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Power Sector Generation and Restructuring Project - Vlora Thermal Power Plant

Available in: Albanian

Electricity in Albania

Albania, like other former socialist countries, experienced difficulties in its power sector during the country’s transition from a centrally-planned to a market-based economy. In 1992, Albania was a net electricity exporter, but with transition and the ensuing economic growth, electricity demand has since grown rapidly. Without any new investments in domestic electricity generation since the mid 1980s, Albania’s economic development has been adversely impacted by shortages in electricity supply. This has consistently been highlighted as a major impediment to business. Albania’s electricity needs, furthermore, are supplied almost solely by hydropower, which suffers during drought. The electricity crisis has had multiple impacts on the life of Albanians. Frequent and prolonged electricity load shedding (power cuts) deprives people of light, space heating, refrigeration, and cooking fuel, thereby adversely affecting their quality of life and their health, as well as restricting their access to education. Expensive electricity imports increase the need for government subsidies, diverting resources from poverty reduction efforts. The crisis adversely affects economic growth, impeding efforts to reduce poverty. With the climate in Albania projected to be significantly warmer and drier in the coming decades, hydropower will likely face further constraints.

To address the main issues affecting the energy sector, the Government of Albania and the Albanian Power Corporation initiated a Power Sector Action Plan and a National Energy Strategy. The World Bank has taken a lead role in the sector, and is well placed to continue this role. So far, the Bank has financed a total of US$151.7 million for 6 projects in Albania’s energy sector.

The Project

The Power Sector Generation and Restructuring Project aims to expand and diversify Albania’s domestic power supply to meet the country’s rising demand for energy by building a new 97 MW diesel oil-fueled power plant.

In 2001, the Government of Albania asked the World Bank to assist in arranging donor financing for a new thermal electric power plant. A siting and feasibility study of seven sites was prepared, on the basis of which the Government decided to build the thermal power plant at a six-hectare site behind a coastal strip near an abandoned industrial area about six kilometers north of the city of Vlora.

The thermal power plant is estimated to cover about 20 percent of Albania’s supply deficit in an average hydrological year, would reduce technical losses in the transmission system, and would significantly improve the security and quality of supply in the country overall — in particular, in the southern part of the country, which is poorly served at present. Introducing thermal generation into Albania’s power supply mix will allow the country to use its hydropower resources more efficiently. Project construction works started in August 2007, and the plant should be operational by the end of 2009.

Environmental Impact

The Project will use Combined-Cycle Gas Turbine technology for power generation, which achieves significantly higher efficiency than other options for thermal power generation and produces very low air emissions. In the short- to medium-term, the plant will be fueled by low-sulphur distillate oil. The fuel specifications for the plant provide for low sulfur content of distillate fuel in order to reduce emissions, even though this will add to the operational cost. The thermal power plant is designed to allow conversion to even cleaner natural gas if and when it is imported to Albania. The plant’s emissions are designed to be in compliance with new EU Directives. The plant is located 400 meters inland from the shoreline. Following the construction period, the beach in front of the plant will be returned to its original state and be fully useable for recreation. The approximately 1,700 pine trees that were cut at the plant site, and for the 220/20 KV OH line track in a nearby forest on the left bank of the Vjosa River, have been replaced by 5,200 trees, as agreed with Vlora’s Forestry Department.

Project Financing

The total cost of the Project is US$112 million, of which US$25 million is funded by a World Bank credit. Other co-financing includes US$37.5 million from the European Bank for Reconstruction and Development (EBRD), US$37.5 million from the European Investment Bank (EIB), and US$12.6 million from Albanian Energy Corporation (KESH).

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