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downward trend is primarily attributed to shifts in the headline deficit and a substantial increase in nominal GDP.
However, projections for 2024 and 2025 are contingent on various country-specific risks. The enactment of a reconstruction act addressing flood damages is expected to determine spending requirements and additional revenue sources for 2024 and beyond. Additionally, negotiations with social partners regarding the reform of the public sector wage system may exert a noteworthy influence on fiscal projections for the year 2025.
7.0 Energy & Power
7.1 Energy & Power - Albania
Albania generates almost all its electricity from hydropower, and production fluctuates sharply from year to year depending on weather conditions. Accordingly, Albania is seeking to diversify its electricity production, mainly through investments into solar and wind capacity.
In the third quarter of 2023 (latest data available) net domestic electricity production rose by 17.5% y/y to 1,611 GWh, enabling Albania to significantly reduce imports.
Public hydropower plants (HPPs) contributed 76.7% of the total, independent power producers made up 21.5%, and other producers (photovoltaics) generated 1.8% of net domestic electricity production.
Albania has long taken advantage of its many rivers to produce electricity. Some of the main hydropower infrastructure was built back in the communist era such as the Komani HPP on the Drin river, which provides some 65% of the country's electricity, although there have been more recent investments such as those by Norway’s Statkraft.
Environmental groups have campaigned vigorously against the construction of new HPPs and dams in Albania and the region amid a new wave of hydropower investment – both large- and small-scale – in Southeast Europe.
Campaigners warned that new HPPs threatened the last wild river in Europe, Albania’s Vjosa river. Tirana has since announced plans to revise its strategy on building small HPPs, and has declared the Vjosa area a national park, thus blocking hydropower development.
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