May 17 (Bloomberg) -- Albania is trying to attract private investors to its power market as it diversifies energy sources and privatizes some of its infrastructure.
The government of the former Communist nation, which awarded 5.2 billion euros ($6.6 billion) in wind power and hydroelectric contracts in the past four years, will support natural gas pipeline projects and processing plants, according to Enno Bozdo, deputy minister for economy, trade and energy.
The Adriatic nation of about 3 million people wants to curb reliance on hydropower, which accounts for 98 percent of its domestic electricity production. Albania offers incentives including tax exemptions for clean-energy activities and a faster permitting process to attract investors, he said. Ten licences for 1,700 megawatts of wind power have been awarded, and 125 hydropower agreements worth 1,500 megawatts since 2008.
“Given the unpredictability of the climate conditions especially in the last decade, there is a pressing need to diversify,” Bozdo said by e-mail. Albania’s electricity production decreased by 47.4 percent last year compared with 2010 because of drought, according to Albania’s Institute of Statistics. “The top priority of the government is security of energy supply,” he said.
The nation produces about 65 percent of its own electricity. It imports the rest, making it vulnerable to political risks and fossil fuel prices, he said.
The government’s hydro agreements include plans with Austria’s EVN AG, Norway’s Statkraft AS and Deutsch Bank AG for projects totaling 1.2 billion euros, he said.
The nation plans to start the bidding process for two further hydro plants on the Drin and Vjosa rivers this month, after starting the procedure for a project on the river Osum. The projects financed by public funds and private investment total about 900 megawatts, according to Bozdo.
Albania, which applied for European Union membership in 2009, is discussing a goal of getting 39 percent of its energy from clean power by 2020 from 29.6 percent now, Bozdo said. To date about 40 percent of the nation’s hydro is used, Bozdo said.
The nation also boosted domestic transmission links and is developing a power line linking Albania with both Macedonia and Italy. It has plans for more lines, he said.
Albania needs transmission link upgrades to support demand in the nation, where gross domestic product grew 3.8 percent in 2010, the highest growth rate in southeastern Europe, boosted by exports of energy, according to the European Bank for Reconstruction and Development.
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