Is Hydropower the best solution for energy generation in Albania?

Water abstraction is the main threat to freshwater ecosystems in the Mediterranean. As part of MAVA’s action plan on ensuring integrated management of water basins and the effort to advance our understanding of the real costs and benefits of infrastructure investments and assist decision-making in favor of sustainable infrastructure planning, the International Institute for Sustainable Development (IISD) has developed the Sustainable Asset Valuation (SAVi).

This SAVi methodology was recently used and customized to assess two hydropower projects that are currently planned along the Vjosa River in Albania. The objective of the study was to investigate and calculate the value of environmental, social, and economic externalities caused by these two projects and analyze how they would affect their net economic value overall.

The Vjosa River enjoys wide international support due to its uniqueness as Europe’s last free-flowing river. Except for the first 10 km below its springs, its entire course of about 260 km is untamed. The river’s catchment area is characterized by undisturbed river dynamics and distinct floodplain ecosystems with around 500 species and 15 priority habitat types.

However, plans to construct two large-scale hydropower plants (Kalivaç and Poçem) along the Vjosa pose a threat to the livelihoods of the local population and these diverse ecosystems. The two projects have a combined installed capacity of 210 MW and are structured as public–private partnerships with a total investment value of EUR 250 million. The SAVi assessment included various cost factors that are often omitted in traditional cost–benefit analyses and asset valuations for hydropower, such as sediment transport, resulting dredging needs to keep the hydropower plants at full capacity, and costs associated with lost agriculture production and lost tourism opportunities. Further, the assessment forecasted financial performance impacts due to changing precipitation levels caused by climate change and conducted sensitivity analyses for key parameters such as electricity price and discount factors.

The integrated cost–benefit analysis for both hydropower plants concluded a negative net result of more than EUR 550 million over the 60-year lifetime of these projects. A summary of this assessment is available in English and Albanian and the detailed results are presented in this report.

The insights of this assessment combined with related scientific studies that were conducted on the conservation value of Vjosa contributed recently to building up political attention and lead key political decision-makers, such as the President of Albania, to speak in favour of protecting the Vjosa River and abandoning the hydropower plans. The President of Albania, Mr. Ilir Meta, stated recently to be “in favor of a national park. The electricity can be generated differently, mainly by solar and wind, so there is no need to destroy the Vjosa.”

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