun Peninsula and

in other regions that are likely sites, to identify

best locations and design for new wind turbines.

 Map geothermal resources.

 Undertake climate risk assessment and CBA of

adaptation measures when planning and designing

new renewable energy assets.

 Would require collaboration between policy

makers/ regulators and renewable power developers

and operators as well as technical experts.

 Would assist with understanding and anticipating

risks, and integration of risk management into

sector operations.

 Would require funding and commitment.

 Could take time to reach international standards.

No-regret

Data collection and

monitoring

 Monitor impacts of climate factors on renewable

energy assets.

 Asset owners and meteorological service providers.

No-regret

Changing or developing

regulations, standards,

codes, etc.

 Consider amending regulations to require

renewable power asset developers to consider

climate change in proposals and energy sector

contracts.

 Review and upgrade (where necessary) design

codes for renewable energy assets and associated

infrastructure (e.g., buildings, pipelines, roads,

etc.) to ensure that assets are climate-resilient.

 Government and regulator.

Low-regret

Delivering Adaptation Actions

Exploit opportunities

 Decreased cloudiness due to climate change

(particularly in summer) would benefit solar

energy production.

 Households, commercial property owners

 Developers of large-scale solar assets (e.g.,

CSP).

Other

105

Table A3.7 Adaptation Options—Electricity Transmission and Distribution

No.

Adaptation Type

Potential Adaptation Actions for Electricity

Transmission and Distribution

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

Building Adaptive Capacity

Research and analysis

 Undertake climate risk assessment and CBA of

adaptation measures when upgrading or

developing new T&D systems. Critical climate

data for design of T&D systems are minimum and

maximum temperatures, and wind conditions.

 Would require collaboration between policy

makers/ regulators and T&D developers and

operators as well as technical experts.

 Would assist with understanding and anticipating

risks, and integration of risk management into

sector operations.

 Would require funding and commitment.

 Could take time to reach international standards.

No-regret

Data collection and

monitoring

 Monitoring to focus on more vulnerable assets,

e.g., vulnerable areas of distribution system, and

rural /remote areas.

 Monitor effects on transmission losses due to

higher temperatures.

 OST and CEZ.

No-regret

Changing or developing

regulations, standards,

codes etc

 Consider amending regulations, standards, codes

of practice for T&D systems to ensure they are

resilient to / take account of changing climatic

conditions.

 Re-assess the climate parameters used for design

of existing transmission lines (e.g., frequency of

extreme events).

 Government and regulator, drawing on information

from meteorological service providers.

Low-regret

Delivering Adaptation Actions

Accept impacts and

bear (some) loss

 Accept slightly higher technical losses due to

higher temperatures. Meet losses through extra

generating capacity

 OST and CEZ.

Other

Spread/share impacts

 Privatization of distribution system passes risks to

a private partner

 CEZ.

Other

106

No.

Adaptation Type

Potential Adaptation Actions for Electricity

Transmission and Distribution

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-regret,

low-regret or

win-win option?

Avoid negative impacts

 Examine costs and benefits of further upgrade of

transmission and distribution system to account for

lower efficiency in hotter weather. Considering the

following options:

 Insulating the lines

 Underground cables (which makes them less

susceptible to climatic conditions) in certain areas

where uninterruptible supply is required

 Use of DC instead of AC current (noting that this

is expensive).

 OST and CEZ.

 Barriers are lack of awareness and information on

which to act; costs and coordination.

Other

 Contingency planning for effects of high winds,

lightning, ice loading on T&D systems.

 OST and CEZ.

No-regret

Exploit opportunities

 There is large potential to improve efficiency of

the distribution system. The transmission grid has

recently been upgraded to EU standards that

should make it resilient to a wide range of climatic

conditions. However, it is noted that EU standards

have not yet taken on board climate change

(though this will change in time, according to the

EU Adaptation White Paper).

 OST and CEZ.

No-regret

107

Table A3.8: Adaptation Options—Fossil Fuel Supply and Transmission / Transportation

No.

Adaptation Type

Potential Adaptation Actions for Fossil Fuel Supply

and Transmission/ Transportation

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

Building Adaptive Capacity

Research and analysis

 Undertake climate risk assessment and CBA of

adaptation measures for existing and new fossil

fuel resources.

 Would require collaboration between policy makers/

regulators and fossil fuel developers and operators as

well as technical experts.

 Would assist with understanding and anticipating

risks, and integration of risk management into sector

operations.

 Would require funding and commitment.

 Could take time to reach international standards.

No-regret

Data collection and

monitoring

 Monitor changing ground conditions and

concentrations of ground pollutants at Patos

Marinza.

 Monitor effects of sea level rise, storm surges and

coastal erosion on coastal assets.

 Monitor integrity of existing low pressure gas

pipeline due to landslips after heavy downpours.

 Monitor potential for pollution incidents due to

heavy downpours at mines.

 Operators of oil, gas, and coal production facilities

and Ministry of Environment.

No-regret

Changing or

developing regulations,

standards, codes, etc.

 Consider amending regulations to require

developers of fossil fuel assets to consider climate

change in proposals and contracts.

 Review and upgrade (where necessary) design

codes for fossil fuel assets and associated

infrastructure (buildings, pipelines, roads, ports,

etc.) to ensure that assets are climate-resilient.

 Government and regulators.

 Asset owners.

 Infrastructure owners.

Low-regret

Delivering Adaptation Actions

Avoid negative impacts

 Identify whether contaminated land remediation

would be effective / quick enough in light of

climate change impacts.

 Operators of oil and coal production facilities and

Ministry of Environment

 Barriers: lack of awareness and information on which

No-regret

108

No.

Adaptation Type

Potential Adaptation Actions for Fossil Fuel Supply

and Transmission/ Transportation

Who could make it happen? Who would bear the

cost? Would the action be acceptable to all

stakeholders? What are the barriers or bottlenecks?

Is it a no-

regret, low-

regret or win-

win option?

 Support contingency planning for legacy

contaminated land e.g., effects of drought followed

by heavy downpour leading to contamination and

health risks.

 Support contingency planning for effects of extreme

precipitation on mine sites and associated pollution

risk.

to act; costs and coordination.

Exploit opportunities.

 Higher temperatures could have a slight beneficial

impact on the cost profile at oil production

facilities.

 Operators of oil production facilities could benefit.

Other

109

ANNEX 4: WEATHER / CLIMATE INFORMATION SUPPORT FOR ENERGY SECTOR MANAGEMENT

Table A4.1: Design and Operation of Energy Plants

This table has been extracted from Hancock and Ebinger (2009).

Design

Operations and Maintenance

Current Resources

Options to Improve

Current Resources

Options to Improve

Large

Hydropower

Plants (LHPP)

For LHPP design, hydrological

models and time series of flow

are needed, but they are out of

date.

Revise hydrological

models, recommence

measurements; digitize all

available data.

For continuous optimization of

reservoir levels, continuous

awareness of water in the system

and rain entering the system are

needed. There is only a small

network of river-level gauges in the

Drin watershed. Radar assessments

of ongoing precipitation would be

useful; precipitation forecasts would

be helpful. But there is no radar,

and numerical precipitation

forecasts are low resolution and not

verified.

Expand river-level gauge network

in Drin; initiate in Mati; and add

rain gauges in both watersheds to

indicate water entering the system

(radar better). Identify best-skilled

atmospheric models with respect

to historical Albanian precipitation

data. Downscale an ensemble of

such to facilitate analysis of

watersheds under climate change.

Small

Hydropower

Plants (SHPP)

For design of new SHPPs or to

select which concessions are

economically promising today,

watershed models are needed,

but those available date to 1990

or before, and rainfall statistics

to 1990.

Undertake revision of

hydrological models.

Digitize rainfall data and

make it publicly available.

Improve monitoring.

To plan power generation and

turbine management, operators have

only low-resolution precipitation

forecasts for the very near term.

Forecasts are not routinely verified.

Highly resolved precipitation

forecasts could be undertaken and

could provide probabilistic

information out to seven days.

Rain gauges would indicate water

entering the system (radar better).

Not only for LHPPs but also for

SHPPs would be useful to identify

best-skilled atmospheric models

with respect to historical Albanian

precipitation data (and downscale

an ensemble to facilitate analysis

of watersheds under climate

110

Design

Operations and Maintenance

Current Resources

Options to Improve

Current Resources

Options to Improve

change).

Power

Transmission

and

Distribution

(T&D)

To devise distribution network

protected against severe

weather, climate data (minimum

and maximum temperature and

wind conditions) are needed,

but what exists is old and much

is not digitized.

Digitize the climate data

and make it available

publicly; strengthen

monitoring.

To anticipate risks to network and

undertake rapid repairs, storm

forecasts and lightning detection are

needed. But severe storms are not

reliably forecast; no lightning

detection network in place; no

radar.

Initiate highly resolved

probabilistic weather forecasts

with verification to tune accuracy;

initiate lightning detection to

speed network repairs; undertake

weather and radar monitoring to

assess storms underway.

Thermal

Power Plants

(TPP)

To assess availability of cooling

water for river or lake cooled

TPPs, water temperatures,

ambient air temperatures, and

climate data are needed. Data up

to 1990 are available; beyond

that, data set is incomplete and

hydrological models are old.

Revise hydrological models

to show availability of

cooling water; expand

monitoring of rainfall to

support ongoing revisions.

To assess adequacy and temperature

of cooling water and ambient air

temperatures, assessment of stream

levels and rainfall entering the

system are needed, but lacking. No

radar. Forecasts needed, but these

are low resolution and risky to use

as they do not provide probabilistic

information and are not verified.

Monitor rainfall entering the

system to provide cooling water

(radar, rainfall, stream levels);

improve resolution of weather

forecasts and provide probabilistic

information.

Wind

To site and design wind

generation plants, knowledge of

wind speed distributions at

turbine height is needed. But

little data are available. Maps

have been undertaken at low

resolution, but their accuracy at

turbine height is not known;

data at turbine height have been

taken in a few places but not

long term.

Improve resolution of wind

maps; add monitoring of

wind at turbine height.

To anticipate wind extremes and

assure security of infrastructure,

wind forecasts are needed. But

forecasts are at very low resolution,

lack probabilistic information and

are not verified.

Improve resolution of forecasts;

add monitoring of wind at key

altitudes; calibrate the forecasts.

111

Design

Operations and Maintenance

Current Resources

Options to Improve

Current Resources

Options to Improve

Solar

To site large solar arrays, need

data on irradiance and

cloudiness. Satellite imagery

could be used. Future

cloudiness is not known but is

generally projected by climate

models to decrease in summer

associated with decrease in

precipitation; this is a skill gap

in climate modeling.

Climatology of cloudiness

assessed in more detail;

assessment of model

accuracy.

To anticipate solar power

generation, cloudiness forecasts are

needed, but these are available at

low resolution and not verified.

Increase resolution of forecasts;

include cloudiness in further

detail.

Energy

Demand

To forecast demand long-term,

KESH has data on demand

patterns in the past.

The widest possible range

of climate projections

covering natural effects as

well as anthropogenic

effects should be reviewed

to understand the range of

future demand possibilities

linked to temperatures,

cloudiness, etc.

To forecast demand day to day,

forecasts of key demand variables

(such as temperature, cloudiness)

are needed, but these are available

only at low resolution, without

probabilistic information, and not

verified.

Increase resolution of forecasts,

provide probabilistic information,

undertake verification and tuning.

112

ANNEX 5: FURTHER DETAILS ON APPROACH TO COST–BENEFIT

ANALYSIS

This annex contains supplementary information to the cost–benefit analysis (CBA), outlined

in Section 5. It includes the following sections:

 Methodology

 Framing workshop parameters summary

 Financial assumptions

 Benefits assessment and valuation

 Results summary

 Limitations

A5.1 METHODOLOGY

Assessment Process Overview

A structured process has been used to evaluate ways to address the shortage of energy

generation predicted to be caused by climate change. This process involved the following

steps:

1. Identify the issue or dilemma requiring assessment, followed by background data review

and discussions.

2. Conduct a formalized workshop process, carried out with stakeholders to frame the

assessment overall.

3. Collect data and pursue consultation.

4. Conduct economic CBA modeling.

5. Present results.

The key steps in this process are discussed in more detail next.

Theoretical Basis for the Assessment

An economic model for assessing the benefits of environmental and social protection has

been presented in Hardisty and Ozdemiroglu (2005). Based on this CBA method, it is

possible to explicitly monetize a number of relevant external costs and benefits, thereby

allowing these costs and benefits to be added into the conventional internal or private

(company or developer) costs and benefits of a proposed project or action. This model,

described below in more detail, is the basis upon which the analysis of options has been

carried out.

Benefits

Objective setting must consider the benefits of achieving a given objective. In economics, the

overall objective of any decision is assumed to be the maximisation of human welfare over

time. To compare the different benefit and cost streams over time, the process of discounting

is used and amounts over time are expressed as present values. Economic analysis

recommends the decision with the maximum net present value (NPV) (present value of net

113

benefits, or benefits minus costs, over time) or the highest benefit cost ratio (BCR) (ratio of

the present value of benefits to the present value of costs). Benefits of environmental

protection can effectively be expressed as the ―damages avoided‖ by undertaking that action.

Net Benefits

What is important in a decision-making process is the overall comparison of the costs of

action, with the benefits of action; hence the term cost–benefit analysis. To find net benefits,

we deduct the flow of costs from the flow of benefits.

Thus, the present value of the net benefits (NPV) (benefits minus costs) of the selected

project or action in any year, t, is given by:

















T

xpxp

CCBB

NPV

0)1(

)()(

Where NPV is the total social NPV of project p, Bp and Cp are the private or internal costs

and benefits of the project, Bx and Cx are the external benefits and costs of the project

respectively and r is the discount rate.

Valuation of Benefits

For the equation to be calculated, both the costs and benefits of each adaptation option must

be estimated in a common unit. Economic analysis uses money as this common unit, based

on what individuals are willing to pay, and what one would have to spend on the actions to

supplement the shortfall in energy generation due to climate change.

The value of the environment or natural resources includes: as an input to production or

consumption (direct use value); its role in the functioning of ecosystems (indirect use value);

or its potential future uses (option value). In the case of water, for instance (a key

consideration in this study), people may also value water and be willing to pay for its

protection unrelated to their own use of the resource (nonuse values) but because of its

benefits to others (altruistic value), for future generations (bequest value) and for its own

sake (existence value). The sum of these different types of economic benefits or values is

referred to as total economic value (TEV) in economic literature.

Private Benefits

If the analysis is undertaken from the perspective of the problem holder, only the costs and

benefits that accrue to the problem holder are considered. This approach, which is a financial

(as opposed to economic) analysis, uses market prices of costs and benefits, which include

subsidies or taxes. Private discount rates are used, which are determined by the cost of capital

or rates of return from alternative investments in the private sector. Private discount rates are

generally higher than social discount rates. Financial analysis does not deal with

environmental or other external social impacts. Table A5-1 presents a selection of typical

private benefit categories.

114

Table A5.1: Private Benefit Categories—Examples

 Value of production realized from project or investment, from energy or water on-sale, for

example

 Increased property value

 Elimination of corporate financial environmental liability

 Elimination of potential for litigation / prosecution (civil and criminal)

 Avoidance of negative public relations or even impact on company stock value

 Protection of a resource used as a key input to an economic process (e.g., water for irrigation

or manufacture)

 Avoidance of exposure of on-site personnel to pollutants

A full economic analysis looks at those costs and benefits that accrue to society as a whole,

and is therefore appropriate in helping to develop national policy. This includes costs and

benefits to the project owner or state proponent as well as those to the rest of the society. The

latter are also known as external costs and benefits (as they are external to the transactions in

the market and hence not included in market prices) so long as they are not compensated by

or paid to the problem holder. This different definition of costs and benefits requires them to

be measured differently than in a financial (private) analysis.

The prices for marketed goods and services that are affected should no longer be market

prices, but real or shadow prices. Shadow prices are estimated by subtracting (or adding) the

subsidy and tax elements from (to) market prices. Subsidies and taxes are referred to as

transfer payments—their payment does not cause a net change to the costs and benefits faced

by the society as a whole but simply a transfer from one party to another within society. For

example, litigation expenses are considered transfer payments. The proponent‘s costs for

litigation become the benefits of the law firm, and hence cancel each other out when a social

analysis is undertaken.

In practice, only some of the benefits identified during a CBA can be readily quantified and

monetized. This is likely to include several of the key private benefits (such as land value).

External benefits are less readily monetized, as there is often no market data that could be

directly used for their estimation. Valuation methods applicable to problems of sustainable

development include the following:

 Actual market techniques, where the good itself is priced on the open market as a saleable

commodity. For example, water sold as drinking water has a price per unit volume, and

land is bought and sold, and has a specific value, depending on location, zoning, and

market conditions.

 Surrogate market techniques, in which a market good or service is found that is

influenced by the externality that itself is not reflected in a market (or it is nonmarket).

For example, water might be used to irrigate crops that are sold at market prices. The crop

market in this example is a surrogate market and a proportion of the economic value of

the yield is representative of the value of water as an input. This approach is especially

useful when irrigation water is provided free or is subsidized resulting in lower prices

than the water would have fetched in free markets in the absence of subsidies. If that

water resource is polluted, another way to quantify the cost is to look at the expenditures

people make to avoid the contamination damage (e.g., purchase of water filters or bottled

water)—these markets act as a surrogate markets for the value of (clean) water.

115

 Hypothetical market techniques create hypothetical markets via structured questionnaires,

which elicit individuals‘ willingness to pay (WTP) to secure a beneficial outcome or to

avoid a loss, or their willingness to accept compensation (WTA) to forgo a beneficial

outcome or to tolerate a loss. Among these stated preference techniques are contingent

valuation and choice modeling.

WTP is a standard method used worldwide for estimating the economic value for goods and

services for which no direct market exists. Economic valuations, transferred from a specific

test group, location and subject and applied to other projects, are a common economic

practice, known as Benefits Transfer, and a standard practice within WTP surveys.

In the process of undertaking a beneficial action, it is sometimes possible that secondary

environmental impacts are produced by those actions, despite best attempts at mitigation. The

economic value of these impacts should be included in the overall economic assessment. The

costs of dealing with these effects (as a lower bound estimate), or the value of the damages

that they cause, which are not borne by the problem holder, are termed external costs of

action (Hardisty and Ozdemiroglu, 2005).

External costs of action (X) can be divided into two categories:

1. Planned or process-related external costs that cannot be mitigated against (Xp)

2. Unplanned or inadvertent external costs (Xup), such that:

X = Xp + (P  Xup)

where P is the probability that the unplanned external cost will occur.

External costs of action could include production of greenhouse gases from energy-intensive

solutions, production of other airborne pollutants such as NOx and SOx, and secondary

impacts on water quality, biodiversity, or community.

Modeling

The CBA modeling is based on published methodologies (Hardisty and Ozdemiroglu, 2005;

UK Environment Agency, 1999), and follows conceptual approaches espoused and approved

by a number of government organisations worldwide.

A5.2 FRAMING WORKSHOP PARAMETERS SUMMARY

Table A5.2 presents the parameters that were identified in Workshop 2, their importance to

stakeholders in Albania, and how they were or were not incorporated into the CBA.

The average ranking for each parameter is presented based on the opinions of workshop

attendees and discussions with other stakeholders during meetings including: an industrial

consumer, an academic, engineering students, and a World Bank economist. The rationale for

inclusion or exclusion from the CBA is also noted.

A number of parameters were identified as areas for further study: value of water, value of

ecosystems, disturbance of people and properties, impacts on tourism, GDP impacts, and

vulnerability to natural disasters. In these cases, parameters could not be fully integrated into

the study (typically because of a lack of data at the appropriate level of abstraction) but may

116

be important for future policy making. One example is tourism. In the absence of a good

basis for quantifying the benefits or dis-benefits that might arise in a ―typical‖ power

generation setting in Albania, the tourism parameter was not included in the current analysis.

However, tourism is very important to the local economy, and it would enhance the value of

the study if the impact on tourism of a particular policy choice were captured.

117

Table A5.2: Parameters for the CBA Discussed at Workshops and Meetings

Class

Parameters

Workshop

Attendee

Rating

Interpreted

Rating of 20

Engineering

Students

Industrial

Consumer's

Rating

Academic's

Rating

World Bank

Economist's

Rating

Average

Scores

Rank

Class

Parameter

Adopted in

Analysis

Comment/ Rationale for

Monetization

Environmental

Value of water

2.5

1.5

2.2

2nd

Yes

This parameter is recognized as

being very complex, as there are

many 'goods and services'

provided by water (e.g. ecosytem

support, irrigation, human

consumption, recreation). Detailed

analysis of this parameter is

beyond the scope of this study and

therefore 'proxy' values are

needed to capture this important

aspect. The unit 'price' of water

has been taken as the Albanian

cost to consumer and sensitivity.

Cabon dioxide

and other GHG

2.3

1st

Yes

EU trading price and industry

norms for operational emissions.

Particulate matter

3rd

Yes

There are no significant emissions

from any of the analyzed

technologies so PM has not been

explicitly included in the analysis.

Nox, Sox

1.8

5th

Yes

Operational Nox incorporated in

the analysis using industry norms

and international market values.

Value of

ecosystems

1.5

3rd

Yes

Footprint of power plant and

associated land take (e.g. estimate

of reservoir land area).

Assumptions made that

mountainous terrain is principal

forest ecosystem and lowland

terrain is coastal (as per examples

such as Vlore and Porto Romano).

118

Class

Parameters

Workshop

Attendee

Rating

Interpreted

Rating of 20

Engineering

Students

Industrial

Consumer's

Rating

Academic's

Rating

World Bank

Economist's

Rating

Average

Scores

Rank

Class

Parameter

Adopted in

Analysis

Comment/ Rationale for

Monetization

Non-use values

0.5

0.8

6th

This parameter is difficult to

monetize without in depth study

that is beyond the scope of this

study.

Social

Recreation

benefits

0.7

6th

Low priority and complex to

analyze. Assessment considered to

be beyond the scope of this study.

Impacts on

tourism

2nd

Although this was seem as a

priority by stakeholders, there is

insufficient information regarding

the likely impacts of energy

generation on tourism in Albania

to enable meaningful analysis in

this study. Further study could be

undertaken to quantify and

monetize this parameter.

Disturbance of

people and

property

2nd

Yes

It is clear that there are other

disturban ces such as community

relocation. The necessary data to

make a detailed assessment is

lacking at this stage so a proxy

has been used to approximate part

of this aspect.

Overall number

of employees per

MW generated/

job creation

1.5

1.3

5th

Low priority and partially

accounted for in OPEX and GDP

parameters.

119

Class

Parameters

Workshop

Attendee

Rating

Interpreted

Rating of 20

Engineering

Students

Industrial

Consumer's

Rating

Academic's

Rating

World Bank

Economist's

Rating

Average

Scores

Rank

Class

Parameter

Adopted in

Analysis

Comment/ Rationale for

Monetization

GDP/ econmic

development

2nd

Yes

It is is recognized tht energy

supply to consumers enables them

to generate wealth in excess of the

cost of electricity. An 'electricity

benefit' factor has been

incorporated in the analysis.

However this is a constant factor

for all approaches (as users would

get the same benefit where ever

the electricity was generated and

thus the marginal difference

between options is zero.

Politics

2.5

2.8

1st

It is considered that the political

process would utilize the output

from the study to inform and

support future decisions that are

made. Therefore it is not

appropriate to incorporate

political views in the cost benefit

analysis.

Financial

Cost per MW

produced -

CAPEX, OPEX

2.5

3rd

Yes

Industry norms and Albanian data.

Efficiency (for

every dollar in

how much do

you get out?)

6th

Efficiency is reflected in the

CAPEX and OPEX to meet the

required energy production

(GWh).

Land Value

1st

Yes

Land usage is reflected in the

representaton of loss of

ecosystem/ 'goods and services'

that the land would otherwise

provide.

120

Class

Parameters

Workshop

Attendee

Rating

Interpreted

Rating of 20

Engineering

Students

Industrial

Consumer's

Rating

Academic's

Rating

World Bank

Economist's

Rating

Average

Scores

Rank

Class

Parameter

Adopted in

Analysis

Comment/ Rationale for

Monetization

Reduction of

liabilities (e.g.

not paying

penalties for

turning off

electricity)

4th

This parameter is captured in the

assumption that all options being

assessed would meet demand, and

that the 'electricity benefit' factor

captures this element to some

extent.

Investor/ funding

agency

confidence

1.5

4th

Considered by stakeholders as a

low priority.

Improved

reputation

6th

Considered by stakeholders as a

low priority.

Loss in

production

2.7

2nd

Yes

This is reflected in the 'electricity

benefit' parameter.

Vulnerability to

natural disasters/

climatic

vulnerabilities

(e.g. landslide,

seismic)

Not

scored

Yes

This parameter has been captured

by a sensitivity scenario within

the analysis. This factor aims to

represent the fact that large

hydroelectric power generation is

often in remote areas with long

transmission lines to supply

consumers in southern Albania.

121

A5.3 FINANCIAL ASSUMPTIONS

A summary of the overall capital expenditure (CAPEX) and operating expenditure (OPEX)

(in real terms) for each option is shown in Table A5-3. OPEX is divided into non-energy

operating expenditure and energy operating expenditure. This separation enables looking at

an increase in energy (such as fuel) expenditure on a standalone basis in sensitivity analysis.

Table A5.3: CAPEX and OPEX Summary (U.S. Dollars, 2010)

Option

Description

Asset Size

(MW)

CAPEX

(USD $m)

OPEX

(USD $m)-

Non-energy

OPEX

(USD $m)-

Energy

Import

LHPP Update

CCGT

SHPP Update

106

New SHPP

132

Wind

130

286

CSP

311

New LHPP

468

CAPEX and non-energy OPEX values adopted are based on proprietary WorleyParsons data

for industry norm (benchmark) values, data from purchased research databases to which

WorleyParsons subscribes, and publicly available sources of information. Many local

conditions may influence CAPEX, including: local policy and strategies, characteristics of

local resources, and import chains. Non-energy operational costs depend on many local

specifics as well, including: plant size, plant organizational structure, local legislation, and

labor and material costs. Energy costs depend significantly on plant efficiency. Values used

in the analysis were reviewed and adjusted in light of discussions with stakeholders in

Albania and are considered to be sufficient for the purposes of this study. Values should be

considered indicative only.

A5.4 BENEFITS ASSESSMENT AND VALUATION

Overview

In a complete economic analysis, the benefits of a given course of action are compared to the

cost. Actions that result in a net overall positive benefit to society as a whole are deemed

economic. In this section, the benefits applicable to this analysis are identified and valued.

The approach for this analysis is to attempt to capture the maximum likely benefits that

would accrue to institutions (private benefits) and to society (external benefits), should

various generation alternatives be enacted. To do this, a conservative approach (from the

economic point of view) has been adopted; with each external (societal) monetizable benefit

valued using a method that will tend to overstate (rather than understate) the benefits. In

addition, a qualitative examination of some likely nonmonetizable benefits is also included.

122

Thus, in the CBA, likely costs are compared with conservatively high benefits, or disbenefits,

as the case may be. In adopting this approach, the report is biasing the economic analysis

towards the societal position. This is advantageous because it assures that the external

perspective is fully considered and valued, and helps to deflect any possible criticism that the

analysis favors the project proponent.

Scope and Basis of the Analysis

This analysis considers only the costs and benefits associated with the various options

designed to provide enough electricity to supplement the expected supply shortfall caused by

climate change. If an external asset is damaged by implementation of a particular option, this

damage appears as a disbenefit (negative benefit). If the value of the asset is maintained as it

is (undamaged), then there is no effect, and no benefit or disbenefit is created. So, for

example, if a water resource is left intact, in place, the current ecological support and option

values of the water remain, and there is no benefit or disbenefit included in the analysis. If

forest, as another example, is cleared, a negative benefit (disbenefit) is included.

A5.5 BENEFIT/DISBENEFIT VALUATION

The following benefit categories have been considered in the analysis. These benefits are

directly related to the Albanian energy sector and were included in the analysis based on the

workshop proceedings.

Carbon Dioxide and Other Greenhouse Gases (GHGs)

Owing to concerns about the effects of greenhouse gas emissions on the Earth‘s climate, caps

have been set on the total amount of GHG emissions in given areas, such as the EU. Permits,

which are permissions to emit a portion of the total allowable GHG emissions, are traded like

other commodities in open markets. The market price represents the value of the emissions

based on supply (the cap is initially set based on current scientific knowledge) and demand

(the desired amount of emission reductions); a balance between the interests of the people as

a whole and the individuals or groups who wish to emit GHG. A spot value from the

European market was used in the analysis, a value for GHG at USD $21.55 per tonne of CO2–

e (European Market Price, 11 May 2009). Other studies, such as the Stern Review (Stern,

2005), use detailed models to project the cumulative economic impact of additional unit of

GHG, called the social cost of carbon (SCC), estimated at approximately USD$75/t CO2-e.

This has been chosen as the ‗high case‘ cost for this analysis. Firms may also strategically set

an internal offset price based on their view of current markets and regulatory frameworks.

The analysis calculated the GHG emissions associated with each option, and includes these

costs over the range identified above.

Value of Water

The total economic value (TEV) of water can be broken down into three components: the

direct use-value (used or potentially useable by humans); the ecological support value, and

the option value (value to society from having the resource available at some time in the

future to be used). Each option realizes different components, dependent on the final state of

the water. In addition, the extent to which they are realized is dependent on the relative

quality of the water resulting from the treatment level for each option. Within the sensitivity

analysis, therefore, the TEV of water is varied around a base estimate of the value of water

sold to enterprise users of USD$0.93 / m3 (90 Lek / m3) (Tirana Municipality, 2006).

123

Given the scarcity of readily accessible water that could develop under climate change, the

high unit value of water can be taken to be the cost of replacing a similar amount of fresh

water. The replacement value of fresh water is considered to be equivalent to the current cost

of desalination by conventional means, with a premium added for the external costs

associated with GHG emissions resulting from the desalination process. Wade (2004) has

reported that the cost of desalination varies between about US$0.70/m3 and US$5.30/m3,

depending on the scale of the facility (larger capacity facilities produce water at lower unit

costs). Karagiannis (2008) indicated costs from US$1.60 for 2.70/m3, with oil at US$23/bbl.

Costs in the order of US$1.10/m3 are typically used by government bodies and commercial

operations. However, given the current high costs of fuel, for the capacity that would be

required to replace the volumes of water discussed in this analysis, a value of US$3.00/m3

has been chosen.

Loss of Ecological Resources

Any options that involve significant land clearing to make way for power plants will cause

direct ecological damage. For this analysis, it is assumed that these habitats would not

otherwise have been destroyed or damaged. Valuation estimates for the surface ecology in

the project area are provided by several sources, which provide estimates of the willingness-

to-pay (see hypothetical market techniques in Section 5.1 of this Annex) for preservation of

similar native vegetation (UNEP, 2001) of US$30 ha/yr for mountain ecosystems and

US$117 per ha/yr (Ladenberg et al., 2007) for coastal ecosystems. For each option that

involves land clearing, estimated impacted areas have been calculated.

Disturbance of People and Property

Construction of power plants can affect people and property in a negative way. For instance,

given two houses that are exactly the same except that one is closer to a power plant, the one

in the vicinity of a power plant will generally be cheaper. This reflects the value that people

place on the possible health troubles (real or imagined), and the general preference for a

natural view rather than neighboring a large industrial facility. The base value of this

disbenefit was US $1.82 /hh/ha/pa (Ladenburg, 2001). This value was prorated for the other

asset types based on the population density of the area and the footprint of the asset at hand.

Electricity Financial Benefit

The revenue received through the sale of produced electricity represents both the value of the

production of the electricity and its contribution to macroeconomic activity. The electricity

revenue is based on the stated average energy price, to all consumers, of 8.23 Lek per kWh

(US$0.085 per kWh) (Tugu, 2009). To account for the fact that the climate change

projections indicate that there will be less water available for hydropower electricity

production, the electricity revenue from hydropower assets has been adjusted downwards as

time progresses. The hydropower was adjusted downward on the basis of a total of a 15

percent decrease in generation capacity over the next 40 years, which is consistent with the

projections based on climate modeling (Annex 8). It is applied on a cumulative yearly basis,

with approximately 0.4 percent less capacity each year than the year before.

Benefits Summary

Based on information provided in Section 5, the range of expected values for each of the

major benefit categories is provided below in Table A5.4. Each of the values in the table is

124

based on a reference, as discussed in Section 5. As can be seen, the unit values for benefits

vary over a considerable range. Base-case estimates have been deliberately chosen to reflect a

reasonable value for the parameters and the ‗high case‘ estimates aim to bracket the likely

uppermost value, and also to provide an indication of the likely future value trend. It is highly

probable that all environmental assets will steadily increase in value over time, given the

increasing scarcity of these resources worldwide and the increasing demand for natural

resources as the world population continues to grow. Despite this, the analysis presented does

not assume any future increase in values, but holds the current values constant over time.

Table A5.4: Monetized Unit Benefit Values (U.S. Dollars)

Benefit Category

Units

Base

High

Value of water

0.93

3.00

Carbon dioxide and other

GHGs

Tonne

21.55

75.00

NOx

Tonne

62.00

Value of ecosystems:

mountain

/ha/yr

200

Value of ecosystems:

coastal

/ha/yr

117

200

Disturbance to people and

property

/hh/km2/yr

1.82

5.00

A5.6 RESULTS SUMMARY

Benefits Realized by Each Option

Table A5-5 presents the net present value (NPV) in USD of the benefits (or disbenefits)

accrued by each option.

Table A5.5: Benefits Realized by Each Option (U.S. Dollars, 2010)

Environmental

Social

GHG

Ecosystem

(coastal)

Ecosystem

(mountain)

Value of

water

NOx

Disturbance

to people

Import

-39,336,650

-4,809,838

-94,308

LHPP

Update

-89,551,619

CCGT

-39,336,650

-3,371

-4,809,838

-94,308

-57,302

ESHPP

Update

New SHPP

-89,453

Wind

-9,993,205

CSP

-593,244

-3,644,669

-3,325,316

New LHPP

-491,777

-89,551,619

-467,808

125

Present Value Benefits Calculation

The present value sum of benefits is calculated using the following formula, in the case of a

uniform annual flow:

 

  C

AP N





1

where:

P = Present Value

i = discount

N = number of years

A = uniform series amounts (e.g., if the benefit is worth USD$100 / year)

C = one off benefit

The discount rate is an issue of controversy, with differing opinions on the value that should

be used. In this study a base discount rate of 4.5 percent has been used as a base value.

Variation in this discount rate is explored through sensitivity analysis. This base value for

discount rate has been adopted following discussion with the World Bank‘s economist in

Albania. The value is higher than the social discount rate used in other developed European

economies (e.g., the United Kingdom uses 3.5 percent) and reflects the higher potential

growth rates that a developing economy, such as Albania‘s, may experience. This discount

rate is perturbed in the sensitivity analysis.

A5.7 LIMITATIONS

There are limitations to this analysis, largely the result of assumptions that are required to be

made, and also due to the often-subjective nature of selections and appraisals that must be

made by the user. The methodology presented in Hardisty and Ozdemiroglu (2005) depends

necessarily on the expert input of the user. In reality, these are the same limitations inherent

in most, if not all, such methodologies for economic analysis: they depend heavily on the

assumptions made, the expertise and experience of the user and stakeholders. As such, this

methodology is seen as a tool for deliberation over options with stakeholders, each of whom

will tend to value various resources and potential risks slightly differently.

126

These tables contain the data for the charts presented in the results section in Section 5.

Table A5.6: Base-case Parameters Results (U.S. Dollars, 2010)

Financial

Environmental

Social

CAPEX

OPEX

Electricity

Benefit

GHG

Ecosystem

(coastal)

Ecosystem

(mountain)

Value of

Water

NOx

Disturbance

to People

NPV

Import

-519,255,000

431,228,000

-39,337,000

-4,810,000

-94,000

-132

Update

existing LHPP

-13,650,000

-13,833,000

420,148,000

-89,552,000

303

CCGT

-72,000,000

-140,062,000

431,228,000

-39,337,000

-3,000

-4,810,000

-94,000

-57,000

175

Update

existing SHPP

-105,600,000

-51,875,000

417,824,000

260

New SHPP

-132,000,000

-51,719,000

417,824,000

-89,000

234

Wind

-286,000,000

-96,833,000

431,228,000

-9,993,000

CSP

-311,380,000

-31,816,000

431,228,000

-593,000

-3,645,000

-3,325,000

New LHPP

-467,000,000

-13,833,000

420,148,000

-492,000

-89,552,000

-468,000

-152

Table A5.7: High-case Parameters Results (U.S. Dollars, 2010)

Financial

Environmental

Social

CAPEX

OPEX

Electricity

Benefit

GHG

Ecosystem

(coastal)

Ecosystem

(mountain)

Value of

Water

NOx

Disturbance

to People

NPV

Import

-519,255,000

431,228,000

-136,902,000

-15,516,000

-122,000

-241

Update

existing LHPP

-13,650,000

-13,833,000

420,148,000

-288,876,000

104

CCGT

-72,000,000

-140,062,000

431,228,000

-136,902,000

-6,000

-15,516,000

-122,000

-157,000

Update

existing SHPP

-105,600,000

-51,875,000

417,824,000

260

New SHPP

-132,000,000

-51,719,000

417,824,000

-596,000

234

Wind

-286,000,000

-96,833,000

431,228,000

-27,454,000

CSP

-311,380,000

-31,816,000

431,228,000

-1,014,000

-11,757,000

-9,135,000

New LHPP

-467,000,000

-13,833,000

420,148,000

-3,279,000

-288,876,000

-1,285,000

-355

127

ANNEX 6: FURTHER DETAILS ON OPTIONS TO IMPROVE THE CLIMATE

RESILIENCE OF ALBANIA’S ENERGY SECTOR

Next steps

Actions marked with an asterisk (*) are no-regrets actions that could improve Albania‘s energy

security even without climate change. Those marked with a cross (†) are included in the draft NES

active scenario.

Informational

* Compile digital databases on historic and observed climatological and hydrological conditions.

Provide free access on the Web to these data.

* Improve coordination of Albania‘s forecasting agencies (the Military Weather Services, Institute of

Energy, Water and Environment and the National Air Traffic Agency), by sharing data, expertise, and

financial strength to support better quality forecasting. These organizations could collectively engage

with energy-sector stakeholders to understand their data needs to support management of the energy /

climate interface.

* Upgrade Albania‘s weather and hydrological monitoring network, focusing most urgently on the

Drin basin:

 Monitoring sites could be equipped with automatic devices able to record and transmit in real-

time the key weather variables (rainfall, runoff, temperature, sunshine hours, wind speed,

reservoir head, evaporation, turbidity, water equivalent of snow).

 Measure sedimentation in reservoirs, which has not been measured for 40 years.

 The data above could be collected by KESH and used in managing reservoirs for safety and

energy production.

 Wind data are also required, measured at the height of wind turbines (80 to 100 m) to ensure

wind farms are designed appropriately and will operate efficiently. Once these data are

available, explore whether high wind speeds coincide with periods of lower rainfall, in which

case wind power could provide a useful resource when generation from hydropower facilities

is lower.

* Develop in-country or obtain weather and climate forecasts appropriate for energy-sector planning

needs:

Short-range forecasts (1 to 3 days ahead) could be provided by IEWE—including weather

products for energy demand forecasting (temperature, cloudiness), reservoir management

(rainfall), safety and disaster management (heavy rainfall, high winds, lightning strikes)

 * Medium-range forecasts (3 to 10 days ahead) could be obtained by subscribing, for example,

to the European Centre for Medium-range Weather Forecasting regional forecasts—

particularly for use by KESH—to facilitate effective management of water reserves for

hydropower generation

 * Seasonal forecasts (several months ahead) could be developed by IEWE from statistical

models of teleconnections, using observed and historical data for application to energy-sector

planning

 Climate change scenarios (years and decades ahead):

o These should be at a spatial resolution suitable for river basin planning (e.g., 50 km 

50 km)

o They should be developed by downscaling ensembles of outputs from global climate

models (GCMs), which are provided by Met Agencies around the world, coordinated

through the World Meteorological Organization.

o The GCMs to be included in the ensemble should be those that are best able to

128

Next steps

Actions marked with an asterisk (*) are no-regrets actions that could improve Albania‘s energy

security even without climate change. Those marked with a cross (†) are included in the draft NES

active scenario.

simulate the observed (historic) precipitation.

* Consider providing free access to these data to energy-sector stakeholders. Short-range and medium-

range forecasts should be available in real time via the Web.

Undertake further research on climate change impacts using downscaled climate change scenarios,

researching the impacts of changes in seasonal conditions and extreme climatic events.

* Update watershed models and maps of Albania‘s climate to support planning for optimization of

future hydropower assets.

* Join networks of experts working on climate and climate change issues; for instance, WMO,

EUMetNet, and EUCOS.

* Create partnerships between weather, climate and hydrological experts, and energy-sector

stakeholders to enhance dissemination of dissemination of information and to ensure that data

providers understand user needs.

* Strengthen regional cooperation on sharing of weather/ climate information and forecasting and

undertake research to develop shared understanding of regionwide climate change risks and their

implications for energy security, energy prices and trade, including:

 Data exchange on historical and recent observed data

 Joint studies and monitoring activities with institutions in neighboring countries, especially in

the two upper watersheds of the Drin and in the Vjosa watershed

 Regional studies to establish whether all South East Europe‘s watersheds are positively

correlated (i.e., whether they experience wet or dry years or seasons at the same time, and

whether wet and dry years correspond with cold and hot years):

o If so, the existing and proposed hydropower assets in the region may be exacerbating

the region‘s vulnerability to climate risks.

o If not, it may be possible to undertake an investment strategy to diversify risk across

the region.

* Work with regional partners to develop better knowledge of the linkages between energy prices and

hydrological conditions in the face of climate change:

 Marginal costs of energy production are higher in dry years than wet years.

 Some data linking these factors are available for 2010 and 2015.

 Research should be undertaken to develop data out to 2020 and 2030, taking account of

climate change projections.

* Improve understanding of current rates of coastal erosion and of the impacts of rising sea levels and

storm surges on future erosion rates, for better management of coastal assets (e.g., TPP and port

facilities).

* Learn from experience of energy-sector experts worldwide on managing current and future climate-

related risks (e.g., hydropower experts in Brazil and EDF in France, both of whom have been

researching these issues for some time).

* Monitor changing ground conditions and concentrations of pollutants at Patos Marinza.

Identify whether contaminated land remediation at Patos Marinza would be effective / quick enough in

the light of climate change impacts and if not, develop additional management plans while

rehabilitation is underway.

129

Next steps

Actions marked with an asterisk (*) are no-regrets actions that could improve Albania‘s energy

security even without climate change. Those marked with a cross (†) are included in the draft NES

active scenario.

* Monitor potential for pollution incidents at coal mines due to heavy downpours.

Institutional: Managing current climatic variability and changes in average climatic conditions

* Improve and exploit data on reservoir use, margins, and changes in rainfall and runoff to improve

management of existing reservoirs.

*† Consider providing incentives for energy-efficiency measures to reduce demand.

* Support enforcement of measures to reduce technical and commercial losses of water.

* Work with water users in the agricultural sector to devise agreed strategies for managing shared

water resources with owners of hydropower plants. This could draw on the outcomes of World Bank

research investigating climate change impacts on agriculture in Albania. The outcomes of the research

presented in this report and the agricultural assessments could be integrated to consider the cross-

sectoral issues around water management.

*† Support enforcement of measures to reduce commercial losses from the power distribution system.

Incorporate robustness to climatic variability and climate change in regulations, design codes, energy-

sector proposals, site selection decisions, environmental impact assessments, contracts, public-private

partnerships for new energy assets and other policy instruments for new facilities.

Ensure that proposed locations for new LHPP will be sustainable in the face of climate change risks.

Assess use of tariffs and incentives to promote climate resilience of energy assets.

Consider amendment to regulations to capture climate change costs in energy prices and the price of

water.

* Strengthen measures to control illegal logging that contributes to soil erosion and siltation of

reservoirs.

Set up a committee to provide oversight and monitoring of progress on climate change adaptation.

Institutional: Managing climatic extremes

Review and upgrade Emergency Contingency Plans (ECPs) for LHPPs, to take account of expected

increases in precipitation intensity due to climate change, ensuring that they include: monitoring of

precipitation; modeling of river flows; communication instruments and protocols for downstream

communities; and plans for evacuation.

* Consider use of Power Purchase Agreements with neighboring countries and large energy users to

assist Albania in coping with the impacts of extreme droughts on energy security. This would need to

be supported by real-time data on regional runoff and precipitation (as outlined above), and could

include:

 Off-take arrangements with countries generating energy through less climatically vulnerable assets

such as thermal power plants

 Power swap agreements, whereby Albania could buy thermal energy from neighbors at low cost

during off-peak hours at night while allowing its reservoirs to fill, then recoup the energy during

the next day‘s peak load hours via a higher fall

 Instituting formal arrangements with large energy users such that they agree to their electricity

supply being cut off in an extreme situation, in return for which they pay less for electricity

* Investigate applicability of weather coverage and insurance instruments for energy-sector risk

management.

130

Next steps

Actions marked with an asterisk (*) are no-regrets actions that could improve Albania‘s energy

security even without climate change. Those marked with a cross (†) are included in the draft NES

active scenario.

* Support development of contingency plans in collaboration with stakeholders for better management

of extreme climatic events and ensure that resources could be mobilized effectively to respond to

them.

* Ensure that regulations on dam security are enforced.

Physical / technical

Optimize existing energy assets:

 * Improve maintenance of existing assets, many of which were designed and constructed several

decades ago.

 Check that the sizing of existing assets is robust to climate variability and projected changes in

average climatic conditions and explore whether water storage could be increased at reasonable

cost to help manage seasonal variations.

 Review old and/or inefficient equipment and identify cost-effective measures to improve

efficiencies, such as:

o Clearing / redesigning trash racks

o Upgrading turbines and generators

o Replacing equipment to reduce water losses (e.g., shut-off valves)

o Improving aprons below dams to reduce erosion

o Raising dam crest on Fierze

o Increasing capacity of spillways on Fierze and Komani dams

o Developing pump storage scheme on Drin river cascade

o Digging wider channels for SHPPs

* Reduce losses:

 Reduce electricity transmission losses.

 Reduce losses of water—hold dialogues with stakeholders sharing watersheds to discuss losses

and establish how best to work together to reduce them.

 † Improve demand-side energy efficiency through incentives (e.g., for insulation and energy

efficient appliances) and enforcement.

Ensure new assets are resilient:

 For new assets at the design stage, review the robustness of design and site locations to climatic

variability and projected climate change—including design of energy generation assets as well as

associated infrastructure, such as port facilities.

*† Diversify energy generation asset types into non-hydropower renewables and thermal power plants,

ensuring that site selection and design are resilient to climate change.

† Increase hydropower installed capacity, ensuring that new facilities are designed to cope with

changing climate risks.

*† Provide better interconnections to facilitate regional energy trade.

*† Reduce energy demand and improve energy efficiency through greater use of domestic solar water

heating, improved building standards, use of lower energy appliances, and use of alternative heating

131

Next steps

Actions marked with an asterisk (*) are no-regrets actions that could improve Albania‘s energy

security even without climate change. Those marked with a cross (†) are included in the draft NES

active scenario.

sources other than electricity.

Optimize transmission and distribution by reducing technical losses (e.g., insulation of cables, under

grounding of critical cables, consider DC rather than AC for long lines).

*† Install alternative fuel sources (other than electricity) for heating buildings, such as solar water

heaters, geothermal.

132

ANNEX 7: ALBANIA POWER SUPPLY DEMAND SCENARIO PROJECTIONS 2003 TO 2050

Table A7.1: Passive Scenario Projections 2003 to 2050

Installed Capacity in MW

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Existing HPPs

1,445

SHPP

108

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural

gas

220

320

Devolli Cascade

100

Vjosa Cascade

Skavica

Wind PPs

Solar PPs

Import - NTC

380

600

900

143

294

423

556

667

797

812

Generation/Supply in

MWh*000'

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Existing HPPs

4,888

5,325

5,274

5,410

2,900

4,000

4,149

SHPP

102

143

185

226

268

309

351

392

434

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

390

CCGT with distillate/natural

gas

226

679

1,540

2,240

Devolli Cascade

400

Vjosa Cascade

Skavica

Wind PPs

Solar PPs

Import - NTC

4,908

5,426

5,381

5,542

3,035

4,102

4,518

5,013

5,800

6,374

7,276

8,018

8,513

8,569

Import

1,295

747

1,018

1,058

3,865

3,302

3,186

3,124

2,746

2,584

2,143

1,907

1,779

2,084

6,203

6,173

6,399

6,600

6,900

7,404

7,704

8,137

8,546

8,958

9,420

9,925

10,293

10,653

Load shedding

908

1,121

1,077

1,058

940

619

501

397

329

271

152

Demand in MWh '000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Demand Baseline Scenario

7,111

7,293

7,476

7,658

7,840

8,023

8,205

8,533

8,875

9,230

9,571

9,925

10,293

10,653

Demand Active Scenario

7,111

7,293

7,476

7,658

7,840

8,023

8,205

8,388

8,570

8,752

8,935

9,117

9,342

9,567

Baseline Demand

7,111

7,293

7,476

7,658

7,840

8,023

8,205

8,533

8,875

9,230

9,571

9,925

10,293

10,653

133

Installed Capacity in MW

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Existing HPPs

1,445

SHPP

119

129

140

150

165

180

195

210

225

240

255

270

285

300

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

420

520

620

750

Devolli Cascade

100

200

300

Vjosa Cascade

100

200

Skavica

150

350

Wind PPs

100

110

120

Solar PPs

Import - NTC

900

1,200

1028

1043

1059

1174

1554

1569

1684

1699

1914

1949

1974

1999

2154

2279

Generation/Supply in

MWh*000'

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Existing HPPs

4,149

SHPP

475

517

558

600

660

720

780

840

900

960

1,020

1,080

1,140

1,200

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

390

CCGT with distillate/natural gas

2,940

3,640

4,340

4,030

4,340

5,250

Devolli Cascade

400

800

1,200

Vjosa Cascade

410

820

Skavica

600

1,400

Wind PPs

108

122

162

216

243

270

297

324

Solar PPs

Import - NTC

9,733

9,789

9,843

10,299

12,109

12,169

12,929

12,989

13,539

13,963

14,050

14,137

15,134

15,621

Import

1,292

1,568

1,854

1,726

252

501

322

105

369

686

104

11,026

11,356

11,697

12,025

12,361

12,670

12,987

13,312

13,645

14,027

14,419

14,823

15,238

15,665

Load shedding

Demand in MWh '000

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Demand Baseline Scenario

11,026

11,356

11,697

12,025

12,361

12,670

12,987

13,312

13,645

14,027

14,419

14,823

15,238

15,665

Demand Active Scenario

9,792

10,017

10,242

10,467

10,697

10,932

11,172

11,418

11,668

11,925

12,187

12,454

12,728

13,008

Baseline Demand

11,026

11,356

11,697

12,025

12,361

12,670

12,987

13,312

13,645

14,027

14,419

14,823

15,238

15,665

134

Installed Capacity in MW

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

Existing HPPs

1,445

SHPP

315

330

345

360

375

390

405

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

900

1,100

1,200

1,300

1,500

Devolli Cascade

300

Vjosa Cascade

200

300

Skavica

350

Wind PPs

130

140

150

160

170

180

190

200

210

220

Solar PPs

Import - NTC

1,200

2394

2419

2544

2569

2794

2819

2844

2854

2964

2984

3084

3284

3304

Generation/Supply in

MWh*000'

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

Existing HPPs

4,149

SHPP

1,260

1,320

1,380

1,440

1,500

1,560

1,620

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

5,850

6,300

6,030

6,300

6,875

7,029

7,579

7,700

8,400

9,100

10,500

Devolli Cascade

1,200

Vjosa Cascade

820

1,230

Skavica

1,400

Wind PPs

351

378

405

432

459

486

513

540

567

594

Solar PPs

Import - NTC

15,918

16,455

16,682

17,039

17,701

17,942

18,579

18,727

19,454

19,511

20,211

21,611

21,671

Import

138

187

252

206

303

443

202

672

1,152

243

686

16,056

16,458

16,869

17,291

17,723

18,149

18,584

19,030

19,487

19,955

20,414

20,883

21,364

21,855

22,358

Load shedding

Demand in MWh '000

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

Demand Baseline Scenario

16,056

16,458

16,869

17,291

17,723

18,149

18,584

19,030

19,487

19,955

20,414

20,883

21,364

21,855

22,358

Demand Active Scenario

13,268

13,533

13,804

14,080

14,361

14,649

14,942

15,240

15,545

15,856

16,142

16,432

16,728

17,029

17,336

Baseline Demand

16,056

16,458

16,869

17,291

17,723

18,149

18,584

19,030

19,487

19,955

20,414

20,883

21,364

21,855

22,358

135

Installed Capacity in MW

2046

2047

2048

2049

2050

Existing HPPs

1,445

SHPP

405

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

1,700

1,800

1,900

Devolli Cascade

300

Vjosa Cascade

300

Skavica

350

Wind PPs

220

Solar PPs

Import - NTC

1,200

3504

3604

3704

Generation/Supply in MWh*000'

2046

2047

2048

2049

2050

Existing HPPs

4,149

SHPP

1,620

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

11,390

11,900

12,600

13,300

Devolli Cascade

1,200

Vjosa Cascade

1,230

Skavica

1,400

Wind PPs

594

Solar PPs

Import - NTC

22,561

23,071

23,771

24,471

Import

266

235

524

334

22,827

23,306

23,796

24,296

24,806

Load shedding

Demand in MWh '000

2046

2047

2048

2049

2050

Electricity Demand Baseline Scenario

22,827

23,306

23,796

24,296

24,806

Electricity Demand Active Scenario

17,648

17,965

18,289

18,618

18,953

Baseline Demand

22,827

23,306

23,796

24,296

24,806

136

Table A7.2: Active Scenario Projections 2003 to 2050

Installed Capacity in MW

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Existing HPPs

1,445

SHPP

108

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural

gas

220

Devolli Cascade

100

Vjosa Cascade

Skavica

Wind PPs

Solar PPs

Import - NTC

380

600

900

TOTAL

143

294

423

556

567

697

712

Generation/ Supply in MWh

‘000

Installed Capacity in MW

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Existing HPPs

4,888

5,325

5,274

5,410

2,900

4,000

4,149

SHPP

102

143

185

226

268

309

351

392

434

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

390

CCGT with distillate/natural

gas

226

679

1,540

Devolli Cascade

400

Vjosa Cascade

Skavica

Wind PPs

Solar PPs

Supply from IC

4,908

5,426

5,381

5,542

3,035

4,102

4,518

5,013

5,800

6,374

7,276

7,318

7,813

7,869

Import

1,295

747

1,018

1,058

3,865

3,302

3,186

2,978

2,441

2,107

1,507

1,799

1,529

1,698

Total Supply

6,203

6,173

6,399

6,600

6,900

7,404

7,704

7,991

8,241

8,481

8,783

9,117

9,342

9,567

Load Shedding

908

1,121

1,077

1,058

940

619

501

397

329

271

152

Demand in MWh ‘000

Total Demand

7,111

7,293

7,476

7,658

7,840

8,023

8,205

8,388

8,570

8,752

8,935

9,117

9,342

9,567

137

Installed Capacity in MW

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Existing HPPs

1,445

SHPP

119

129

140

150

165

180

195

210

225

240

255

270

285

300

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural

gas

220

320

Devolli Cascade

100

200

300

Vjosa Cascade

100

200

Skavica

150

350

Wind PPs

100

110

120

Solar PPs

Import - NTC

900

1,200

TOTAL

828

843

859

974

1254

1269

1384

1399

1614

1649

1674

1699

1724

1849

Generation/ Supply in MWh ‘000

Installed Capacity in MW

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Existing HPPs

4,149

SHPP

475

517

558

600

660

720

780

840

900

960

1,020

1,080

1,140

1,200

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

390

CCGT with distillate/natural

gas

1,540

2,240

Devolli Cascade

400

800

1,200

Vjosa Cascade

410

820

Skavica

600

1,400

Wind PPs

108

122

162

216

243

270

297

324

Solar PPs

Supply from IC

8,333

8,389

8,443

8,899

10,009

10,069

10,829

10,889

11,749

11,863

11,950

12,037

12,124

12,611

Import

1,459

1,628

1,799

1,568

688

863

343

528

-81

236

417

604

396

Total Supply

9,792

10,017

10,242

10,467

10,697

10,932

11,172

11,418

11,668

11,925

12,187

12,454

12,728

13,008

Load Shedding

Demand in MWh ‘000

Total Demand

9,792

10,017

10,242

10,467

10,697

10,932

11,172

11,418

11,668

11,925

12,187

12,454

12,728

13,008

138

Installed Capacity in MW

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

Existing HPPs

1,445

SHPP

315

330

345

360

375

390

405

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural

gas

435

550

700

800

Devolli Cascade

300

Vjosa Cascade

200

300

Skavica

350

Wind PPs

130

140

150

160

170

180

190

200

210

220

Solar PPs

Import - NTC

1,200

TOTAL

1929

1954

2079

2104

2244

2269

2294

2304

2464

2484

2584

2604

Generation/ Supply in MWh ‘000

Installed Capacity in MW

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

Existing HPPs

4,149

SHPP

1,260

1,320

1,380

1,440

1,500

1,560

1,620

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

CCGT with distillate/natural

gas

3,045

3,300

3,850

4,200

4,550

4,900

5,600

Devolli Cascade

1,200

Vjosa Cascade

820

1,230

Skavica

1,400

Wind PPs

351

378

405

432

459

486

513

540

567

594

Solar PPs

Supply from IC

13,113

13,200

13,697

13,784

14,126

14,763

14,850

14,877

15,254

15,661

16,011

16,711

16,771

Import

154

333

106

295

235

-115

363

291

195

130

421

318

564

Total Supply

13,268

13,533

13,804

14,080

14,361

14,649

14,942

15,240

15,545

15,856

16,142

16,432

16,728

17,029

17,336

Load Shedding

Demand in MWh ‘000

Total Demand

13,268

13,533

13,804

14,080

14,361

14,649

14,942

15,240

15,545

15,856

16,142

16,432

16,728

17,029

17,336

139

Installed Capacity in MW

2046

2047

2048

2049

2050

Existing HPPs

1,445

SHPP

405

Bratila New HPP

Kalivaci New HPP

Ashta New HPP

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

900

1,000

1,100

Devolli Cascade

300

Vjosa Cascade

300

Skavica

350

Wind PPs

220

Solar PPs

Import - NTC

1,200

TOTAL

2704

2804

2904

Generation/ Supply in MWh ‘000

Installed Capacity in MW

2046

2047

2048

2049

2050

Existing HPPs

4,149

SHPP

1,620

Bratila New HPP

330

Kalivaci New HPP

356

Ashta New HPP

202

Rehabilitation of Fier TPP

CCGT with distillate/natural gas

6,300

7,000

7,700

Devolli Cascade

1,200

Vjosa Cascade

1,230

Skavica

1,400

Wind PPs

594

Solar PPs

Supply from IC

17,471

18,171

18,871

Import

176

494

117

446

Total Supply

17,648

17,965

18,289

18,618

18,953

Load Shedding

Demand in MWh ‘000

Total Demand

17,648

17,965

18,289

18,618

18,953

140

ANNEX 8: ESTIMATING IMPACTS OF CLIMATE CHANGE ON LARGE

HYDROPOWER PLANTS IN ALBANIA

This Annex outlines the approach to estimating the impacts of climate change on large

hydropower plants (LHPPs) in Albania. These estimates are required to make an initial

assessment of climate change risks to Albania‘s energy sector, which will feed into the high-

level cost–benefit analysis of adaptation options.

It was outside the scope of this vulnerability assessment to undertake hydrological assessments

including climate change for Albania‘s LHPPs, and the data needed were not available to do this.

The report therefore utilizes information from existing studies for Albania and other countries.

It is recognized that Albania could benefit from additional investment in hydrological and

meteorological monitoring and research/assessments to understand these issues better.

A8.1 EXISTING AVAILABLE INFORMATION ON LHPPS AND CLIMATE CHANGE IMPACTS

The following information was reviewed linking climate change and hydropower production:

a. Work by IEWE (formerly HMI) at Tirana Polytechnic University for Albania‘s First

National Communication to the UNFCCC

b. Recent work by IEWE on the Vjosa Basin in southern Albania

c. Recent work by IEWE on the Mati River catchment for Albania‘s Second National

Communication

d. A correlation of annual average inflows to Fierze and electricity generation

e. Verbal information from the World Bank‘s Senior Energy Economist in Albania6

f. Roberto Schaeffer et al. (2009), recent assessment of climate change impacts on

LHPP in Brazil7

These are reviewed in turn as follows.

6 Meeting with Demetrios Papathanasiou, Senior Energy Economist at the World Bank, on April 22, 2009.

7 Reported in: Pereira de Lucena, A.F., Szklo, A.S., Salem, A., Schaeffer, R. de Souza, R.R., Borba,

B.S.M.C., da Costa, I.V.L, Junior, A.O.P., da Cunha, S.H.F. (2009). The vulnerability of renewable energy

to climate change in Brazil,

Energy Policy

, 37: 879–889

and

Roberto Schaeffer’s presentation on the

above at World Bank Energy Week 2009.

141

A8.2 ALBANIA’S FIRST NATIONAL COMMUNICATION

The range of projected climate changes for Albania presented in the 1NC8 is shown in Table

A8.1

Table A8.1 Climate Change Scenarios for Albania (CCSA)

Scenarios for Albania

Time Horizon

2025

2050

2100

Annual

Temperature (oC)

0.8+1

1.2+1.8

2.1+3.6

Precipitation (%)

-3.8+-2.4

-6.1+-3.8

-12.5+-6

Winter

Temperature (oC)

0.8+1.0

1.3+1.8

2.13.7

Precipitation (%)

-1.6+0

-1.8+0

-3.7+0

Spring

Temperature (oC)

0.7+0.9

1.0+1.5

1.8+3.0

Precipitation (%)

-2.7+-1.3

-3.6+-2.1

-7.4+-3.4

Summer

Temperature (oC)

0.9+1.2

1.2+2.0

2.3+4.1

Precipitation (%)

-0.8+-5.6

-20.0+-9.1

-27.0+-14.4

Autumn

Temperature (oC)

0.9+1.1

1.1+2.0

2.1+3.8

Precipitation (%)

-4.3+-3.4

-11.2+-2.1

-16.2+-8.6

Sea Level (cm)

20-24

48-61

Cloud Cover (%)

-1.3+-1.5

-2.6+-2.0

-4.6+-3.1

Wind Speed (%)

0.7

1+1.3

1.6+2.3

To assess the impact of climate change on the mean annual runoff, two models that relate runoff

forming factors (annual sum of precipitation and mean annual evapotranspiration) to the long

term mean annual runoff were used.

The 1NC states that: ―The models forecast a decrease in the long term mean annual runoff,

respectively from –9.8 percent to –13.6 percent and from –6.3 percent to –9.1 percent, for 2025‖

(see the black line in Figure A8.1).

According to Figure A8.1:

a. The projected climatic changes for 2050—that is, decreases in annual

precipitation of –6.1 percent to –3.8 percent and temperature increases of +1.2

deg C to +1.8 deg C—translate into a decrease in annual runoff of about –15

percent by 2050.

b. The projected climatic changes for 2100—i.e. decreases in annual precipitation of

–12 percent to –6 percent and temperature increases of +2.1 deg C to +3.6 deg

C—result in a decrease in annual runoff of about –35 percent by 2100.

8 Islami, B., Kamberi, M., Demiraj, E., Fida, E. (2002). The First National Communication of the Republic

of Albania to the United Nations Framework Convention on Climate Change (UNFCCC). Ministry of

Environment, Republic of Albania.

142

Figure A8.1: Average change in mean runoff according to CCSA for three time horizons:

2025, 2050, 2100

A8.3 ASSESSMENT OF CLIMATE CHANGE IMPACTS ON THE VJOSA BASIN

The assessment of climate change impacts on the Vjosa Basin9 presented a slightly different set

of climate change scenarios, with larger changes for Albania than the 1NC, as shown in Table

A8.2.

Table A8.2: Climate Change Scenarios for Three Time Horizons: 2025, 2050, 2100

Scenarios for Albania

Time Horizon

2025

2050

2100

Annual

Temperature (oC)

0.8 to 1.1

1.7 to 2.3

2.9 to 5.3

Precipitation (%)

-3.4 to -2.6

-6.9 to -5.3

-16.2 to -8.8

Winter

Temperature (oC)

0.7 to 0.9

1.5 to 1.9

2.4 to 4.5

Precipitation (%)

-1.8 to -1.3

-3.6 to -2.8

-8.4 to -4.6

Spring

Temperature (oC)

0.7 to 0.9

1.4 to 1.8

2.3 to 4.2

Precipitation (%)

-1.2 to -0.9

-2.5 to -1.9

-5.8 to -3.2

Summer

Temperature (oC)

1.2 to 1.5

2.4 to 3.1

4.0 to 7.3

Precipitation (%)

-11.5 to -8.7

-23.2 to -17.8

-54.1 to -29.5

Autumn

Temperature (oC)

0.8 to 1.1

1.7 to 2.2

2.9 to 5.2

Precipitation (%)

-3.0 to -2.3

-6.1 to -4.7

-14.2 to -7.7

A rainfall-runoff model was used to assess the impacts of these changes on Vjosa River runoff.

The projected changes in runoff are shown in Figure A8.2.

The paper notes that during winter, precipitation feeding the Vjosa River falls as snow and that

the presence of deep karst aquifers ―assure an abundant underground supply during the dry

season.‖

According to Figure A8.2 which presents data drawn from that paper:

a. The projected climatic changes for 2050—that is, decreases in annual

precipitation of –6.9 percent to –5.3 percent and temperature increases of +1.7

9 M. Bogdani Ndini and E. Demiraj Bruci, 2008

143

deg C to +2.3 deg C—translate into a decrease in annual runoff of about –18

percent to –25 percent by 2050.

b. The projected climatic changes for 2100—that is, decreases in annual

precipitation of –16 percent to –9 percent and temperature increases of +2.9 deg C

to +5.3 deg C—translate into a decrease in annual runoff for the Vjosa River in

the range –30 percent to –47 percent by 2100.

Figure A8.2 Projected Climatic Changes to 2100

A8.4 ASSESSMENT OF CLIMATE CHANGE IMPACTS ON THE MATI RIVER BASIN

The assessment of climate change impacts on the Mati River10 presented the same set of climate

change scenarios as the assessment of the Vjosa River (see Table A8.2).

The assessment states that ―snowfall is not a frequent phenomenon, even in the hilly part of the

study area‖ and notes that increasing temperatures will make snow in future even rarer.

According to Figure A8.3:

a. The projected climatic changes for 2050—that is, decreases in annual

precipitation of –6.9 percent to –5.3 percent and temperature increases of +1.7

deg C to +2.3 deg C—translate into a decrease in annual runoff of about –18

percent to –25 percent by 2050.

b. The projected climatic changes for 2100—that is, decreases in annual

precipitation of –16 percent to –9 percent and temperature increases of +2.9 deg C

to +5.3 deg C—translate into a decrease in annual runoff for the Vjosa River in

the range –30 percent to –47 percent by 2100.

10 B. Islami and E. Demiraj Bruci, 2008. Impacts of Climate Change to the Power Sector and Identification

of the Adaptation Response Measures in the Mati River Catchment’s Area.

144

Note that these are the same graphs as were presented above for the Vjosa River study.

Figure A8.3 Expected changes in runoff, Mati catchment’s area

This report states that there is a strong correlation between Mati River flow and power

production from Ulëza and Shkopeti HPP, as shown in Figure A8.4 (taken from the report).

This graph implies that if the flow of the Mati River declined by 20 percent, electricity

generation would fall by about 15 percent.

145

Figure A8.4: Relation of electricity production to river flow, MRCA

A8.5 CORRELATION OF ANNUAL AVERAGE INFLOWS TO FIERZE AND ELECTRICITY

GENERATION

The World Bank office in Albania has provided Excel spreadsheets that include data on monthly

and annual average inflows (m3s-1) to Fierze from 1948 to 2007, as well as annual energy

generated (GWh) from all sources for the years 1999 to 2007.

A linear correlation of these data is provided in Figure A8.5. It indicates that a 20 percent fall in

inflow leads to a reduction in energy generated of approximately 15 percent.

Figure A8.5: Electricity generation and Fierze inflows, 1999–2007

146

A8.6 VERBAL INFORMATION FROM THE WORLD BANK

The World Bank‘s Senior Energy Economist in Albania reported verbally that at Skavica a 20

percent reduction in precipitation translated into an approximate 20 percent reduction in HPP

output.

A8.7 ASSESSMENTS OF LHPP IN BRAZIL

Research undertaken by Schaeffer and colleagues (Schaeffer, et al,.2009) used regional climate

modeling for Brazil at 50 km  50 km spatial resolution and on monthly timesteps to project

impacts on LHPP.

First, projected changes in climate were used to generate perturbed river flows taking account of

climate change. Then, using the SUISHI-O HPP operation simulation model, projected changes

in HPP output were generated.

The projected changes in hydropower production for the period 2071 to 2100 are summarized in

Table A8.3, (from Schaeffer et al., op. cit.)

Table A8.3: Results for Hydropower (Deviation from the Reference Projections) and

Relative Participation of Each Basin in the Brazilian Hydropower System

Basin

Average Annual Flow

Average Power

Firm Power

Percent

A2 (%)

B2 (%)

A2 (%)

B2 (%)

Brazil

SINa

Parana River

-2.40

-8.20

0.70

-1.20

15.90

17.60

Grande

1.00

-3.40

0.30

-0.80

9.20

10.20

Paranaiba

-5.90

-1.40

-1.90

10.20

11.30

Paranapanema

-5.00

-5.70

-1.40

-2.50

3.00

3.30

Parnaiba

-10.30

-0.80

-0.70

0.30

Sao Francisco

-23.40

-26.40

-4.30

-7.70

8.50

9.40

Tocantins-

Araguaia

-14.70

-15.80

-0.30

15.80

17.60

Brazil (SIN)

-8.60

-10.80

-0.70

-2.00

-1.58%

-3.15%

62.80

69.80

a SIN – Sistema Interligado Nacional (Brazil Interconnected Electric Power System)

Schaeffer and colleagues state that in some of the river basins, reservoir management could go

some way to mitigating the runoff changes in some basins, but not all: ―The Parana River,

Paranaiba Basin, Paranapanema Basin and the Grande Basin—which all belong to the major

Basin of Parana—show similar results. Besides the estimated negative average effect on flow,

the seasonal variations in flow tend to be positive in the months when flow is increasing and

negative in the months when it is falling. If this were the case, these power plants would face an

earlier dry period, as well as an earlier start of the humid period. Given the not so relevant net

annual results and the favourable seasonal pattern (higher flows in the beginning of the wet

season), by adjusting the reservoir management in these existing power plants the estimated

effects of GCC would be attenuated. The remaining basins all show an average negative impact

on flow, especially the Sao Francisco Basin, where there is an installed hydroelectric capacity of

6.8GW. In that case, reservoir management would not be enough to compensate for the losses in

the inflows to the hydropower plants.‖ (Schaffer et al., 2009),

147

A8.8 SUMMARY

The range of projected changes in annual climatic conditions, runoff, and hydropower

production from the above studies are summarized in Table A8.4.

The research in Brazil indicates less severe impacts than the analyses above suggest for Albania,

and Schaeffer and colleagues state that in Brazil reservoir management can compensate to some

extent for reduced river flows.

According to this analysis, the high-level cost–benefit analysis for Albania uses an estimated

decrease in annual hydropower output of 15 percent by 2050, associated with an average annual

decrease of 20 percent in runoff. In addition, if possible, the CBA should test the sensitivity of

these results to changes in annual power output in the range –20 percent to –5 percent.

Table A8.4: Projected Changes in Annual Climatic Conditions, Runoff, and Hydropower

Production

Study

Change in annual average

climatic conditions by 2050

Change in annual

runoff by 2050 (%)

Change in annual

hydropower output

(%)

First National

Communication

Precipitation: –6.1% to –3.8%

Temperature: +1.2oC to +1.8oC

–15%

Vjosa River

Precipitation: –6.9% to –5.3%

Temperature: increases of

+1.7oC to +2.3oC

–18% to –25%

Mati River

Precipitation: –6.9% to –5.3%

Temperature: increases of

+1.7oC to +2.3oC

–18% to –25%

Figure A8.4 indicates

that a 20% reduction in

runoff would cause a

reduction of 15% in

power generation

Correlation of

Fierze inflows

and energy

generation

A 20% reduction in

inflows to Fierze is

associated with a 15%

reduction in power

generation

Verbal

information

from World

Bank

―20% reduction in

precipitation translates

into a 20% reduction in

HPP output‖

Schaeffer et al.

Parana River (2071–

2100) –8.2% to –

2.4%

Sao Francisco (2071–

2100) –26.4% to –

23.4%

–1.2% to +0.7%

–7.7% to –4.3%

148

ANNEX 9: ESTIMATING IMPACTS OF CLIMATE CHANGE ON ENERGY

GENERATION IN ALBANIA, EXCLUDING LARGE HYDROPOWER PLANTS

This Annex outlines the estimates of climate change impacts on Albania‘s energy assets,

excluding large hydropower plants11, to be used in the cost–benefit analysis. It has been

developed by considering the climate change projections for Albania and drawing on the

authors‘ engineering expertise of the relationships between climatic factors and asset

performance.

A9.1 SMALL HYDROPOWER PLANTS (SHPPS)

Assume a 1 to 1 relationship between reduced river flows and SHPP production, that is, a 20

percent reduction by 205012.

A9.2 THERMAL POWER PLANTS (TPPS)

Estimate a 0.5 percent reduction in TPP output associated with higher temperatures in 2020,

rising to 1 percent in 2050.

A9.3 WIND

The climate change scenarios‘13 projections of changes in wind are low confidence and show

little or no change. The report therefore assumes no change.

A9.4 DOMESTIC SOLAR HEATERS

The climate change scenarios14 indicate a reduction in cloudiness as shown in Table A9.1.

Table A9.1 Range of Projected Changes Compared to 1961–1990 Baseline

Range of projected changes compared to 1961–1990 baseline

2020s

2050s

Climate

variable

Annual

Summer

Winter

Annual

Summer

Winter

Cloudiness

(%)

–4 to –1

–5 to –2

–2 to 0

–5 to –2

–8 to –6

–3 to 0

In summer, domestic solar heaters already provide all the required energy for water heating, so

decreases in summer cloud cover will not act to reduce energy demand for water heating. In

winter, however, this is not the case, so the report assumes that the winter water heating demand,

taking account of climate change, should be reduced by 1 percent by the 2020s and 2 percent by

the 2050s. For autumn and spring we suggest reduced demand of 1.5 percent by the 2020s and

3.0 percent by the 2050s.

11 For LHPP estimates see Annex 8.

12 See Annex 8.

13 Acclimatise. (2009). Climate change projections for Albania. Acclimatise, United Kingdom. (Jane, is this the

elusive “CCSA”? If so the word here would be Scenarios? not projections)

14 Ibid.

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A9.5 CONCENTRATED SOLAR POWER

The report uses the data on decreases in cloudiness to estimate equivalent increases in output

from concentrated solar power.

A9.6 TRANSMISSION AND DISTRIBUTION

The efficiency reduction for transmission and distribution is estimated as 1 percent by 2050,

associated with rising temperatures.

150

ANNEX 10: GLOSSARY OF KEY TERMS

Adaptation Actions to reduce the vulnerability of natural and human systems to climate change

effects. For instance, an adaptation action that can be taken to reduce the damaging effects of

rising sea levels is to build higher sea defences. Various types of adaptation exist, e.g.,

anticipatory and reactive, private and public, and autonomous and planned.

Adaptive capacity The ability of a system to adjust to climate change (including climate

variability and extremes) to moderate potential damages, to take advantage of opportunities, or to

cope with the consequences.

Baseline The reference against which change is measured, e.g., baseline climate is normally

defined as the period 1961–1990.

Carbon dioxide (CO2) CO2 is a naturally occurring gas, and a byproduct of burning fossil fuels

or biomass, of land-use changes and of industrial processes. It is the main greenhouse gas

produced by man that is driving climate change.

CEZ CEZ Group, a privately owned Czech energy production group that has recently taken over

management of Albania‘s power distribution system.

Climate change Climate change refers to any change in climate that lasts for an extended

period, typically decades or longer, whether due to natural variability or as a result of human

activity.

Climate hazards Climate variables that have consequences for the system being studied (in this

case, Albania‘s energy sector). The main climate hazards to be discussed at the workshop are

temperature, precipitation, relative humidity, sunshine, winds, sea level rise and extreme events

such as storms.

Climate impacts The effects that climate hazards have on a given system (in this case, Albania‘s

energy sector), such as reductions in rainfall have impacts on hydropower generation.

Climate variability Climate variability refers to variations in the average state of climate.

Rainfall, for instance, has high natural variability, which makes it difficult to detect a climate

change signal.

GCM General Circulation Model / Global Climate Model A computer-based numerical model

of the climate system. GCMs are developed and run by climate modeling centers around the

world and are used to project changes in climate.

Greenhouse Gases (GHGs) Greenhouse gases absorb and emit infrared radiation. This property

causes the greenhouse effect. Water vapour (H2O), carbon dioxide (CO2), nitrous oxide (N2O),

methane (CH4) and ozone (O3) are the primary greenhouse gases in the earth‘s atmosphere.

Intergovernmental Panel on Climate Change (IPCC) The Intergovernmental Panel on Climate

Change was formed in 1988 by the World Meteorological Organization (WMO) and the United

Nations Environment Programme (UNEP), and is the international advisory body on climate

change.

Mitigation Actions to reduce man-made effects on the climate system. These include actions to

reduce emissions of greenhouse gases (such as energy efficiency measures or the use of

151

renewable energy resources), as well as actions to increase greenhouse gas sinks (such as

planting forests).

Risk Risk is the product of the likelihood (or probability) of an event occurring and the

magnitude of its consequence.

Scenario A plausible description of how the future may develop. Scenarios are not predictions or

forecasts, but are useful to provide a view of the implications of actions.

Sensitivity Sensitivity is the amount by which a system is affected, either adversely or

beneficially, by climate variability or climate change. For instance, the efficiency of gas turbines

is sensitive to temperature. As temperatures rise, efficiency falls.

Special Report on Emissions Scenarios (SRES) To provide a basis for estimating future climate

change, the IPCC prepared the Special Report on Emissions Scenarios in 2000. It provides 40

greenhouse gas and sulphate aerosol emission scenarios based on different assumptions about

demographic, economic and technological factors. The emissions scenarios are fed into Global

Climate Models, to project future changes in climate.

Threshold A property of a system where the relationship between the input and the output

changes suddenly. For example, the height of a flood defence represents a critical threshold—if

water levels exceed the defence height, flooding will occur. It is important to identify climate-

related thresholds, as they indicate rapid changes in the level of risk.

Timeslice Projections of climate change are usually given for three timeslices—the 2020s,

2050s, and the 2080s. The projections are a 30-year average, centered on each of the given

timeslices, (i.e., the 2020s is 2010–2039). Climate models cannot predict what the specific

climate will be in any given year, due in part to the interannual variability of climate variables,

so the projections are 30-year averages of future climate.

Uncertainty An expression of the degree to which a value is unknown (e.g., the future state of

the climate system). Uncertainty can result from lack of information or from disagreement about

what is known or even knowable.

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