52122 Climate Vulnerability Assessments An Assessment of Climate Change Vulnerability, Risk, and Adaptation in Albania's Energy Sector Country Energy Sector Vulnerability Assessments Program Helping Countries Prepare an Effective Energy Sector Response Figure 1: Decision-making Framework for Adapting Vulnerable Energy Infrastructure to Climate Change Understanding Energy Sector Vulnerability itoring Before & mon Work t ation lnerabilities Climate ri sks & shop 1 men s & vu pl e vuln Im ate risk erab ili m ties C li Many countries are increasingly vulnerable to destructive and their costs and benefits. It draws on experience and 8 1 Cl weather events -- floods, droughts, windstorms, or other published guidance from the United Kingdom and 2 e nt Monitor decision Identify objectives im D at em e parameters. The vulnerability is driven in part by recent Australia, as well as existing research and literature. The ur isks na s ma ing in g 7 g W & vu r isk et 2 extremes in climate variability but also by countries' climate vulnerability assessment framework puts stake- te r Me ork lnerab Implement decision sensitivity to events exacerbated by past practices, holders at the heart of the decision-making process Clima fter Identify decision- sho making criterion A socioeconomic conditions, or legacy issues. The degree and involves: p1 6 to which vulnerability to weather affects the countries' COMMUNICATE AND ilities Make decision YES / NO economies is driven by their coping or adaptive capacities. 3 Climate risk screening of the energy sector to identify ENGAGE STAKEHOLDERS and prioritize hazards, current vulnerabilities, and 3 Seasonal weather patterns, weather variability, and risks from projected climate changes out to the Clima 5 Assess vulnerabilities s extreme events can affect the production and supply of year 2050 ilitie & risks Appraise options & vu ngs 1 Me te r energy, impact transmission capacity, disrupt oil and gas Identification of adaptation options to reduce rab 3 Cost-Benefit Analysis eti ana isk production, and impact the integrity of transmission overall vulnerability lne s & eti ng m sk Me s 2 gem 4 ri pipelines and power distribution networks. Climate change 3 A high-level cost benefit analysis of key physical ng en Identify adaptation options Du ri also affects patterns of seasonal energy demand. It is adaptation options t e & parameters for CBA at important to explore these vulnerabilities for the energy im Cli Du r Cl ma ing W sector given its major contribution to economic develop- This overview showcases a pilot vulnerability, risk, and te r orks ho 2 ent isk man p 2 shop gem ment, the long life span of energy infrastructure planning, adaptation assessment undertaken for Albania's energy agem Be fore Work & mana en t ment and the dependence of supply and demand on weather. sector to raise awareness and initiate dialogue on energy Climate risk assess sector adaptation. This pilot assessment demonstrates an In response to these challenges, the Energy Sector approach that can be used to help countries and energy Management Assistance Program (ESMAP) has developed sector stakeholders develop policies and projects that are a framework for decision-making to support adaptation of robust in the face of climatic uncertainties, and assist energy infrastructure vulnerable to climate change, them in managing existing energy concerns as the specifically the Climate Vulnerability Assessment Frame- climate changes. It identifies key direct risks to energy work (Figure 1). A bottom-up, stakeholder-based, supply and demand and options for adaptation to qualitative/semi-quantitative risk-assessment approach is establish where to focus subsequent in-depth analyses. used to discuss and identify risks, adaptation measures, It also identifies additional research needed to better understand the implications of extreme climatic events for the energy sector as well as potential indirect impacts "Europe and Central Asia suffers from an `adaptation -- such as possible adaptation actions in the agriculture deficit' that is already challenged by recent climate sector that may affect energy supply. variability, which will only worsen with the consequences of projected trends in climate in the coming decades." Marianne Fay, Director of the World Bank's World Development Report 2010, and author of the report Adapting to Climate Change in Europe and Central Asia 1 Country Energy Sector Vulnerability Assessments Program HElPIng CountrIES PrEPArE An EFFECtIVE EnErgy SECtor rESPonSE 2 Figure 2: generation, Import, and Supply of Electricity in Albania from 2002 to 2008 Albania's Energy Sector is Vulnerable Generation, import and supply of electricity, 2002-2008 to Climate Change 7000 6300 6000 6121 5900 5945 5933 Water Resources are a National Asset Other factors constrain Albania's ability to manage these 5430 5467 5409 5516 5750 challenges, such as limited regional electricity intercon- 5000 4974 Energy (GWh) The River Drin is the main source of electricity for nections and inefficiencies in domestic energy supply, Albania; delivering power for local industry and house- demand, and water use. Losses in the electricity 4000 3770 holds, and providing about 90% of domestic electricity distribution system were about 33% in 2008. Together, 3204 2933 3000 generation.1 Meanwhile, Albania's rainfall and snow is these factors create frequent load shedding and 2828 2417 among the more variable in Europe.2 As efforts to adversely impact Albania's economic development. 2072 2000 counter the impacts of climate change accelerate and as other countries struggle to reduce their greenhouse gas Meanwhile, small hydropower plants compete for limited 1000 937 emissions, Albania's ability to produce renewable energy water resources with the irrigation needs of the agriculture 567 633 365 will only increase in importance as a national asset. sector.3 This is exacerbated during summer when rainfall 0 2002 2003 2004 2005 2006 2007 2008 is the lowest and agriculture requires greater water Generation 2304 4974 5467 5409 5516 2933 3770 But the High Dependence on supply. Improving the efficiency of water use in Albania's Import 2072 937 567 365 633 2828 2417 Hydropower Brings Challenges irrigation system, where 10% to 20% of water resources Supply 5430 5900 5945 5933 6121 5750 6300 are lost, is an adaptation mechanism that can help both Albania already finds it difficult to meet energy demand sectors. Source: Authors and maintain energy supply due to the fluctuations in the country's rainfall and other precipitation on which Currently, efforts are underway to address these hydropower depends. As a result, hydropower production challenges and improve resource use efficiency. For can vary between almost 6,000 GWh in very wet years instance, the Albanian government has recently decided to less than half that amount in very dry years. In 2007, to eliminate load shedding from 2009 onwards and a drought in the Drin's watershed led to severe electricity committed to provide 24 hours of electricity supply. shortages and blackouts, affecting businesses and Electricity losses from the distribution system were citizens alike. reduced by 5.5% in 2008 compared to 2007 and losses from the transmission system were 3% in 2008, Figure 2 clearly shows lower domestic power production down from 4% in 2006. The efficiency of water use in linked to low rainfall in 2002 and again in 2007 with energy generation has also improved due to better resultant associated high energy imports. It is worth monitoring and management. noting that, even with imports, load shedding is still required so the energy consumption data in Figure 2 do not represent the true energy demand. 1 The remaining domestic generation comes from the Mati River and other smaller hydropower plants. A new thermal power plant is expected to come into operation in late 2009 that will add about 10­15% of domestic generation capacity in the country. 2 There are several factors that contribute to Albania's variable rainfall: it is mountainous; it is located to the northeast of a body of water; and it receives a considerable amount of its moisture from irregularly occurring cyclones. 3 Agriculture accounts for 20% of GDP and almost 60% employment. Irrigated agriculture is key for high value and export crops (fruit and vegetables). 3 Country Energy Sector Vulnerability Assessments Program HElPIng CountrIES PrEPArE An EFFECtIVE EnErgy SECtor rESPonSE 4 Figure 3: Annual Precipitation trends (%) Climate Change Looks Likely to Adapting to Climate Variability will over Albania, 1961­1990 Make Matters Worse, Unless become Increasingly Important for (Blue colours are areas that became drier) Prompt Action is Taken the Albanian Energy Sector Climate forecasts project an increase in droughts A wide range of Albanian stakeholders met regularly resulting from global warming and changing hydrology. over eight months to tackle these questions through a These changes could reduce annual average electricity collaborative assessment of vulnerability, risk, and output from Albania's large hydropower plants (LHPPs) adaptation for the energy sector. Through a series of by about 15% and from small hydropower plants structured workshops and meetings, they collectively 0.2 (SHPPs) by around 20% by 2050. Most of the country identified and prioritized 20 key risks and options for has already seen decreases in precipitation (Figure 3). managing them. 0 Other energy assets are not immune from climate Albania's draft National Energy Strategy (NES) sets out -0.2 impacts. Rising temperatures can reduce the efficiency of an `active scenario' to improve energy security in the transmission and distribution lines, as well as the power decade to 2020. It targets a majority of identified -0.4 produced by thermal power plants (TPPs) by about 1% adaptations and describes plans to diversify the each by 2050. If river-water cooled TPP were developed energy system by encouraging development of renewable -0.6 in future, these would be affected by changes in river energy generation assets (e.g., solar, small hydropower flows and higher river temperatures, further reducing plants, wind, biomass) and thermal power. It notes the -1 their efficiency. Owing to uncertainties in current and importance of new electricity interconnection lines, some future wind speeds, estimates of changes in wind power already under construction, to facilitate Albania's active -1.2 generation cannot be made. Solar energy production in participation in the South East European energy market. Albania may, however, benefit from projected decreases As currently drafted, the NES does not account for future -1.6 in cloudiness as it is estimated that output from solar climate impacts on the performance of new energy power could increase by 5% by 2050. assets -- neither generation nor transmission. -1.8 Higher temperatures due to climate change may reduce The draft NES does emphasize the need for improved the demand for heating in winter, but will increase energy efficiency through greater use of domestic solar demand for air conditioning and refrigeration in the water heating, improved building standards, use of summer. The seasonality of Albania's supply-demand lower energy appliances, and alternative heating sources imbalance raises this exposure: summer temperatures other than electricity. These energy efficiency measures Source: Bruci, E. (2008). Climate variability and trends in increase the demand for cooling and refrigeration at the are critical and will become increasingly essential as the Albania. IWE, Tirana Polytechnic University, Tirana, Albania. same time hydropower production is most constrained by climate changes. reduced rainfall. Summer temperatures also coincide with a greater irrigation need in agriculture, which may compete directly with small hydropower plants for the limited water supplies. 5 Country Energy Sector Vulnerability Assessments Program HElPIng CountrIES PrEPArE An EFFECtIVE EnErgy SECtor rESPonSE 6 Illustrating Climate Adaptation -- imports and exports of power. For example, hydropower is Two Ongoing Efforts exported at daytime peak periods to neighboring countries and imported at night time off-peak hours from thermal Better weather forecasting. Knowing that droughts occur power producers. and will recur in the Drin watershed, Albania's hydropower managers are adapting their operations. Working with Re-dimensioning small hydropower systems. The owner of weather and climate experts, managers plan to install a several small "run-of-the-river" hydropower facilities, has seen network of river-level sensors and a system for collecting decreasing accumulation of snow over the past few years and regional weather forecasts. Managers will be able to more melting start earlier each year. The earlier melting and less accurately forecast the river to time the filling and release of snow accumulation means that rivers swell sooner, stronger, water from reservoirs and more efficiently utilize the river and for shorter periods. The risk of flooding has increased flows with due consideration to flood handling. They are also and the operating window of his plants has shortened. To working with regulators to improve the efficiency of how the adapt to the changing circumstances, he has adjusted turbine water is used to generate electricity. This includes setting capacity and widened the river channel at one facility to minimum water levels for each reservoir and managing produce more energy during periods of high flows. However, the draft NES should also take into account significant seasonal impacts on energy security due to Figure 4: net Present Value of Diversification options to 2030 the fact that the wider region on which Albania depends changing demand and production over the year, with (To fill the energy shortfall due to climate change) for energy imports is also facing emerging climate summer peak demand increasing when hydropower impacts. About one quarter of the region's electricity is production is at its lowest. generated by hydropower and regional summer energy Net Present Value of Options demand will rise along with temperatures and economic A high-level cost benefit analysis (CBA) was undertaken 400 development. This could increase import prices and to estimate the relative costs and benefits to Albania of 300 reduce supply unless region-wide coping strategies are supplying the shortfall in its electricity production also devised. attributed to climate change impacts. Using financial 200 (capital and operational costs), environmental (water US$ millions Albania's Climate Vulnerability Assessment value, greenhouse gas and other emissions, and 100 Reveals an Energy Shortfall by 2030 ecosystem values), and social (disturbance to people and property) parameters identified by Albanian - Together with Albanian energy practitioners, the Climate stakeholders, the CBA ranked the sustainability of their -100 Vulnerability and Adaptation Assessment team extrapo- options, such as increased energy trade and different lated the energy planning scenarios to 2050, as outlined types of domestic energy generation (Figure 4). -200 in the `active scenario' of the draft NES, to illustrate IMPORT Enhance CCGT Enhance New WIND CSP New potential longer term impacts of climate change on energy Figure 4 presents the Net Present Value results in Existing Existing SHPP LHPP LHPP SHPP supply and demand. Assuming full implementation of the current (2010) US$ terms for each of the options tested, measures already identified in the extrapolated `active under a `base case' set of assumptions for the period to Source: Authors scenario,' the potential supply-demand gap was 2030. Based on this analysis, the most economic estimated at 350 GWh per year by 2030, equivalent to options for Albania are to upgrade existing LHPPs and power generation of 50 MW. By 2050, the shortfall SHPPs in the medium term, followed by development of rises to 740 GWh per year (105MW) or 3% of total new SHPPs and TPPs (shown as combined cycle gas demand. Embedded within these figures are the more turbine, CCGT). Sensitivity analyses confirmed that upgrading existing LHPPs and SHPPs were the most economic options for discount rates in the range of 2% to 20% and, as expected, are insensitive to the value of greenhouse gas emissions. 7 Country Energy Sector Vulnerability Assessments Program HElPIng CountrIES PrEPArE An EFFECtIVE EnErgy SECtor rESPonSE 8 Albania Has Options for Managing mechanisms for monitoring weather and its influence Weather and Climate Vulnerability on river flows and reservoir levels, as well as commu- nication with downstream communities, and There are several critical actions that Albania could take contingency plans for evacuation. now to support optimal use of energy, water resources, 3 Ensuring the management and development of water and operation of hydropower plants today. Enacting these resources integrates all sectors energy, agriculture, steps now will help Albania better manage climate water supply and sanitation, and cross-border concerns variability and build the country's future resilience to along with environmental and social concerns. climate change. 3 Exploring further adaptation opportunities. Climate change emphasizes the imperative to increase the 3 Improving the way that institutions monitor, forecast, diversity of its energy supplies through increased and disseminate information on meteorological and regional energy trade and a more diverse portfolio of hydro-meteorological conditions. Albania could domestic generation assets. With major investments develop (in-country) or obtain (from elsewhere) in upgrading new energy assets on the horizon, and weather and climate forecasts appropriate for energy the privatization of assets, the earlier climate risks are sector planning, covering short-range forecasts (1-3 considered, the greater the opportunities to identify days), medium-range forecasts (3-10 days), seasonal and implement solutions that make the energy system Coordination with Other Sectors Offers forecasts, and regional downscaled climate change more robust and resilient for coming decades. Adaptive Opportunities projections. This information could support energy sector stakeholders to undertake joint climate risk Albania's unique asset for water management. Across Albania there is a high density of small rural dams; 640 assessments across shared water resources and small- to medium-size reservoirs with a cumulative storage regional energy networks, and devise agreed capacity of about 0.6 billion m3. Developed for irrigation strategies to manage identified climate vulnerabilities from the 1960s­80s, there are important opportunities and risks. today to rationalize and modernize the dams, improve their use, and raise Albania's capacity to manage increasing 3 Improving energy efficiency by reducing system hydrological variability. Such measures could be further losses and encouraging and helping end users to supported through rehabilitation of main irrigation canals manage their demand for power. and better incentives for the adoption of efficient irrigation systems. 3 Upgrading Emergency Contingency Plans (ECPs) for hydropower plants where needed, to account for A synergy between quarrying and dredging for river expected increases in precipitation intensity due to basin management. Strong soil erosion, while a natural phenomenon in mountainous territory with heavy rainfall, climate change. Power producers and local authorities has been exacerbated in Albania by human activities, may also need to improve their capacities to imple- particularly deforestation during the 1990s. Large sediment ment ECPs, ensuring that they provide sound volumes end up in rivers and reservoirs, requiring strategies for sediment management. Encouraging quarrying of alluvial soils in river areas at the entrance to reservoirs could support adaptation. 9 Country Energy Sector Vulnerability Assessments Program HElPIng CountrIES PrEPArE An EFFECtIVE EnErgy SECtor rESPonSE 10 ACRONYMS AND ABBREVIATIONS CBA cost benefit analysis CCGT combined cycle gas turbine CSP concentrated solar power ECP emergency contingency plans GDP gross domestic product GWh gigawatt hours LHPP large hydropower plant m3 cubic meters MW megawatts NES National Energy Strategy SHPP small hydropower plant TPP thermal power plant The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and technical assistance trust fund administered by The World Bank and assists low- and middle-income countries to increase know how and institutional capability to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. This work benefited from support from ESMAP, the Trust Fund for Environmentally & Socially Sustainable Development (TFESSD) made available by the governments of Finland and Norway, and The World Bank. The Climate Change Vulnerability, Risk, and Adaptation Assessment of Albania's Energy Sector will be available at www.esmap.org. For more information on the Country Energy Sector Vulnerability Assessments Program or about ESMAP's climate vulnerability assessments, please visit us at www.esmap.org or write to us at: Energy Sector Management Assistance Program The World Bank 1818 H Street, NW Washington, DC 20433 USA email: esmap@worldbank.org web: www.esmap.org Photography Credits Cover: KESH Page 1: Albes Fusha Page 4: The World Bank Page 5: KESH; Gent Shkullaku Page 8: Alessandro Palmieri Page 9: Albes Fusha Production Credits Design: Schum & Associates, schum.com Copyright © NOVEMBER 2009 The International Bank for Reconstruction and Development / THE WORLD BANK GROUP 1818 H Street, NW, Washington, D.C. 20433 USA All images remain the sole property of their source and may not be used for any purpose without written permission from the source.