What is the current situation with subsidies for solar energy in Albania?
During this transitional period, which may last up to twelve months, the Renewable Energy Act allows the temporary application of existing secondary legislation based on the previous law. Under Act No. 24/2023, “Promotion of the Use of Renewable Energy Sources”, support mechanisms may take the form of Power Purchase Agreements (PPAs), Contracts for Difference (CfDs) and Premium Agreements.
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How does the law address stored energy?
Law No. 24/2023 stipulates that electricity from priority producers, which has not yet been fed into the grid but is temporarily stored on their premises, is considered delivered and eligible for subsidies at the time of the planned grid feed‑in.
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Albania’s geographical location is ideal for photovoltaics. Should investments be booming?
Solar irradiance in Albania is among the highest in the Western Balkans, particularly in the regions of Fier, Vlora, Saranda, Berat and Korça. Investment‑based support programmes could play a decisive role in expanding photovoltaics, especially in developing countries such as those in the Western Balkans. By reducing high upfront costs, they can help lower major financial barriers to PV development.
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How could such investment support look in practice?
Instruments such as capital or investment grants covering 20–50 percent of installation costs would greatly improve project profitability, particularly for private households and small businesses installing rooftop or ground‑mounted PV systems. Tax credits or deductions could further encourage investment and foster a more favourable business climate for solar developers.
What about low-interest loans for PV?
Low‑interest or government‑guaranteed loans that improve access to capital for smaller developers and municipalities would help accelerate investment. Such financing mechanisms are particularly valuable in emerging PV markets like Albania, as well as in other Balkan countries including Kosovo, North Macedonia, Montenegro and Bosnia and Herzegovina. Investment risks remain high in these markets, and institutional experience in PV financing is still developing.
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What about feed-in tariffs?
Given Albania’s evolving energy‑market structure and its push to diversify beyond hydropower, production‑based support programmes could provide a strong boost to solar expansion. They would also contribute to meeting the National Energy and Climate Plan (NECP) targets for renewable‑electricity generation.
Are feed-in tariffs already in use?
Feed‑in tariffs are currently applied on a limited basis for small‑scale installations. However, they could be refined to offer stable and predictable returns for investors, especially in the early years of operation.
What about contracts for difference (CfDs)?
Contracts for Difference (CfDs) are considered especially attractive for large solar parks in high‑irradiance areas, as they shield developers from volatile electricity‑market prices. These mechanisms can offer long‑term planning security and financial stability, encourage domestic and foreign investment in renewables, and facilitate wider integration of variable solar energy into Albania’s grid.
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What is the status of auctions for PV projects in Albania?
Albania is moving forward with electricity‑market liberalisation and aims to align its regulations with the EU’s energy framework. Market‑based support schemes, such as auctions, could ensure cost‑efficient renewable‑energy development. The government has completed the first three wind‑power auctions and is assessing their suitability for PV projects, though concrete progress has yet to be made. Tendering procedures promote transparent competition, reduce costs and improve efficiency.
Have such auctions already been conducted?
Albania has carried out pilot projects using these mechanisms and allocated solar‑PV capacity through competitive auctions, attracting substantial private investment at low rates, according to reports from the Karavasta PV power plant. Expanding such tenders to other sun‑rich regions could further stimulate market growth.
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Are there incentive programmes for decarbonisation?
A quota system for renewable energy, or a system of green electricity certificates, is also being considered. This would oblige electricity suppliers to source a fixed share of their portfolios from renewables. Such an approach could complement auction mechanisms and support a gradual shift toward a more integrated, market‑oriented framework for PV and other renewable technologies.
Could hybrid support programmes advance Albania’s energy transition?
Hybrid approaches that combine different support models look particularly promising. For instance, auction‑based feed‑in tariffs could provide stable revenues at competitive prices, strengthening investor confidence and fiscal efficiency. Subsidies and tax incentives could also be directed to solar zones such as Myzeqe and Dumre, where strong solar potential aligns with good grid connectivity. Close coordination of these instruments with permitting reforms and the NECP would help align investment incentives, spatial planning and decarbonisation goals.
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What is the political stance on this?
While financial incentives can encourage investment, their effectiveness depends on complementary policy reforms, including streamlined permitting, transparent grid‑connection rules and strong regulatory oversight. Close coordination between the Energy Regulatory Authority (ERE), the Ministry of Infrastructure and Energy, local authorities and the scientific community is considered essential to strengthen investor confidence.
What is the state of research and skilled personnel in photovoltaics in the country?
Research in the PV sector needs to be expanded, along with Albania’s technical expertise and institutional readiness to support large‑scale solar and wind projects. Support programmes should be embedded in a broader energy‑transition strategy aimed at increasing the share of renewables, reducing reliance on variable hydropower and advancing the country’s long‑term decarbonisation and EU‑accession objectives.
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Is the will there, but conditions not yet right?
In summary, Albania has some of the most favourable solar resources in the Western Balkans. With a well‑designed support framework and diversified approach, PV deployment could accelerate quickly. In the near term, investment‑based measures such as capital grants, tax incentives and low‑interest loans are likely to be most effective in promoting decentralised, small‑scale PV for households, businesses and municipalities.
What is the long-term strategy for PV expansion?
As the market matures, production‑based mechanisms such as feed‑in tariffs could provide stable returns for medium‑sized developers. Auctions are likely to become the main driver for large solar parks, ensuring transparency and cost efficiency. In the longer term, hybrid and targeted support schemes, combined with spatial planning and grid‑expansion strategies, could further stimulate investment. Hybrid solar‑hydropower systems with battery energy storage (BESS) are seen as particularly relevant for Albania.
Interview by Manfred Gorgus
Coming next Tuesday:
Join us for our next read, where Professor Malka highlights promising developments in Albania’s solar‑energy sector and explores how ongoing grid upgrades, stronger regulations and growing expertise are paving the way for accelerated solar expansion.
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