Albania and Kosovo are the signatories and Contracting Parties of the Energy Community Treaty, which was signed in October 2005 in Athens, Greece, and has been in force since July 2006, with the initial period of 10 years which was then extended to 2026. The key objective of the Energy Community (EnC) is to extend the EU internal energy market rules, standards and principles to countries in South East Europe, the Black Sea region and beyond through a legally binding framework composed by a number of acquis on energy, environment and competition.
Based on this treaty, Albania adopted in 2015 a new Power Sector Law (no.43/2015), which transposes the EU Directive 2009/72/EC of 13 July 2009, concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC. The new Power Sector Law dismissed the single-buyer wholesale market model and introduced a multi-segmented liberal market. The new market pattern defined in the Power Sector Law includes the day-ahead market (DAM), the intraday market (IDM), the balancing market and the ancillary services’ market, as well as the market of bilateral contracts, which is in line with customary practice across many EU countries. The Power Sector Law also provides the establishment of a Power Exchange for the purpose of operating the organized electricity market in Albania.
According to Power Sector Law, the Albanian Government adopted in July 2016 the Albanian Electricity Market Model, which defines the roles and responsibilities of the various stakeholders in an organized DAM and IDM market, while more specific rules how the organized market shall function were approved by the Albanian Energy Regulatory Authority (ERE) in December 2017.
In line with the requirements of the Power Sector Law, in July 2020, the ERE approved the Rules of Balancing Market (decision no.106, date 2.07.2020), which provides the establishment of a competitive market for balancing services required by the Albanian TSO.
Based on the Council of Ministers’ decisions, respectively no. 322, dated May 15, 2019 "On the establishment and designation of the legal form and ownership structure of the market operator’s share capital" and no. 609, dated September 11, 2019 "On defining the criteria and procedures for the selection of participants in the market operator’s share capital” the Albanian Power Exchange (ALPEX) was established in October 2020 as a Joint Venture Company under the Albanian law, owned by the Transmission System Operators of Albania (OST) and Kosovo (KOSTT).
In December 2020 the Energy Regulatory Office of Kosovo (ERO) approved the request of KOSTT to delegate the authority for organizing the DAM and IDM in Kosovo to ALPEX. Therefore, the ambition is that ALPEX shall become the NEMO for both Albania and Kosovo, subject to regulatory approval.
Under the auspices of the Energy Community Secretariat and the European Commission, six Contracting Parties of the Energy Community including Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia joined to the Western Balkan 6 (WB6) initiative (also known as the Berlin Process). The primary aim of the WB6 initiative was to support these countries in strengthening regional cooperation and driving sustainable growth and jobs. In April 2016, the six countries signed the memorandum of understanding (MoU), which sets out the general principles of cooperation as well as concrete actions to develop the regional electricity market. With their signatures, the EU stakeholders recognized the importance of the initiative in terms of driving regional DAM coupling between the Energy Community Contracting Parties and neighboring EU member states. Stakeholders from all EU member states that neighbor with the WB6 countries joined the initiative by signing the MoU.
In line with the WB6 MoU, in June 2018 a MoU was signed between OST, KOSTT, ERE and ERO for coupling of the day-ahead and intraday electricity market. On 21 October 2021, Albania and Kosovo, supported by USAID, as part of the USA support for energy security and regional integration of Albania and Kosovo , signed the Framework Agreement on Market Coupling electricity markets between the two countries.
Based on the above, ALPEX is expected to operate the organized electricity market (day-ahead and intra-day) in Albania and Kosovo, by having market coupling between Albanian and Kosovo electricity market, and to facilitate future coupling with other neighbouring markets in accordance with EU electricity market regulations and the European Target Model.