Albania’s lack of a spot market for electricity and a lack of plurality on the energy market was highlighted in a recent report by the Energy Community Secretariat, an international NGO, published this week.
All electricity for customers below 35 kV, including domestic and most business users, is sold by OSHEE, the state-owned electricity company. This means they set prices, and customers have no choice but to pay them, with no other options available.
“Albania has yet to establish a spot market for electricity,” the report notes, adding that “as long as there is no power exchange, competition is distorted by a public service obligation. All customers below 35 kV continue to be supplied by the universal supplier at regulated prices without the possibility of switching.”
OSHEE operates, constructs, maintains and develops the electricity distribution network throughout the country, serving households and private clients. It is a subsidiary of the Albanian government and is supervised by the Ministry of Infrastructure and Energy.
In many European countries, energy companies purchase electricity on the spot market. They compete for custom through locked-in rates, special offers, and low prices. This offers a healthy and competitive market where customers can choose their provider and switch if the rates are no longer competitive.
But in Albania, customers have no option but to pay the rates set by the government. While much of Albania’s power is generated by hydropower, this only happens in the spring and summer.
Not being able to store the energy, it is sold abroad, and then fossil fuel from neighboring countries is purchased for the winter. This is sold to consumers at a rate sometimes two or three times higher during winter when more electricity is consumed.
However, the report noted that Albania demonstrated modest progress in reforming the energy sector during 2020-2021, with a total reform implementation score of 62%, the highest in the region.