Why Albania should be your destination to invest in the energy sector?

Albania, a country in the Western Balkans, located between Greece, Montenegro, North Macedonia and with access to the Adriatic and Ionian seas to Italy, is one of the countries with the greatest potential in terms of renewable energy sources. More than 250 to 300 sunny days a year and numerous water assets, with hot summers and wet winters make Albania the ideal place to invest, especially in the energy field. However, this is not the only reason why Albania should be under your attention to invest, as following this article, we will present you with some of the reasons why investing in Albania is not only necessary, but also the right choice.

Albania has started the EU integration process and the compliance of Albanian legislation with that of the EU is a daily process, for which we at ‘Halimi Law and Tax’ have been involved for many years with our high professional expertise.

According to Eurostat, only in 2021, in Albania, the share of renewables in gross final energy consumption was 41.4%. This percentage was not only the highest among all Western Balkan countries, but it was also higher than the EU average, where the share of renewable sources in gross energy consumption was 21.8%. Within the year 2030, according to the national objectives, established by law no. 24/2023 ‘On promoting the use of energy from renewable sources’, it is expected that the share of energy from renewable sources in the final gross energy consumption will be 54.4%.

Hydroelectric capacity is the most important source of energy for the production of electricity in our country, however, currently, only 35% of the potential of hydroelectric energy is used. Large international companies such as Statkraft, EVN and VERBUND have built HPPs with a total capacity of 269 MW and 53 MW respectively. Meanwhile, more than 300 other domestic and foreign investors have built HECs from two-100 MW. In the field of photovoltaic energy, the investment of the French company Voltalia with about 300 MW is accompanied by a growing number of Albanian and foreign investors.

In Albania, the production of all energy is guaranteed with the buyer, the state, on the basis of the contract that is signed upon obtaining the construction permit (currently, the purchase price of energy is 94 EUR/MWh), but on the basis of developments on participation in the energy market free, some or all of the energy can be sold on the free market by notifying the state-owned company before the end of November of the sale in the following year. The sale of energy can also be carried out through the ALPEX platform –the Albanian Power Exchange, which has been operational since 14 April 2023.

In addition to the purchase of energy production, the Ministry of Infrastructure and Energy, in the capacity of the responsible state authority, undertakes to assist the investor in all procedures for obtaining the necessary permits, licenses and approvals throughout the duration of the contract.

Foreign investors in the energy sectorcan also benefit from a special legal protection, which is offered according to law no. 55/2015 ‘On strategic investments in the Republic of Albania’ including strategic investments in the fields of production, transmission, distribution and supply of electricity.

Obtaining the status of ‘strategic investor’ is a procedure that is approved by the Committee of Strategic Investments through fast procedures and that are followed with priority by state bodies. In the same way, giving priority to the client’s needs and dedicating special attention to administrative procedures, ‘Halimi Law and Tax’ operates.

In addition to legal support and facilities, there are also powerful interest groups in Albania, which not only promote, but also protect the interests of energy producers from renewable sources. One of these groupings is the Albanian Renewable Energy Association (AREA), which has 74 members, and in all its activities is supported by legal consultancy from the experts of ‘Halimi Law and Tax’, as for relations with state authorities, as well as for the sale or purchase of energy.

The facilitation of application procedures for investors in the energy sector, as one of the strategic sectors, is also coordinated with the possibilities that real estate owned by the Albanian state can be made available for the development and realisation of strategic investments. In this context, it is worth underlining that, for all production capacities up to two MW, approval for construction is given by the minister responsible for energy while the construction of all those new production capacities, over two MW, requires the approval of the Council of Ministers with the proposal of the minister responsible for energy.

It is worth mentioning that with the last changes in 2022, the Albanian legislation marked an achievement by already exempting from the obligation to apply for licensing for the trading or supply of electricity all those companies that have a license issued by the regulatory authority of a country that is part of the Energy Community or the European Union. Thus, these subjects only need to recognise the license through its translation and notarisation, then depositing it in the competent authority in Albania.

One of the most important goals of investors is profit and income generated by the exercise of economic activity. Besides the above reasons, there is another reason why Albania is the ideal place to invest. Dividends, income derived as a partner’s profit, in Albania, are taxed at 8%, which is one of the lowest dividend tax rates.

However, believing that this article enlightens you on the reasons why you should invest in Albania, ‘Halimi Law and Tax’ – one of the law firms with the longest expertise in the energy sector since 2001, together with the best experts, who are part of our team – is always ready to explain to you in detail about any possible benefit, in order for you as investors to increase income, and Albania to benefit from economic development.