Albania - Introducing Solar-Powered Water Heating

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The sun rises over Albania

Theth National Park
Theth National Park

In Albania, rivers power the turbines that produce 95 per cent of the country’s electricity. Subsidized by the government, relatively cheap electricity has been a driver of economic growth, averaging a buoyant 6 per cent in recent years. But now these antiquated hydro plants are running beyond capacity, causing electricity shortages and power outages. To drive future economic growth, the country needs another energy source. But what?

Albanians don’t have difficulties spotting the alternative. With 225 sunny days per year, the country has an abundance of sunlight. The challenge, in part, is to give people the right incentives to switch to solar power for their water heating needs, which would reduce considerably the burden on the country’s hydro stations. And to do that in a country where incomes average around $2,060 a year, making it almost impossible for an ordinary Albanian to afford the considerable start-up costs.

To address this challenge, the government of Albania has formed a partnership with the United Nations Development Programme (UNDP) and the Global Environmental Facility (GEF) in order to help create a functioning market for solar water heating. The project is part of a global initiative to promote solar power in countries such as Algeria, Chile, India and Mexico.

In Albania the partners - the United Nations Development Programme (UNDP) and the Global Environmental Facility (GEF) - are currently finishing the preparatory stage of the project. After much analysis, they have concluded that the country can reasonably aim to install 90,000 sq. metres of solar water heating collectors over the next five years, the duration of the project.

Provided the project is successful, the partners believe that the demand for solar water heating will grow by 20 per cent annually after the project finishes, reaching 580,000 sq. meters of installed solar water heating collectors by 2020. In the process, the country will be able to reduce its emission of greenhouse gases by 1.5 million tons over the next 20 years.

Following the preparatory stage, the partners will assess what institutional frameworks need to be established to promote a market for solar power. This includes devising the right tax incentives, subsidies and other measures designed to foster domestic production of solar power units and make it easier for consumers to make the switch. Furthermore, the parties will conceive a promotional effort to educate the public about the benefits of solar power.

Needless to say, the hurdles are still formidable. Currently Albania has only one producer of solar water heating units. The project team believes this number will grow once the right policies are put in place.

According to Ermira Fida, National Program Manager for Climate Change and Solar Heating at UNDP, the project will also help establish quality standards that domestic producers of solar power units must enforce. "Albanian consumers need to be sure of what they are buying", she says.

Context

Focus Areas

Geographic Scope

Albania, as part of the Global Project where during the first phase are involved also Algeria, Chile, India, Mexico and one combined subproject for Lebanon and Palestinian Authority.

Stakeholders

UNDP is playing the role of the GEF Executing Agency.

Contacts

Batkhuyag Baldangombo, Environmental Programme Officer, UNDP Albania

Ermira Fida, MoEFWM, Albania Mirela Kamberi, MoEFWM, Albania


Contents

Background and Significance

Background

Skadar lake Waters
Skadar lake Waters

Albania has significant potential for utilization of solar energy with an average of 225 sunny days/year and an annual yield of standard solar water heating systems ~ 500-650 Kwh/m2 per year. From the other hand, around 82 % of domestic hot water is covered by electricity, demand for hot water in residential sector is projected to grow from 600 GWh in 2000 to 875 GWh in 2015 and 67 % of electricity consumption comes from household sector. As a by/result and not only because of the above-mentioned, there has been a growing disparity between the demand and the supply capacity in Albania over the past several years, leading to frequent power cuts, and solving this situation has become one of the key priorities of the Government.

A primary objective of the National Energy Strategy (NES) is to improve Albania’s energy security position. On the demand-side, the National Energy Strategy proposes a number of measures in order to reduce the growth rate of energy consumption, including promotion of solar water heating systems for domestic hot water preparation, thereby reducing the amount of electricity used for this purpose.

The proposed project has been formulated in collaboration with the Albanian National Agency for Energy (NAE) to support the NES implementation in the area of transforming the market for hot water preparation in the residential and services sectors from the currently used electric boilers to a predominance of solar water heated boilers, which has been identified as one of the priority measures to reduce also country’s GHG emissions also by Albania’s First National Communication (FNC) and Technology Needs Assessment (TNA).

Goal and Objectives

The project preparatory phase (PDF B) which is currently under implementation aims to assist the Government of Albania to formulate the full size GEF project that will accelerate the market development for solar water heating with the objective to achieve the level of 90,000 m2 of installed solar water heating capacity by the end of the project and a sustainable growth of the market at the average annual rate of 20 % after the project has ended to reach 580,000 m2 of installed solar water heating capacity by the end 2020. By this, the project will reduce the use of electricity for hot water preparation with the estimated, cumulative GHG reduction potential of over 1 million tons of CO2 by the end of 2020.

The Experience: Challenges and Solutions

WHAT

Three mikro-studies have been performed under the PDF-B project in order to ensure the best picture regarding the current solar energy utilization for hot water preparation, to assess the future potential, to analyse the market and the consumers affordability for the installation of SWH, to evaluate the capacities of SWH installers and vendors, to assess the solar thermal technologies as well as available public support and purchasing modalities and finally to make the financial analysis and find out the ways for promotion of SWH:

Solar Panels on Kindergarden
Solar Panels on Kindergarden
  • Market Survey and Market Analysis as per three climatic zones and different consumers’ types:
    • Commercial and Service Sector (existing & new buildings for hotels, recreational facilities & restaurants, hospitals, schools & other public buildings); and
    • Residential Sectors (existing & new household buildings).
  • Manufacturing Survey;
  • Financial analysis.

According to the draft ProDoc, the expected outputs of the project "Albania- Market Transformation for SWH” are listed as following:

  • Enhanced awareness and an enabling policy framework in place to stimulate demand for SWH systems;
  • Leveraged financing to reach the set target of additional 50,000 m2 of new installed SWH capacity by the end of the project (including the establishment of a supportative financing mechanism);
  • Successful introduction of a certification and quality control scheme applicable for Albanian conditions;
  • Enhanced capacity of the supply chain to offer products, delivery models, installation and after sale services that are conducive to the overall market transformation goals of the project;
  • The provided support, institutionalized and the results, experiences and lessons learnt documented and disseminated.

WHO

The primary stakeholders of this project are:

  • The targeted consumers (residential and service sector);
  • Local SWH manufacturers, dealers and installers;
  • Domestic banking community;
  • Local power utilities;
  • The Government of Albania (Ministry of Economy, Trade and Energy (MoETE), the Ministry of Environment, Forestry and Water Management (MoEFWM) and the National Energy Agency (NEA)) in a number of different capacities:
  • drafting and approving new legislation as needed to activate the solar thermal programme;
  • financing and implementing selected project components,
  • executing the project and facilitating the co-ordination with the associated Government funded activities in co-operation with UNDP;

In providing technical backstopping for country specific activities and working with international experts, major emphasis will be placed on making sure that the work will be done jointly and in close co-operation with local experts and interest groups, thereby also facilitating the associated on-the-job training.


WHERE

What is the location of the experience?

Mountain river, Theth
Mountain river, Theth

Albania has a typical Mediterranean climate, with favourable conditions for utilizing solar water heating compared to, e.g., Northern and Central Europe. According to radiation measures undertaken by the Institute of Hydrometeorology radiation varies between 1170 [kWh/m2, year] in the North East part of Albania and 1680 [kWh/m2, year] in Fier, with a country average of 1460 [kWh/m2, year]. This compares to averages of 913 [kWh/m2, year] in the Netherlands, 1095 [kWh/m2, year] in Denmark, 1387 - 1679 [kWh/m2, year] in France and North of Italy and 1679 [kWh/m2, year] in Spain, South of Italy and Greece.

Due to the collapse of industries, and a growth in residential and commercial that later now occupies more than 60% of the total energy demand and 62% of the electricity demand. Up to 1990, supply and demand for heating, cooking, domestic hot water and fuels (mainly wood) were more or less in balance with electricity national production mainly from hydro sources. After 1990, there was a large reduction of fuel wood supplied by the state enterprises to urban areas, resulting in extensive illegal cutting of trees as well as increasing electricity consumption. The latter trend has been further strengthened due to low prices and poor payment discipline.

Electricity is the only energy commodity, for which prices have not yet been liberalized. This, combined with the higher, liberalized prices of competing fuels, has inevitably led to the increasing electricity consumption in meeting the household’s energy needs, thereby contributing to the growing electricity demand-supply imbalance in Albania. While traditionally over 90% of country’s electricity demand has been met by domestic hydro power generation, the Government is trying to cover the current imbalance through electricity import and new fossil fuel power plant construction. The World Bank has helped the government to draw-up an investment plan to expand its installed capacity by 823MW by 2015 and 75% of this new capacity is expected to come from fossil fuels.

Over 70% of domestic hot water needs of the household and service sector in Albania is supplied by electric boilers. According to studies conducted as a part of National Energy Strategy prepration (2002) and following baseline development, the demand for hot water in Albania is projected to grow from 600 GWh in 2000 to 875 GWh in 2015, in the residential sector alone.

At present time there is only a limited market potential for solar thermal energy utilization, because the current situation with regards to energy economics limits the economic feasibility of solar thermal energy use for domestic water heating compared to conventional energy resources.

The PDF B Project aimed to write the prodoc for solar water heating targeted to different consumers as per three climatic zones all over Albania:

  • Commercial and Service Sector (existing & new buildings for hotels, recreational facilities & restaurants, hospitals, schools & other public buildings); and
  • Residential Sectors (existing & new household buildings).

Any important contextual details: in the countryside, in the city, in a protected area, coastal zone, wetland?

The coastal zone is the most important one since it coincides with the first climatic zone, the warmest one, where the solar potential is the biggest.

Who lives in this area? What socio-economic/ethnic factors are important?

The project covers the whole territory of Albania.

The project aiming at promotion of solar water heating in Albania will approach various target groups:

  • Hot water consumers;
  • SWH producers, importers, plumbers, planners, architects, M&E engineers, builders and housing associations;
  • Banking system;
  • Related institutions and other interested players.

WHEN

When was the project implemented?

The PDF – B Project has started in October 2005 and is currently on up to the end of 2006.

What is the status /progress of the project/intervention?

The prodoc has been submitted to GEF Sec for approval in April and is already approved as Global SWH Project in August 2006.

Was the duration appropriate, too long, needed for such a project to evolve?

For the PDF – B stage, the time was appropriate. The Prodoc already considered the conclusions and recommendations of other studies previously performed in the field.

Does/did time related factors have any specific influence/impact on the experience?

No.


HOW

The project has gone through the following steps:

  • The Global solar water heating Project has been approved by GEF Sec in August 2006;
  • Because of the similarities in approach with a global SWH project already submitted to GEF Sec for approval; and benefits of having stand alone projects versus a global project - we have been advised not to proceed with a stand alone Albania project, but to fold it into the global SWH project and have Albania as one of the first countries to benefit from this global initiative;
  • The full-size project document has been drafted and submitted for approvfal in April 2006;
  • The Market Survey and Market Analysis as per three climatic zones and different consumers’ types are performed:
    • Commercial and Service Sector (existing & new buildings for hotels, recreational facilities & restaurants, hospitals, schools & other public buildings); and
    • Residential Sectors (existing & new household buildings).
  • Manufacturing Survey is performed;
  • Preliminary financial analyses are done.
  • Based on the results of the above-mentioned studies, the Situation Analysis has been completed, which implies:
    • Climate Change;
    • Energy Sector;
    • National Policy Framework (legislative and institutional);
    • Technology Introduction and Supply Chain;
    • Financing Environment for SWH Financing (banks and other lender loans, leasing, vender financing, guarantees, interest rate subsidies, other financial incentives to be considered).

During the project, there has been a good cooperation among the related institutions and other interested stakeholders like: (MoEFWM), (MoETE), National Energy Agency, EU-Energy Efficiency Centre, environmental NGOs, producers/installers and traders of SWH systems, and even banks which appeared to be very interested to the business of solar water heating systems.

To this cooperation, it is worth to mention even the one between the project and the Austrian initiative in the region for promotion of solar energy. A great contribution came through the international consultancy which was contracted for the purposes of the project.

The cost of the project: Total PDF B USD $ 350,000

  • GEF: USD $ 280,000
  • UNDP: USD $ 10,000
  • Albania Government: USD $ 60,000

Results and Impact

UNDP-GEF Project on Market Transformation on Solar Water Heating in Albania (as part of a global GEF funded project, subject of GEF approval) aims to accelerate the market development for solar water heating in Albania.

Lessons for Replication

Main Results

Global SWH approved

Outlook (Conclusions and Next Steps)

N/A

Testimonies and Stakeholder Perceptions

Timeframe & Status

Based on the recommendation for promotion of solar water heating coming from important national documents like Albania National Energy Strategy, Albania First National Communication to United Nations Framework Convention on Climate Change and Albania’s Technology Needs Assessment, and also considering the Albanian policy and legislative developments in the energy & environment fields to gradually move towards adoption of EU directives and legislation, through the Climate Change Program/Ministry of Environment, Forestry and Water Management (MoEFWM), and Ministry of Economy, Trade and Energy (MoETE), Albania applied for and it has been approved the GEF-UNDP PDF- B Project "Albania - Market Transformation for Solar Water Heating". The project preparatory phase (PDF B) is currently under implementation.

The full-size project document has been drafted and submitted already. Because of the similarities in approach with a global SWH project already submitted to GEF Sec for approval; and benefits of having stand alone projects versus a global project - we have been advised not to proceed with a stand alone Albania project, but to fold it into the global SWH project and have Albania as one of the first countries to benefit from this global initiative. UNDP is closely working and communicating with the GEF Secretariat on its finalization under GEF-3.

References

See also

Water Knowledge Fair 2006

External Resources

Attachments

 Albania Solar water heating.doc

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