Albania Energy Sector Reform: successful technical and financial collaboration

In March 2024, the Practitioners' Network for European Development Cooperation visited Albania to foster European integration and cooperation within the country and the region. 

The visit provided an opportunity for Network Members to discuss and present effective examples of joint implementation. The goal was to develop strategies for Working Better Together as part of a Team Europe approach and to enhance and coordinate the technical offer from Team Europe in Albania and the wider Balkans. The focus areas included alignment with the EU acquis, good neighborly relations, the green agenda, sustainable connectivity, and the digital economy and society. 

As an example of technical and financial collaboration, here is an interview with the project managers from Expertise France involved in the Albania Energy Reform Technical Assistance, providing insights into the project's cooperative approach. 

Can you provide an overview of the project you are implementing in Albania? 

As part of several commitments undertaken by Albania in pursuit of its accession to the European Union, the country is engaged in an in-depth reform of its energy sector, including operational, financial and structural aspects. Aiming to support the Energy Sector Reform Programme of Albania, the Albanian Ministry of Finance and Economy (MoFE) and the Albanian Ministry of Infrastructure and Energy (MIE), on behalf of the Albanian Government (GoA), have signed with KfW German development Bank and the Agence Française de Développement (AFD) a “Memorandum of Understanding” (MoU) regarding the granting of a Policy Based Loan (PBL). In that respect, the objectives of the PBL are to enable the GoA in its endeavour to establish a market environment within the context of the Albanian Energy Sector that conforms to EU best practices and acquis, as well as being aligned with the international commitments made by Albania. 

In parallel to the budgetary support, AFD has also decided to support the energy reform undertaken by the Albanian Government through a Technical Assistance (TA) project. The TA, entrusted to and carried out by Expertise France, aims to support Albania in developing a modern regulatory framework as well as a more environmentally friendly energy sector, with a special focus on energy regulation matters.   

What are the project's main objectives and goals? 

The Technical Assistance project implemented by Expertise France aims to support Albania, more specifically MIE, Energy Regulatory Entity (ERE) and EEA, as well as Distribution System Operator and Renewable Energy Operator, to continue the restructuring of the energy sector in Albania. The GoA, being a signatory member of Energy Community Treaty, has undertaken to continue the reforming process until the electricity market complies with EU best practices.  

The reform of the sector and corporate governance, the establishment of the electricity market and the development of renewable energies are considered essential to ensure the sector’s financial recovery and sustainability. The energy crisis has also showed the importance of completion of the energy reforms to ensure resilience of the energy sector in Albania in order to address a wide range of power sector issues, including enhancing Albania’s energy efficiency, increasing renewable energy generation capacity, operationalisation of an organised electricity market, and integrating Albania’s electricity market within the wider regional electricity markets and ultimately the EU internal electricity market.  

In terms of finance, what gaps have been identified, and how has technical assistance been utilised to address them? 

In order to fulfil the project’s objectives, activities of the TA are centred on providing support to energy institutions and energy companies, closely following the scope of work received from the AFD.  

The TA workstream is divided in three main parts for each institution based on their needs:  

• Capacity building through regular trainings.  
• Supporting the daily work of these institutions in preparing policy documents focused on the reform process.  
• Support the preparation and implementation of the PBL.  

Technically wise, which is the added value that you are offering to the project? 

Having in mind that the reforms are based on the changing needs and priorities of the GoA, the TA activities follow the day-to-day activities of the institutions in implementation of the reforms as presented in the objectives of the project. A principle of lean management of the project will be agreed between Expertise France and the AFD and formalised in the contract for the TA,to best meet counterparts’ needs. As such, the activities can be reoriented during the entire implementation of the programme upon proposal from Expertise France and approval of the AFD, depending on the expressed needs of national counterparts.  

The TA provides the Albanian Government with a dedicated team of local and international experts that act as in-house consultants to ensure the successful implementation of the energy sector reform. 

How do you collaborate with other organisations or stakeholders involved in development activities in Albania? 

Apart from capacity building activities, the TA functions in the role of in-house consultants with an extensive collaboration with KfW financed technical assistance, based on cooperation agreement between AFD and KfW in setting up the Policy Based Loan. The TA work activities are continuously adapting in terms of support based on the availability of other Technical Assistance projects that are being implemented by other stakeholders in the Energy sector.

Because of the principle of lean management agreed by the AFD and Expertise France, and the role of the TA team as in house consultant to the main institutions of the energy sector in Albania, the TA can support any activity that other Technical Assistance Project are being provided to the main institutions of the energy sector based on the requests of these beneficiaries.    

How does the project contribute to broader development goals or priorities in Albania? 

To successfully implement new reforms, the Albanian Government has positioned its strategic outlook and policy decision to tackle each of the following dimensions of the energy sector reform:  

- Improving security of supply.  

- Strengthening the internal energy market.  

- Enhancing energy efficiency.  

- Increasing the renewable energy generation.  

- Improving governance regulation in the sector.

The GoA has also committed to implement the Clean Energy for all Europeans Package, adopted in 2019, which aims to help decarbonise the energy system in line with the European Green Deal objectives, leading to reduction of greenhouse gas emissions. Against this context, the AFD has decided the implementation of the TA whose activities will concretely help support the GoA in designing appropriate energy sector’s regulatory, administrative, technical, economical, and legal environment for addressing the reforms.  

The TA’s main objective is to offer support as needed to the GoA in successfully implementing the reforms in the above-mentioned dimensions to ensure fast implementation of the energy reform as envisaged by the commitment of Albania to pursue accession into EU. 

What achievements have been made thus far in the project? 

The overall objective of the Technical Assistance is linked to the Policy Based Loan and the subsequent action lists approved by the Project Steering Committee, which envisage the completion of milestones by focusing on policies that the government and other bodies need to adopt to ensure the continued reforms of the sector. Over the last three years, we have followed all necessary steps that were agreed upon, achieving meaningful results that have brought us closer to achieving energy sector reform goals. 

In addition to overall support as in-house consultant, Expertise France has completed numerous documents and trainings to support the energy sector reform, such as:  

- ESSA: environmental and social system assessment.  

- Social Support Scheme for vulnerable customers: diagnosis and action plan.  

- Gender and Energy diagnosis followed by a Seminar in Tirana with all involved stakeholders.  

- RES (renewable energy sources) law proposal. 

- A net billing scheme has been drafted. 

- Training to ERE on HR and wholesale markets topics (by CRE) and tariffs (by ERO). 

- Training to AEE on EU’s EE policies and energy audits.  

- Study visits for ERE and AEE in France.  

- Training to small and medium voltage consumers before their entering into the open electricity market.  

Could you share any lessons learned or best practices in technical and financial cooperation derived from your project experience in Albania? 

- Work directly and close with the beneficiaries to follow their agenda, and their priorities, while always considering what is feasible.  

- Have open and regular communication to ensure a sense of ownership and enhance the effectiveness of technical assistance.  

- Provide study visits together with theoretical learning. Trainings are an excellent tool to introduce theoretical ideas. However, real-life examples and visits, as done in this TA, make theory reality and support principles of adult learning (learning by doing, asking questions, integrating knowledge through lived experience).  

- Allow projects to evolve with needs of Beneficiary. Projects with flexible budget lines and adaptable methodologies to meet overall objectives allow project implementers to adapt as time and needs evolve. Each project is unique and while an initial project design is indispensable to begin, it is not realistic to expect this design to stay static throughout implementation. Continuing to work with the implementer and allowing flexibility through the project enhances the likelihood for success.  

- The Principle of Lean Management between AFD and Expertise France coupled with the role of in-house consultants have ensured that the Technical Assistance provides support as needed by the Government of Albania and its main energy institutions.    

How does the project align with the priorities of the Practitioners 'Network for European Development Cooperation? 

This project is aligned with the priorities of the Practitioners' Network for European Development Cooperation because it adapts to the realities and needs expressed by stakeholders and works closely and coordinates with other development actors. 

More information about Albania Energy Reform Technical Assistance can be found here.