Albania moves closer to a fully market-based support scheme for renewables 

A new Market Readiness Assessment is expected to boost investor confidence and strengthen Albania’s role in building a more competitive and resilient electricity market  

The Albanian energy regulator (ERE) has adopted a Methodology for Market Readiness Assessment, marking an important step towards preparing for the transition to fully market-based renewable support schemes.  

As in several other Energy Community Contracting Parties, in Albania renewable energy auctions are legally required to be conducted under a Contract for Difference (CfD) scheme. However, because the electricity market has not yet been sufficiently liquid, the law has allowed an interim solution. In practice, producers have been awarded long-term Power Purchase Agreements (PPAs) at fixed prices, with the condition that these will be converted into genuine CfD arrangements once the market is ready. The newly adopted methodology is set to trigger the process for this conversion.

Once Albania’s electricity market becomes liquid enough, these PPAs will be converted into full CfDs. Under this system, producers will sell their electricity directly on the day-ahead market but remain protected from price volatility through the CfD: if market prices fall below an agreed level, they receive a payment to cover the difference; if prices rise above it, they pay back the excess. 

This shift marks a step toward a more transparent and investor-friendly electricity market—one that encourages greater private participation.

According to the approved methodology, ERE will complete its first market readiness assessment within six months. The subsequent conversion to Contracts for Difference (CfDs), based on ERE’s findings, is expected to increase traded volumes and improve liquidity in Albania’s Day-Ahead Market (ALPEX). If successfully implemented, the resulting increase in market liquidity will strengthen Albania’s preparation for integration into the EU’s internal electricity market ahead of its EU accession. 

The methodology was developed with the support of the European Bank for Reconstruction and Development (EBRD), with the Energy Community Secretariat actively involved in reviewing and providing detailed feedback throughout the process. Its implementation will serve as an important reference point for other Contracting Parties considering similar steps toward market-based renewable energy support schemes.