Electricity

Implementation indicators

  • Unbundling

    Unbundling

    The transmission system operator is unbundled and certified. The functional unbundling of the distribution system operator is ongoing, but not yet completed.

  • Access to the system

    Access to the system

    Network access tariffs are approved and published. Third party access to the new interconnection line with Kosovo* is still not ensured. The Transparency Regulation and Connection Codes are transposed, implementation is still to be completed.

  • Wholesale market

    Wholesale market

    The excessive public service obligation in the wholesale market impedes the development of competition. The power exchange company was established by the transmission system operators of Albania and Kosovo* as shareholders. The procedure for designation of the operator for market coupling is in place. REMIT has not been transposed.

  • Retail market

    Retail market

    The retail market remains regulated for all customers below 35 kV. Eligibility is unduly made conditional on the fulfilment of technical requirements.

  • Regional integration

    Regional integration

    Market coupling project with Kosovo* depends on the operationalisation of ALPEX. A market coupling project with Italy, Montenegro and Serbia is in an early phase. The transmission system operator signed a Load Frequency Control (LFC) agreement with the transmission system operator of Kosovo*. Cross-border capacities are allocated through SEE CAO, except split auctions with EMS of Serbia.

State of compliance

The reform of the electricity market is on track but progress this year has been slow with limited achievements in terms of implementation of the acquis.

The transmission system operator OST was certified and finally fulfils the independence conditions requested in the Secretariat’s Opinion, following the adoption of amendments to the Power Sector Law in May 2020. The distribution utility OSHEE was transformed into a holding company with three subsidiaries, respectively licensed as the distribution system operator OSSH, the universal service supplier FSHU and the electricity market supplier FTL. Functional unbundling is currently being implemented and will be verified by the Secretariat.

The most notable progress was made in the process of establishment of the organized electricity market. Following the Government’s 2019 decision on the establishment of a power exchange, to be established by the transmission system operator OST, an open tender for the selection of other shareholders was completed in 2020. It resulted in the selection of the transmission system operator of Kosovo*, KOSTT. The establishment and registration of the power exchange company ALPEX was completed in October 2020. According to the plan, the operation of ALPEX and market coupling of Kosovo* and Albania should be launched simultaneously in the first half of 2021.

An early implementation of the Capacity Allocation and Congestion Management (CACM) Guideline started by the transposition of the procedure to designate the nominated electricity market operator, adopted by the regulatory authority ERE in line with the recommendation of the Energy Community Regulatory Board. This is a precondition for market coupling.

Until the establishment of the power exchange, excessive public service obligations remain in place on the wholesale market. The universal service supplier FSHU and the distribution system operator OSSH are obliged to buy all the electricity required to supply customers under universal service and cover losses in the distribution system from the generation company KESH under regulated conditions. If electricity is purchased at market conditions, KESH is obliged to compensate the costs incurred from the price difference.

After an ongoing dry run, the balancing market is expected to start operating in 2021 according to the balancing rules approved by the regulatory authority in 2020, which allow for cross-border trading of balancing services.

All three Network Codes on network connections were transposed by ERE in 2018. The transmission system operator OST started publishing data on the ENTSO-E Transparency Platform. The REMIT Regulation is yet to be transposed and implemented. According to the amendments to the Power Sector Law of February 2018, all customers, except those connected to high voltage and 35 kV, continue to be supplied by the universal service
supplier, FSHU, at regulated prices, until the distribution system operator OSSH informs the customer that technical preconditions related to the installation of interval meters are in place. For a period of two years after OSSH’s decision the customers can be supplied by FSHU under the supply of last resort. This undermines the eligibility right of customers and the interest of new suppliers to enter the retail market.

Cross-border capacities are allocated through SEE CAO, except split auctions applied with EMS of Serbia. Allocation of capacities on the 400 kV interconnection line with Kosovo* is pending implementation of the recently signed connection agreement between the transmission system operator of Kosovo* KOSTT and the ENTSO-E.

In 2019, OST and KOSTT signed an agreement on establishing a new load frequency control (LFC) block Albania – Kosovo* (AK). The implementation will commence upon the establishment of the KOSTT system as a separate control area. It is expected that this is the first step of a future broader integration of Albania with organized regional electricity markets.