Albania has secured €114mn in German financing for an energy infrastructure and efficiency programme aimed at strengthening the reliability of its electricity system and modernising strategically important public assets. The agreements were arranged through the German development bank KfW. The package combines €90mn in loans with €24mn in grants.
The blended structure is designed to reduce Albania’s direct financing burden while directing funds to projects that are less likely to be delivered through purely commercial financing. Energy Minister Enea Karakaci presented the agreements as a continuation of Albania’s long-standing energy partnership with Germany. The programme covers transmission upgrades, hydropower modernisation and energy-efficiency measures.
Transmission network reinforcement for renewable integration and trading
The largest component focuses on improvements to Albania’s electricity transmission network. Grid reinforcement is intended to support the integration of new renewable generation. It is also linked to improving cross-border trading and reducing operational risks tied to the country’s heavy dependence on hydropower.
These transmission works are positioned within a broader effort to prepare the system for changes in generation output and power flows. The financing structure includes a grant element of €24mn, representing roughly 21% of the total package. This contribution is intended to improve affordability for the programme.
Vau i Dejës hydropower rehabilitation and balancing services
A second part of the financing supports modernisation of the Vau i Dejës hydropower plant, described as one of Albania’s principal generating assets. Rehabilitation is expected to improve availability and operating efficiency. It is also aimed at enhancing the plant’s ability to provide balancing services during periods of volatile renewable production.
The programme highlights that such investments are particularly relevant in dry years, when Albania’s hydrological exposure can lead to higher electricity imports. The modernisation component is therefore tied to maintaining system flexibility under changing water conditions. The financing approach also aims to enable modernisation of existing assets.
Energy-efficiency upgrades at Tirana student residences
The third component covers energy-efficiency improvements at student residences on the university campus in Tirana. Although smaller than the grid and hydropower investments, it introduces a demand-side element through lower heating and electricity consumption in public buildings. This measure is part of the same overall package backed by German financing.
The overall design combines three priorities that are often financed separately: stronger transmission infrastructure, rehabilitation of existing renewable generation and reduced consumption in the public-building stock. The programme is also described as providing a relatively low-cost route for Albania to modernise existing assets while preparing its network for a more diversified generation mix.
