Support contracts for energy producers - ERE: The market is not ready to convert them into contracts for difference
The periodic assessment of the functioning of the Day-Ahead Market shows that the Albanian market is not sufficiently developed to produce a stable reference price, making it impossible to convert existing renewable energy producer support contracts (PPAs) into contracts for difference (CfDs).
According to the analysis conducted by the Energy Regulatory Authority, although some positive developments have been noted, the day-ahead market in Albania still does not meet the conditions to be considered fully functional in this regard.
One of the main findings relates to market liquidity. The turnover factor in ALPEX is significantly lower compared to the European Union markets used as a reference, which indicates a more limited level of trading activity in relation to the size of the market. At the same time, the difference between supply and demand, another important indicator, is higher than in the comparative markets, signaling difficulties in carrying out transactions without significant price fluctuations.
However, the document also highlights some encouraging developments. For more than 10 months, the market has produced an uninterrupted hourly price, while the number of participants is considered comparable to EU countries. Also, the Albania-Kosovo common market has functioned in an integrated manner over 99% of the time, reflecting a high level of regional coordination.
Another element is the market's ability to absorb new production from renewable sources. According to the data, in about 25% of the hours of analysis, the market would not have been able to absorb new energy volumes without negatively impacting the price, which constitutes a limitation for the expansion of green capacities.
This assessment implies that the transition to more advanced schemes, such as contracts for difference, will require further increases in liquidity, competition, and market depth.
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