2016

ANNUAL REPORT
1
 2016
ANNUAL REPORT
3
 The domestic electricity market was
supplied with 8.46 TWh, of which 6.35
TWh were produced in our country and
1.82 TWh were imported from the regional
electrical energy market. The energy
balance, for 2016, positions Albania as
an exporter country, with a net amount of
energy equal to about 42 GWh in output.
Electricity transmitted to the transmission
network for 2016 is about 8% more than
the electricity transmitted in 2015.

4
Dr. ENGJËLL ZEQO
ADMINISTRATOR OF TSO

Dear friends, Honorable colleagues,

I have the pleasure to present to you the annual report and to share with you our satisfaction for the work
accomplished throughout 2016. During this year, TSO staff has shown the highest commitment to meet all legal and
technical requirements for the operation, maintenance and development of the Albanian Power System.
TSO has ensured a high performance in fulfilling its obligation for the efficient transmission of electricity to the
domestic market, as well as electricity exchanges in the regional market, in full compliance with the standards for
parallel operation with the European Continental Synchronous Area.

The domestic electricity market was supplied with 8.46 TWh, of which 6.35 TWh were produced in our country and
1.82 TWh were imported from the regional electrical energy market. The energy balance, for 2016, positions Albania
as an exporter country, with a net amount of energy equal to about 42 GWh in output. Electricity transmitted to the
transmission network for 2016 is about 8% more than the electricity transmitted in 2015.

Special attention is continuously dedicated to accomplishing major projects aimed at strengthening and extending
the transmission system. The results achieved in 2016 on service quality and system reliability improvement, as a
consequence of our maximum commitment in accordance with the best European and ENTSO-E standards, will be
preserved and enhanced in the coming years, through investments and projects supporting the key role of TSO in the
development and operation of the power system and the electricity market in the country.

The future challenges, which are closely related to the improvement of regional cooperation and other wider markets
cooperation of TSO, such as: (i) creation of a joint electricity market with Kosovo and beyond; (ii) coordination for the
security operation of the power systems; (iii) creation of day ahead market, etc., are integral parts of our vision for the
future - I am convinced that with our cooperation and commitment we will successfully accomplish these challenges
contributing to the reformation of the power sector, promoting the economy and the security and sustainability of the
national power system.

5
6
 CONTENT

8
I. TSO presentation

13
II. TSO management model

17
III. Operating system management

29
IV. Transmission network exploitation and maintenance

37
V. Market operator

42
VI. Transmission system development planning

48
VII. Financial statements

7
 I. TSO PRESENTATION
1. GENERAL INFORMATION

Electricity Transmission System in Albania is managed by the Transmission System Operator (TSO), which is a
public company with 100% of the shares owned by the state. Based on the legal and regulatory framework in
force, TSO has the responsibility to operate, maintain and develop the transmission network system, including
interconnections with other systems across borders, to ensure a long-term ability of the system to meet the
requirements for reasonable electricity transmission. Transmission System Operator (TSO) is one of the major
components of the electricity market in Albania. Based on this important role, the company relies on the medium
and long term plans of the electricity’s sector development in the country.

TSO in fulfilling of its

responsibilities to apply as:

System operator Market operator

Transmission
network operator

8
The main responsibilities of TSO arising from laws, regulations and regulatory requirements in force are:

TSO is responsible for:

Power flows management

in the electricity System balancing
transmission system services

Development of the transmission

network to guarantee Covering of network
the security of the electricity losses and providing
transmission system ancillary services

Cross-border Connecting users with the

capacity allocation transmission system network

9
 2. MISSION, PRIORITIES AND STRATEGIES
MISSION

TSO is a company that provides high quality services for all transmission system users, based on best practices,
achievements and standards applied for transmission system operators, thus contributing in the economic
development of Albania and in securing quality exchange of energy in the country and region.

PRIORITIES AND STRATEGIES

Development of the transmission network in compliance with the expectations and development plans of the
electricity sector as a whole.
Development of cross-border capacities in compliance with the regional projects and beyond, in coordination with
the region’s development plans and projects.
Making strategic investments and investments related to the replacement of old technology, as well as the
incorporation of the contemporary technology to an intelligent management of power networks.
Proactive involvement in regional and European initiatives.
Provision of adequate operating conditions for the electricity market in compliance with anticipated market
developments.
Effective and efficient functionality to maintain and guarantee the stability of the Albanian electricity system.
Ensuring financial stability of the company.
Close cooperation with ERE (Energy Regulator Entity) to ensure a transparent and competitive electricity market
model.
Enabling attractive employment environment in the labor market in Albania.
Observance of all environment policies in compliance with European Standards in transmission network
management and development.

TSO is constantly looking to improve its technical, economic and financial performance in order to meet the highest
international standards of the Energy Community Market, as well as the standards of European organizations,
which promote and monitor the opening of the domestic electricity market and its integration into the regional and
European energy market.
In accordance with the stipulations of thE LTA, TSO is entitled the right to participate in all technical structures of
ENTSO-E represented by respective experts, as well as in the General Assembly of ENTSO-E.
Albania is one of the signatories of the Energy Community Treaty in relation to the regional development of the
electricity sector and natural gas in Eastern Europe. This treaty requires member states and our country to align and
adopt the legal framework with the acquis communautaire of EU in four areas, including the directive on internal
electricity market and the regulation on the exchange of electric power between neighboring countries. TSO is one
of the founding companies of SEE CAO (South East Europe Capacity Allocation Office) jointly with the transmission
companies of Montenegro, Croatia, Greece, Kosovo, Bosnia – Herzegovina, Turkey and Macedonia.

Since 2015 SEE CAO conducts annual, monthly and daily auctions of interconnection capacity allocation. Actually
due to non-recognition of Kosovo as a controlled area, monthly and daily auctions of capacity for this border area
are conducted by TSO SEE CAO is a real proof of the efforts for regional cooperation between Transmission System
Operators in the region which establishes favorable conditions for the development of the common energy market in
the future. The Law No. 43/2015 “On Power Sector”, as well as the expected imminent membership with full rights
in ENTSO-E, presents TSO with a new perspective, which requires the entire electricity sector, and consequently
TSO to adapt with European models of governance and operation.

One of the areas of development of the sector in the near future is the establishment of the Electricity Exchange
Market in which TSO is expected to be the main shareholder.
In this regard, the Steering Committee, established under the auspices of the Ministry of Energy and Industry,
an active part of which is the Market Operator, is working extensively with all market participants to create the

10
conditions, measures and legal and technical steps that should be undertaken for the successful establishment and
operation of the Albanian Electricity Exchange Market according to the best European practices and the merger with
the Pan-European Market in support of the obligations and commitments undertaken by the Albanian Government
arising from the Berlin Process.

3. ENVIRONMENTAL ISSUES

TSO considers environmental conservation and protection as one of its primary tasks and is constantly working
to improve the environmental performance of the company. TSO has already developed and implemented
environmental policies, which are made public on the website of the company. The implementation of environmental
policies is carried out through Action Plans, which give details about all identified environmental issues. The
environmental policy of TSO is based on three main pillars:

a) Management of Environmental Issues; TSO develops environmental policies pursuant to laws and regulations
on power and in accordance with environmental requirements pertaining to electricity sector.

TSO complies with all legislation on power starting from the planning phase all the way through the implementation
and completion of each project. Each project is in compliance with:

Law No. 10431, dated 09.06.2011, “On Environmental Protection”, to prevent and take measures for the
improvement of environmental conditions and quality of life and ensuring conditions for sustainable development.
Law No. 10440, dated 07.07.2011, “On Environmental Impact Assessment”, amended by Law 12/2015, to obtain an
Environmental Statement / Decision on Preliminary EIA depending on the type of project and its scope

TSO takes all measures to comply with all legal requirements concerning forests and pastures in cases the project is
implemented into forest and pasture areas by obtaining also all the necessary documentation and licenses.

b) Improvement of Environmental Performance by raising appropriate awareness for the staff and by providing
relevant trainings on this issue;

c) Prevention and Mitigation of Environmental Impact by monitoring and controlling the emission of gases
in atmosphere and the protection of pollution discharge making sure it is within accepted standards, in order to
preserve and protect the sustainability of natural resources.

An “Environmental Impact Assessment” report is prepared for all projects undertaken by TSO. This report describes
and assesses the direct and indirect impact of the project on people, flora and fauna, groundwater and surface
water, climate, terrain and its construction, as well as the interaction of these factors with the cultural heritage,
social activity and environment. Upon completion of this assessment, necessary measures are taken to prevent or
eliminate the negative impact on the environment.
Public information and awareness-raising concerning the negative effects that might be caused by the
implementation of the projects.
All the conditions set in the Environmental Statement or Decision on Preliminary EIA shall be applied by taking the
necessary measures to avoid, reduce or minimize all the undesirable environmental impacts.
All sites, assets and maintenance teams are monitored and inspected constantly during the project implementation
and operation phases.
Areas affected by the project are rehabilitated and trees are replanted in accordance with pertaining legislation to
enable the improvement of the environmental situation.

Management has set environmental objectives and policies to address environmental issues arising from the activity
of the company. A strong base for the management of environmental issues is Environmental Management System
in accordance with the European standard ISO 14001.

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12
 II. TSO MANAGEMENT MODEL
1. GOVERNING STRUCTURE

TSO is governed by:

Supervisory Board Administrator

The Supervisory Board of TSO consists of six (6) members appointed by the General Assembly.
On 31 December 2016 the Supervisory Board:

PAJTIM BELLO NIKOLLA LERA

Chairman Member

ARBEN DHIMO ARTUR LAMA

Member Member

ETJEN XHAFA ENKELEJD MUSABELLIU

Member Member

The Supervisory Board of TSO has appointed:

ENGJËLL ZEQO
Administrator of the company

13
 THE NEW ORGANIZATIONAL STRUCTURE OF TSO

SUPERVISORY
COUNCIL

AUDIT

ADMINISTRATOR

CABINET DIRECTORATE OF HUMAN

DIRECTORATE RESOURCES AND SERVICES

PROCUREMENT
DIRECTORATE

ECONOMIC
DIRECTORATE

LEGAL DIRECTORATE

SYSTEM OPERATION MARKET OPERATOR TRANSMISSION

DEPARTMENT DEPARTMENT DEPARTMENT

14
 MONTENEGRO
KOSOVO

2
MACEDONIA

GREECE

ADMINISTRATIVE UNITS OF TSO

1. Shkodra Operating Unit 4. Elbasani Operating Unit

2. Burreli Operating Unit 5. Fier Operating Unit
3. Headquarters 6. Korça Operating Unit
Tirana Operating Unit
Transsmision Maintenance Unit 15
 2. HUMAN RESOURCES MANAGEMENT

The organizational structure of the company is simple and flexible, creating the possibility of further improvements
and the establishment of new management units based on this structure.

Average number of TSO employees in 2016 was 715. TSO staff is motivated and skillful to meet strategic
objectives, pursue and implement new projects on time and with high efficiency.
To fulfill the arising obligations from the observance of legal standards and requirements for membership in
ENTSO-E, TSO has increased the number of qualified staff to be recruited by the company.
Human resources policies cover recruitment and selection of human resources, development of skills,
management of performance and rewards, gender equality and inclusion of other ethnic minorities.

CENTRAL ADMINISTRATION OPERATING UNITS

30 - 40 years
30 - 40 years

30 years 30 years 40 - 50 years

40 - 50 years

50 - 60 years

*Personnel according to age

50 - 60 years

CENTRAL ADMINISTRATION OPERATING UNITS

Female Female

Men

Men

*Personnel according to gender

16
III.OPERATING
SYSTEM MANAGEMENT
TSO in the role of System Operator operates the Power System both in normal and abnormal conditions.
TSO operates the power system using the best contemporary techniques on the operation of the transmission
system and its components, ensuring the balance between generating, exchanging and consuming electricity.
TSO operates the network in accordance with the provisions of Law 43/2015 “On Power Sector”, the Transmission
Grid Code, the Electricity Market Model, the bilateral or multilateral agreements, as well as other legal acts in
force. The Transmission System operates in accordance with all ENTSO-E guidelines and policies, in particular
the Operational Handbook of ENTSO-E and the Transmission System Operation Safety and Security (SO GL)
Guidelines.

TSO as the system operator is responsible for:

Scheduling daily/hourly demand
Operating the production and coverage, hourly scheduling for each
transmission system in compliance facility, and controlling the operating
with the Transmission Grid Code and security level using the
ENTSO-E standarts n-1 security criterion

Real time management of power

Management of ancillary services generation and demand, ensuring
necessary for the normal functioning the balance between generating,
of the system exchanging and consuming electricity

The exchange and harmonization of the
hourly schedule of energy exchange with the
neighboring TSOs for the following day and
calculating the energy exchange for each
interconnector for the previous day
Analyzing the work of the Energy System
and proposing correcting measures in
order to maintain the security of work in
coordination with Network Users, regional
TSOs and the Regional Coordination Center

In cooperation with neighboring TSOs, it

determines the transboundary transmission
capacity for each annual, monthly and daily
Forecast of the work of the Energy System energy flow for each boundary and direction
in the short and medium term of the flow of energy

The real time operation of the transmission system is realized through the National Dispatch Center. At the
beginning of 2016, the construction of the new National Dispatch Center was completed, which is currently in
operation by monitoring, controlling and taking appropriate measures to maintain the work safety of the power
system in coordination with network users, and neighboring TSOs based on information received in real time.

17
 2016 POWER BALANCE TABLE
Unit Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Domestic Product (GWh) 462 726 877 393 800 479 353 368 310 392 826 649 6,636

Energy Intake (GWh) 257 70 95 188 74 93 213 215 203 183 48 189 1,827

Total Energy (GWh) 719 795 972 580 874 572 566 583 513 575 874 838 8,462
entering the System

Outgoing Energy (GWh) 49 252 410 103 377 100 25 29 25 64 315 122 1,869

Energy
transmitted (GWh) 621 500 511 415 417 429 490 501 430 444 492 565 5,901
to OSHEE

Energy
transmitted (GWh) 35 25 28 49 58 35 38 39 49 55 48 45 503
to other consumers

Total Energy
(GWh) 704 777 949 567 852 559 553 569 503 564 855 822 8,272
Transmitted

Transmission 14 22 13 13 13 10 11 19 16
(GWh) 14 18 24 190
system losses

Operation of the power system requires continuous control and monitoring due to dynamic changes of load and
generation. The main parameter which should not change regardless of the operation state is the frequency (f
= 50Hz). The correct operation of the load frequency control and primary reserve provided by generating units
connected to the transmission network have contributed to maintain balance and the quality of frequency in the
Albanian TSO Control Area. The quality of maintaining system balance and exchange program can be observed by
checking the area control error according to the chart below, wherein the error zone hours outside the ± 20 MW
range represent relatively a small part.

18
Hours 2016 Area Control Error (ACE)
9000

8000

7000

6000

5000

4000

3000

2000

1000

0
-200 -180 -160 -140 -120 -100 -80 -60 -40 -20 0 20 40 60 80 100 140 160 180 200

The above chart shows the ACE frequency with intervals ± 20 MW, so each column shows the number of ACE
within the range of ± 10 per column with the value 0, the same interval is used for each column.

Above is represented, in absolute and relative value, the frequency area control error according to interval ±
20 MW. During 2016, TSO did not face any serious outages in the transmission network, or unforeseen events
associated with limitation of electricity supply to consumers. Because of efficient management and investment
in the transmission network, the unplanned outages of network elements are reduced, thus guaranteeing the
continuity of power supply to all transmission network users.

19
 Hydropower plants dominate the generation sector of the country, so the production of electricity in Albania is
highly dependent on hydrological conditions throughout the year, ranging approximately from three TWh in a dry
year to seven TWh in a wet year.

This big change in production, in dry and wet years reduces the reliability of the generating system so it is needed
the provision of electricity by imports, to meet the country’s demand for electricity. System Adequacy is achieved
through firm import contract of Distribution System Operator (OSHEE) which has provided by KESH a part of its
electricity demand. In the last years, it is noticed that the dependence from import has been decreased because of
new hydro power plant, mostly connected to transmission system even to distribution network.

The chart below shows data on production, consumption and exchange over these years:

System Balance 2011 - 2016

GWh
Production Exchange Demand
8000

7000

6000

5000

4000

3000

2000

1000

0
2011 2012 2013 2014 2015 2016

Generally, electricity consumption was approximately up to the forecasted values of the annual plan where we can
observe a significant reduction of total consumption (about 4% less than the same period of the previous year), as
a result of measures, taken by OSHEE sh.a. to reduce non-technical losses of the distribution network. Anyway,
reduction of the consumption is lower compared with year 2014/2015 which was 10%.

Monthly average
consumption, in MWh 2014 2015 2016

26 000
24 000
22 000
20 000
18 000
16 000
14 000
12 000
16 000

Month

20
21
 In the perspective of generation adequacy, during year 2016 adequacy was met by generation, since the total
balance of transmission system is positive with a relatively small value (+42GWh). In some months of 2016, in
addition of meeting the country’s demand, a part of generation has been exported, ranging around 20-25% of
hydropower plants production.

Production Import Export

-40% -30% -20% -10% -0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

The peak load increase was observed on 31.12.2016, roughly 4% compared to 2015; however, the transmission
system had enough capacity for accommodating power flows in the internal network and in tie lines.

MWh System peak load (MW)

1800
1486 1540 1552
1600
1454 1475 1489
1400

1200

1000

800

600

400

200

0
2011 2012 2013 2014 2015 2016
Year

22
 THE ELECTRICITY BALANCING MARKET

Developments in the electricity power market and model, in accordance with Law 43/2015 “On Power Sector”
brought changes in the TSO’s organizational structure which is an important and necessary step, for balancing
market electricity, as well as the provision of transmission network losses, balancing or ancillary services required for
system operation, through competitive non-discriminatory and transparent procedures aiming a liberalized market.

Changes on Market Rules during 2016, approved by ERE, set OSHEE sh.a. as subject of imbalances. Following the
existing practice and according to Market Rules changes, on hourly-based data obtained from the measurement
system of the TSO, are made hourly-based calculations of imbalances for every Market Participant. Party’s
imbalances are estimated on monthly basis, and later are invoiced to Market Participants. Likewise, on monthly basis
calculation, KESH sh.a. is compensated for the Balancing of the Transmission System.

Imbalances
Negative imbalances Positive imbalances
YEAR 2016 above 1% above 1% YEAR 2016 Negative imbalances Positive imbalances

MWh MWh MWh MWh

Jan 1.400 2.573 Jul 7.111 13.242

Feb 404 2.701 Aug 4.037 9.824

Mar 306 1.545 Sep 4.314 14.885

Apr 391 447 Oct 4.937 19.196

May 752 1.580 Nov 8.096 17.841

Jun 159 837 Dec 8.251 9.431

Sum 3.411 9.684 Sum 36.745 84.420

23
 MWh Imbalances above ± 1% MWh Imbalances
3000 25 000
2500 20 000
2000 15 000
1500 10 000
1000 1000
500 500
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Negative imbalances above 1% Negative impalances
Positive impalances above 1% Positive impalances

AUXILIARY SERVICES AND NETWORK LOSSES

Regarding the transmission system auxiliary services, persisted efforts have been made in the regulatory
framework drafting process.
The auxiliary services in the transmission system are currently provided only by the Public Generator KESH sh.a.
until the establishment of an auxiliary services market, as well as the balancing energy for balancing the power
system, is provided with a regulated price according to the agreement with KESH sh.a.

WORK REGIME PLANNING (OPERATIONAL PLANNING)

Calculations on the current situation (the N-1 security criterion) and forecasts on a daily, weekly, monthly, yearly basis
were performed based on Grid Code, TSO internal rules, Policy 3, 4 of Operational Handbook and system operation
guideline (SO GL). The network models are updated and analyses with software are performed for power system
simulations by increasing the reliability of operation.
Regarding operational planning, different scenarios of contingencies are analyzed, which are made available to
National Dispatch Center. Also various calculations are performed such as the calculation of the NTC, the study on
static stability of Albanian Transmission Network and Southeast Europe (SEE) network, as well as the creation of
monthly model M+2 (10:30 for the third Wednesday of the month), etc.
The results obtained from the operational planning process, have been helpful to National Dispatch Center in system
operation decisions.
During 2016, TSO joined in, with other TSOs in ENTSO-E, the project for the assessment of system adequacy
in short and medium terms. This project is coordinated by Regional Security Coordinators Coreso, TSC, SCC.
Adequacy evaluation consists in assessing the generation adequacy in a control area, while covering the expected
demand at a certain point in time. Adequacy assessment is realized by comparing the input of each individual control
area adequacy, with the remaining generating capacity to carry out cross-border exchanges and availability of NTC.

24
*THE PARTICIPANT COUNTRIES IN SHORT AND MEDIUM
TERM ADEQUACY PROJECT
Non-Participant Countries Participating Countries

25
 PLATFORMS AND OPERATING SYSTEMS

Transmission System Operator has implemented several automated platforms used for the real time operation of
the system and for managing different data. Among these systems are:

Management platform of the power network

“Network Manager”. This platform provides all the functionalities of SCADA/EMS (Supervisory Control and Data
Acquisition / Energy Management System), as well as a variety of other functions. During 2016, the platform is
located in the new premises of TSO and it has been in full operation. In addition, the applications of “Network
Manager” are used for performing real-time control and analysis, as well as for optimization and planning
purposes. These powerful tools offer an ease and useful daily operation in the network.

In the frame of the establishment of SCADA system in the new Dispatch Center, during 2016, a “Video-Wall”
was installed in the National Dispatch Center, which assists in introducing the common scheme of the whole
transmission network. This investment has been quite efficient in handling and operating the power system,
increasing the reliability and the control through SCADA system.

Backup SCADA System

Besides the platform “Network Manager”, in TSO the platform “E-TERRA”, which serves as a back-up system for
the National Dispatch Center, is implemented in TSO This system helps in monitoring and controlling the 400 kV
and 220 kV substations. Besides substations in “E-TERRA” system, KESH sh.a. power plants are also monitored
and operated under the LFC.

Emergency Control System

A system which is a 2016 investment, is one of the ENTSO-E requirements. Emergency Platform “Prozanet”
is duplicated in all levels of data receiving and transmitting. This platform is located in Tirana 2 substation
and provides all the functionality for monitoring and control of the transmission system. In this platform, LFC
functionality, along with KESH sh.a. power plants, will be implemented also for HPP Banja and HPP Fangu.

ELECTRONIC HIGHWAY NETWORK (EH) - TSO

Being part of the European Transmission System and in order to meet the ENTSO-E standards, has fulfilled
obligations regarding the interaction with other TSOs, as well as with ENTSO-E. In this context, OST sh.a has
implemented all the requirements to become an official member of the “Electronic Highway” and has initiated the
processing of the necessary data for the Transparency platform of ENTSO-E. Electronic Highway (EH) is a closed
dedicated network between European TSOs. Through this network, data are exchanged in real time and non-real
time. TSO, adhering to the directives of ENTSO-E has implemented the network node, installed at the National
Dispatch Center.

Local Control Systems/Equipment

SCADA systems are supplied with real time data from RTU devices and/or local monitoring systems installed
in substations. Transfer of these data is provided by the OST sh.a Telecommunication network. 400/220kV
substations are all equipped with local control systems and partly with RTU for providing data through two
sources. TSO has also installed RTU in many 110kV Substations. During 2016, developments were noticed
within these local control systems/RTUs. Among these, we can mention the installation of RTUs in substations of
Saranda, Përmet, Korça, Peshkopi and Kukës. These devices collect the data from respective substations.

The Electronic Platform for the Electricity Market Management

Is used to operate the transmission network according to the ENTSO-E requirements as reflected in the
Operational Handbook and regulatory policies, as well as to create adequate conditions for the functioning of the
energy market.
TSO uses its electronic platform of the DAMAS electricity market, an investment made during 2016, with its

26
own financial resources. The market platform enables trade exchanges of electricity between participants in the
domestic market, as well as in the regional electricity market.
Through the electronic platform, the harmonization of trade exchanges declared by the participants of the
local energy market with the Regional Transmission System Operators, with which we are connected through
the interconnection lines, is realized. Meanwhile, the granting of the right to use the intangible capacity as a
mechanism that enables the trading of electricity towards the regional markets is realized through the platform in
an automated way. Market Participants have the opportunity to participate in auctions conducted by the TSO for
the granting of this right through the electronic procedure and to be informed on the results, according to a fully
programmed process and completely transparent rules.

Based on the principle of transparency, from the point of view of the function and management of business
aspects that are realized in the domestic energy market, the Market Operation Platform will ensure the reporting
of the business process data that is carried out in the Transparency Platform of ENTSO- E (ETP) for the Pan-
European market.

CONTROL OF NETWORK CODE IMPLEMENTATION BY USERS

One of TSO’s objectives during 2016 has been monitoring and treatment of regulatory issues or requirements
defined by Law No. 43/2015 “On Power Sector” as well as further improvement of cooperation and coordination
with all Transmission Network Users and/or electricity market participants, for the full implementation of Network
Code and ENTSO-E Network codes provisions.

Code Administration and Drafting of Technical Regulatory Acts

TSO is focused on identifying and addressing the issues faced with the implementation of the Transmission Grid
Code by network users, as a condition for meeting the operational security standards in the transmission network,
as well as guaranteeing a stable and uninterrupted supply with electricity. For this, the TSO has continuously
pursued the activity and performance of users of the transmission network by monitoring, communicating and
guiding, as appropriate, on the full recognition and implementation of KKRT provisions in order to increase the
operational safety, avoiding disturbing events in the System and improve the functioning of the power system as a
whole.

Users Monitoring
In line with Network Code requirements, TSO has monitored and inspected the performance of Users through
information acquisition, data analysis and on-site inspection. Monitoring activity is considered effective related
to cooperation increase and Network Users performance improvement, by addressing correct implementation
problems of Transmission Code requirements.
It has been noticed that the technical and operational staff of the Transmission Network Users lack relevant
knowledge for the full implementation of the provisions set forth in the Transmission Code and formal personnel
training, which in most cases is limited to technical safety measures training.

27
 REGIONAL AND ENTSO-E COOPERATION

In addition to the activities related to the energy sector in the country, the TSO is also active in all activities for
South Eastern Europe of ENTSO-E such as the Regional Group of South East European Countries (RGSEE), the
ENTSO-E Coordinated Operation System, South East European Broadcasting System Initiative for Transmission
System Planning (SECI-USAID / USEA), ENTSO-E Awareness System (ENTSO-E EAS), ENTSO-E CE NMFT-
Network Modeling Group and modeling software.

TSO is a member of the Vienna-based Energy Community. The Energy Community’s Mission is the expansion
of the European Union’s domestic energy market for Southeast Europe and beyond on the basis of a mandatory
legal framework. The main instrument to achieve this is the adoption of EU legislation, the so-called “acquis
communautaire”, in the field of energy and related fields.

As part of monitoring, compliance verification and fulfillment of reliability standards of network operation, and in
line with the ENTSO-E Operational Handbook requirements, TSO was audited in September 2016 regarding the
compliance with the requirements of Policy 5 “On Emergency Operations”.
The audit consisted in the verification of the practices followed by TSO, verification of information declared and
submitted by TSO during the self-evaluation campaign carried out in 2015 and compliance with the requirements
of the Operational Handbook (OH) of ENTSO-E. TSO showed its highest commitment to identify all the associated
procedures and documentation that meets the necessary operational security standards such as Operational
Agreements with Neighboring TSOs, KESH and OSHEE, the System Defense Plan, the System Restoration
Plan, the Evacuation Plan, the Automatic Systems and the Communication Infrastructure, test reports of the
functionalities of the main Control Center and the Emergency Center, the National Dispatch Center’s Rules, etc.
At the end of the on-site audit process and verification of all supporting documentation, the Audit Group
concluded that the TSO is fully in line with all audited standards.

In addition, in May 2016, the TSO participated as a member of the audit team during the audit process of
SWISSGRID for Policy 5.

28
IV. TRANSMISSION NETWORK
EXPLOITATION AND MAINTENANCE
TSO works constantly to maintain and develop the Power Transmission System in accordance with long-term
forecast of electricity demand and new generating resources and to coordinate the development of network
interconnection with neighboring countries.

TSO as a transmission network operator is responsible for the:

Development of the Transmission System in
accordance with long-term forecasts
Integrated and safe operation and development plans of the Power
of the Power System Generating Sector

Maintenance of Transmission Network and

equipment in accordance with the technical Maintenance of telecommunications
requirements of security and operation infrastructure and measurement system

Maintenance and development of the Creating network access to all energy

transmission auxiliary assets market participants

Management of the new connection

Supplying customers directly connected and their development
to the Transmission System in the Transmission System

29
 ALBANIAN POWER TRANSMISSION
SYSTEM ASSETS

The Albanian Transmission System consists of HV transmission lines, substations and other elements with a
voltage level of 110 kV to 400 kV.
The main assets of the Transmission System are listed below:

No. Substation Type Operating Unit

1 400 kV N/St.400/220 kV, 840 MVA Tirana 2 Tirana

2 400 kV N/St.400/220 kV, 600 MVA Elbasan 2 Elbasan

3 400 kV N/St.400/110 kV, 300 MVA Zemblak Korça

4 220 kV N/St.220/110 kV, 540 MVA Vau i Dejes Shkodra

5 220 kV N/St.220/110 kV, 660 MVA Fierzë Shkodra

6 220 kV N/St.220/110 kV, 540 MVA Koman Shkodra

7 220 kV N/St.220/110 kV, 115 MVA Koplik Shkodra

8 220 kV N/St.220/110/20 kV, 486 MVA Tirana 1 Tirana

9 220 kV N/St.220/110 kV, 190 MVA Sharre Tirana

10 220 kV N/St.220/110 kV, 200 MVA Rrashbull Tirana

11 220 kV N/St.220/110 kV, 360 MVA Fier Fier

12 220 kV N/St.220/110 kV, 200 MVA Babice Fier

13 220 kV N/St.220/110 kV, 120 MVA Komsi Burrel

14 220 kV N/St.220/110 kV, 360 MVA Bradashesh Elbasan

15 220 kV N/St.220/110 kV, 360 MVA Bradashesh Elbasan

No. Line Voltage Length in Km

1 400 kV 445.091

2 220 kV 1159.6

3 150 kV 34.4

4 110 kV 1.658

30
31
 The Albanian Power System operates synchronously with Continental Europe area and is connected through
the following interconnection lines:

400 kV line Tirana 2 - Podgorica (MNE) 400 kV line Zemblak - Kardia (GR)

220 kV line Fierzë - Prizren (KS) 220 kV line Koplik - Podgorica (MNE)

400 kV Tirana 2 - Kosovo B (KS) 150 kV line Bistrica - Myrtos (GR)

Electricity transmission system stability and performance is achieved by paying special attention to the
transmission grid maintenance which is realized through the cooperation of Peripheral Operating Units and the
central Transmission Maintenance Unit that manages the heavy vehicles and specialists who are prepared and
ready to intervene in critical cases which require high professionalism.
Special attention is given to specific issues, malfunctions, failures and shortcomings of the transmission system.
Constant data analysis is important for planning timely and efficient interventions when necessary. Overhaul
planning is paramount for the maintenance and quality of the transmission system. Overhauls are planned in
coordination with network users and transmission companies in the region. Substation primary equipment
maintenance schedule is developed based on the information received from maintenance personnel of operational
units and instructions from machinery manuals. At the same time, maintenance schedule for high voltage overhead
lines is compiled based on information coming from operational units personnel and experience from previous
years.
The following table gives an overview of malfunctions and failures in the Transmission System and the specific
repair time needed, focusing on transmission lines and autotransformer equipment.

32
 LINE OUTAGES TABLE FOR 2016
OUTAGE TYPE OUTAGE CAUSE

Name Total Transitional Steady Weather Line Primary Relay SHAM OSHEE Other Time
Defaults faults faults conditions faults equipment protection /SHAF reasons duration

400kV Line 16 7 9 10 2 0 0 0 0 4 19h 15’

220kV Line 90 41 49 42 28 13 1 0 3 3 135h 10’

110kV Line 407 244 163 212 54 22 54 4 52 9 560h 20’

Total 513 292 221 264 84 35 55 4 55 16

PRIMARY EQUIPMENT OUTAGES TABLE FOR 2016

OUTAGE TYPE OUTAGE CAUSE

Substation Total Transitional Steady Weather Line Primary Relay SHAM Staff Other Time
Defaults faults faults conditions faults equipment protection /SHAF reasons duration

AUTO, TR 35 9 26 5 6 13 9 0 0 2 79h 30’

Celsa TRR TT 5 0 5 0 0 5 0 0 0 0 18h 10’

LINE FAULTS EQUIPMENT FAULTS

450 45
400 40
350 35
NUMBER OF FAULTS

NUMBER OF FAULTS

300 30
250 25
200 20
150 15
100 10
50 5
0 0
Linja 400 kV Linja 220 kV Linja 110 kV Autotransformers CB, CT, VCT

Transitional faults Steady faults Transitional faults Steady faults

33
 Year 2016, unplanned outages Year 2016, planned outages
for maintenance for maintenance

400 kV 400 kV

220 kV

220 kV

110 kV 110 kV

MEASUREMENT SYSTEM

TSO has installed an up to date measurement system with high standards in all the boundaries of ownership with
the users of the network and in all interconnection lines. The data generated by this measurement system are
processed by EMC (Energy Management Centre) in real time and sent to network users.
A very important project (Rehabilitation Measurement System) was implemented and applied during 2015 in order
to meet all the requirements of ENTSO-E and increase measurement accuracy.

The purpose of this project is:

a) Building of the CME (Energy Management Center)

With a new monitoring platform (Hardware & Software) which allows an open measurement system and with new
additional functions of the advanced technologies of the time with applications in AMR, AMI, AMM and WEB. The
energy meters and their data are stored for years by high security level.

b) The intervention in existing installations

of the measuring system, making duplications of existing meters (referring to the Network Code). This has enabled
the testing of one of the meters without the need of interrupting power for this service and security improvement.

c) OPGW infrastructure
Building a secure communication infrastructure, based on OPGW network of TSO.

34
RELAY PROTECTION SYSTEM

In order to ensure the safety of the Albanian Electric Power System with high standards and continuous operation,
TSO pays special attention to the maintenance and proper handling of relay protection systems installed in the
facilities of the Albanian Power System.
Maintenance policy consists in continuous monitoring of the relay protection system either locally (local access)
or from distance (remote access), preliminary maintenance and monitoring of the situation to ensure that the
transmission system is always protected in an appropriate manner, in full compliance with the requirements
stipulated in the Transmission Grid Code. The activity of Relay Protection system improvement in 2016 has
focused on several directions, such as:

Maintenance of relay protection system in all 400 kV and 220 kV power system substations.
Development of relay protection system in several important substations of the system, with the object of
improving the protection and control schemes.
Changes in the design of relay protection systems, putting the efficiency of the enormous opportunities created by
the installation of optical fibers, almost all of the energy system lines.
In this context, the conception of protecting HV lines is changing a lot and the use of differential line protection is
continually growing as the main protection at 400 kV, 220 kV and 110 kV power system lines.
Training of relay protection specialists of the Central Group and Operational Units.

WORKPLACE SAFETY

A very important aspect that is continuously observed by the TSO staff is safety at work and the correct
implementation of the Technical Safety Regulation. For 2016, TSO has had several targets in the context of
increasing the performance of technical safety knowledge and its application in practice. TSO performance in
relation to safety at work is very high, and the most important indicator of this performance is the lack of human
injuries at work.

TELECOMMUNICATION NETWORK

The rapid development of telecommunication technology has made necessary the need to adapt the existing
infrastructure of the telecommunication network in accordance with the needs and requirements of the company
and the transmission system. To this end, TSO has invested in important projects for the telecommunications
network.These projects aim to increase the security and communication performance of the transmission system.

Expanding of the telecommunication system

In 2016, the project on telecommunication network expansion was implemented, which enables data
collection from every energy meter in all measuring points of the TSO transmission system accessible from our
telecommunication network. In this way, through this project, a secure and fast data collection network was
created from the metering points in the Energy Metering Center. Therefore, the communication of energy meters
can be accomplished with two redundant routes, namely: telecommunication network of TSO and GSM / GPRS
mobile network.

Optical Network Monitoring System

An important project for 2016 and the telecommunications network is the Optical Network Monitoring System.
This system aims at real-time monitoring of parameters and communication of optical fiber network to TSO. This
system enables real-time and high-precision localization of every possible defect in the fiber optic lines.

35
 N/st. Dardhe N/st. F.Arrez N/st. Kalimash

N/st. Peshqesh
N/st. Fierze N/st. Kukes

N/st. Prell

N/st. Lapaj

N/st. Koman N/st. Lac 2

N/st. Lure

N/st. Gjorice

N/st. Lac 1
N/st. V. Dejes N/st. Shkopet

N/st. Ternove
N/st. Ulez
N/st. Bushat
N/st. Koplik N/st. Burrel

National Dispatch
Center

N/st. Kucove N/st. Librazhd

N/st. Gjirokaster
N/st. Elbasan 2
N/st. Lushnje N/st. Tirana 1
N/st. Rrashbull

N/st. Ballsh N/st. Tirana 2 N/st. Zemblak

N/st. Fier

N/st. Cerrik N/st. Korce

N/st. Memaliaj

N/st. Babice

N/st. Kucove
N/st. Fiber

N/st. Bistrice N/st. Kavaje N/st/ Elbasan 1

Legend:

N/st.XX
Electrical substation 220kV & 110 kV

Active routing equipment

*TELECOMMUNICATION NETWORK SCHEME IN TSO

36
V. MARKET OPERATOR
TSO plays an important role as Market Operator, whose functions are being gradually expanded through
a step-by-step approach in creating a free and competitive electricity market in Albania, as well as through the
integration of this market in the regional electricity market.

REGISTRATION OF MARKET PARTICIPANTS

This function is related to the implementation of the registration procedures for entities that wish to register as
parties in the Albanian Electric Power Market, to the designing and administration of the Registry of the Market
Parties, with the respective data of the registered entities, as well as the consecutive fulfillment of their respective
terms, for remaining a market party. All the requests submitted by entities are pursued consecutively for registering
in the electric power market, in accordance with the relevant licenses issued by ERE.
Till the end of 2016, 28 subjects are registered, holders of 49 market licenses, of which:

18 are Suppliers,
23 are Traders,
8 are Producers.

In accordance with the relevant provisions of the Law, the Albanian electric power market had by the end of 2016
13 Customers now connected to the Transmission Network.

Referring to the end of the preceding year 2015, at the end of 2016, two subjects had the status “suspended” in
the market, due to the fact that they do not have a financial guarantee of the registration in MO within the validity
period.

CONTRACT NOTIFICATION

All the Albanian Power Market transactions, regulated or not by ERE, must be notified in Market Operator (MO), in
the form of a contract notification or market parties’ applied and received transfers. It is the MO that nominates these
contracts, certifies their validity, in conformity with the respective procedures, fixed by the Market Rules.
Notification of transactions contracts in the MO and the registration in the respective parties’ accounts is necessary,
among other things, for addressing the balancing responsibilities of the market parties in the transaction.
For all the nominated transactions, MO manages a register wherein there are kept the parties’ respective accounts,
for the transactions carried out in the market.

All the notifications of contracts and transfers of the market-parties transactions regarding the sales, purchases,
imports and exports of the electric power are registered consecutively.

37
 THIS REGISTER SHOWS THAT, NOTIFIED BY THE PARTIES, REGISTERED ARE THE FOLLOWING:

Contracts Number of contracts Volume of energy (MWH)

Export 83 589,691

Import 73 1,089,598

Supply 56 502,981

Between parties 163 2,450,699

Total 375 4,632,969

ALLOCATION OF CAPACITIES IN INTERCONNECTIONS

TSO administers the interconnection transmission capacities by applying the reservation of physical transmission
through auctions, according to the rules for allocation of interconnection capacities. The ongoing physical rights of
market participants in interconnection, according to the boundary, flow direction and reservation period, for all the
capacities, annual and monthly, acquired in ATC auctions organized by the TSO have been recorded.

Regarding capacity allocations in interconnections, for the year 2016 the respective procedures are followed
in conformity with the rules approved by ERE by Decision No. 140, dated 22/11/2013 “Regulation on Capacity
Allocation in the Interconnections”.

Table 1
Table 1 shows a summary of some of the Monthly Auction data, for the period January 1st to December 31st 2016,
organized by TSO (For interconnection Albania - Kosovo).

TSO Albania - Kosovo (AL - KS) Interconnection - Monthly Allocation - 2016

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

No. of
participating No 7 6 7 9 7 8 5 9 6 7 5 9
subjects

No. of No
offers 53 50 55 173 106 70 36 66 72 97 47 61

Auction Price Exp 0.01 0.02 0.19 0.19 0.12 0.15 0.01 0.05 0.05 0.08 0.20 0.59
Euro / MWh Imp 3.03 0.51 0.03 0.15 0.16 0.25 0.13 1.25 0.38 1.09 0.08 0.06

38
 Table 2
Table 2 shows a summary of some of the Monthly Auction data, organized on behalf of the TSO by the regional office
SEE CAO, for the interconnection with Montenegro.

SEE CAO Albania–Montenegro (AL - ME) Interconnection - Monthly Allocation - 2016

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

No. of
participating No. 10 11 12 12 11 10 11 12 13 10 11 14
subjects

No. of No.
offers 44 52 39 46 35 41 37 42 48 37 39 63

Auction Price Exp 0.01 0.03 0.16 0.18 0.06 0.05 0.06 0.03 0.04 0.03 0.12 0.75
Euro / MWh Imp 1.73 0.68 0.15 0.17 0.15 0.11 0.17 1.11 0.69 0.67 0.33 0.13

Table 3
Table 3 shows a summary of some of the Monthly Auction data, organized on behalf of the TSO, by the regional office
SEE CAO, for the interconnection with Greece.

SEE CAO Albania–Greece (AL - GR) Interconnection - Monthly Allocation - 2016

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

No. of
participating No. 14 14 14 15 13 13 14 14 13 12 14 16
subjects

No. of No.
offers 55 57 68 67 53 55 62 51 58 53 53 58

Auction Price Exp 7.37 4.21 11.83 11.11 7.67 6.15 5.61 4.05 3.37 2.61 2.82 2.57
Euro / MWh Imp 0.08 0.12 0.04 0.03 0.01 0.00 0.09 0.02 0.03 0.03 0.12 0.75

Table 4
Table 4 shows a summary of some of the Monthly Auction data, for the period January 1st to December 31st 2016,
organized on behalf of the TSO by the regional office SEE CAO, for the interconnection with Montenegro and Greece.

SEE CAO Annual Auction (1 Jan - 31 Dec) 2016

Border AL-ME AL-KS AL-GR VLERA TOTALE

Direction Import Export Import Export Import Export Import Export Import +
Export

No. of
participating No. 12 11 - - 14 15 26 26 52
subjects

No. of No.
offers 83 42 - - 85 85 168 127 295

Auction Price Euro 2.07 0.07 - - 0.19 7.52 1.13 3.80 2.46
(average for TSO) /MWh

39
*PARTICIPATING COUNTRIES IN SEE CAO

40
By assessing that the implementation of the electric power market is also a cooperative process and of mutual
assessment between the MO and Market Participants, according to their respective role in the electric power
market, the MO is following the contacts, the occasional meetings and consultations with the market participants.

In total, there are allocated in daily auctions, 6,116 MWh, of which, 2,015 MWh without congestion, with an
average price of the winning bids with congestion, of about 0.62 Euro / MWh, with a total value of 2,548 Euro.

The total value of the ATC auctions allocated in the daily auctions by the SEE CAO, for the border with Montenegro
and Greece, including the implementation of the principle “use it – or sell it” by the market participants,
is 19,330 Euro.

PARTICIPATION IN REGIONAL WORKING GROUPS AND REGIONAL INTEGRATION

AND EXCHANGE OF EXPERIENCES WITH NEIGHBORING MOS

Ensuring the market operation electronic platform remains the priority of the demands for supporting the DOT
work, as it will serve for increasing into a more contemporary level of the Market participants’ communication with
the MO; it will increase the volume and quality of the necessary information for the correct and transparent market
operation, as well as it will enhance the market operation performance and avoid possible miscalculations. During
2016, the abovementioned platform has enabled the setting into work of several modules, which relate mainly to
the cross-border schedule. Other modules are expected to be operational in early 2017.
This platform will also enable the performance of functions that are currently impossible to be really completed, as
the realization of an open balancing market and ancillary services purchase.
The MO specialists have participated in working groups for the establishment of the Electric Power Exchange
working group, chaired by MEI, with the participation of the TSO and the Electric Power Secretariat of Vienna.
The working group is established by the Minister of Energy and Industry order and in support of the Albanian
Market Model, approved by the Decision of the Council of Ministers No. 519, dated 13.07.2016 “On approval of
the Electric Power Market Model,” has already prepared the draft amendments to the Law on the Albanian Electric
Power Sector, in order to give the opportunity and to pave the way to the creation of the Market Operator road,
which will serve as Electric Power Exchange in Albania and beyond.

In addition, MO, in cooperation with the consultant of MEI, has drafted the Electric Power Market Rules, which
were forwarded for approval to ERE, at the end of the year and their approval is expected.

During this period, meetings of the Regional Group for the South East Europe (SEE RG) are also developed, one
of which took place in Tirana, with the organization of TSO. MO specialists participated in these meetings, where
discussions focused on the progress and challenges of the future in the region, as well as on the unification of
markets and its expansion in countries such as Ukraine or Moldova.
In this context, a Task Force of Western Balkans countries has been constituted as well, which will assist the
Secretariat in drafting the periodic reports in the framework of the Berlin Process, reporting which is performed
on a quarterly basis and which defines the trends and the commitments undertaken by countries, in terms of
openness and unification of regional markets with those of the Central Europe. Two meetings of this Task Force
were organized during 2016, which focused on forwarding the TSO ‘s opinion on these reports.

An important task which has also been developed during the 2016, was the signing of the Memorandum of
Understanding between the Western Balkans countries (WB6), with the initiative of Electric Power Secretariat,
between the TSOs, Regulatory Entities, Ministries and the PX-es in the Region, in support of commitments taken
by the Albanian Government in the Berlin process for the unification of our countries’ markets. The obligation that
derives from this Memorandum of Understanding is related to the establishment of the Steering Committee of the
Day Ahead Markets Union, with the participation of MO representatives.

41
 VI. TRANSMISSION SYSTEM
DEVELOPMENT PLANNING
Pursuant to the national laws and in accordance with ENTSO-E requirements, TSO designs the Long-Term
Development Plan of the Transmission System, performs calculations with major target to increase the
performance of the Transmission Grid throughout planning the new elements construction and the reinforcement
of existing transmission system elements.
In compliance with the Transmission Network Code and the annual plan tasks related to the network planning for
2016, TSO has processed the data of the previous years and built the 2016 statistical data for the consumption
and losses by region, annual consumption for every substation, load peak, energy balance, outages intervals of the
transmission network elements, etc.
The aforementioned data are necessary and mandatory for the creation of Network Models and Network Operating
Scenarios for carrying out the required studies. The software used for calculations is PSS°E (Power Transmission
System Planning Software) for which TSO Possesses two licenses.
Creation and updating the network studies models assists the detailed transmission system analysis with the
purpose of correct identification of the congestions that the network and the system in global will face in the future.
After the different regime analysis, the results interpretation will serve to the detailed transmission system planning
in the future.

During the first part of 2016, TSO has finalized the process of the “10 Year Network Development Plan” up to 2025.
The work for the realization of this development plan has commenced in the second part of 2015, and to this end a
detailed analysis of the transmission system is carried out by performing:

Power Flow Calculation for the complete transmission system, analyzing the base case year 2014 and target
year 2025. The system load forecast up to 2025 and the generation forecast is done based on applications
for new connections in the grid. The generation forecast methodology is based in the evaluation of potential
commissioning of these power plants until 2025;
The evaluation of the operation security criteria in the circumstances of the decommissioning of one or some
elements. Power flows calculation are performed for specific regions with the aim of identifying and defining part of
network that needs strengthening;
Short circuits calculations for base case, year 2014 and target year 2025;
Calculation for the evaluation of the system dynamic stability.

During 2016, as an integral part of the work, TSO has carried out several studies, and among the most important are:

Study for the possibility of installing a shunt-reactor in 400/110 kV Zemblak Substation.

Study for the “Extension of the Koman Substation” by installing a 400/220 kV Autotransformer and the connection
with the 400 kV Tirana 2 – Kosovo B interconnection line, and necessary calculations on the possibility of installing
a 400 kV Power Shift Transformer.
Study on the possible operation in parallel with the Europian Grid of the 150 kV Line Bistrica1- Myrtos, and
reinforcement of Bistrica1 Substation with a new 150/110 kV, 80 MVA autotransformer. The existing transformer
has a capacity of 40MVA.
Calculation on the possibility of construction of a double circuit line Elbasan2 – Fier with 2 level of voltage. In the
perspective of construction of 400 kV Kuçova Substation, one circuit is foreseen with a capacity of 400 kV. Kuçova
substation will operate as an important node for the transmission of electricity produced by Thermo Power Plants
foreseen in the Gas Master Plan. The second circuit is foreseen to have a capacity of 220 kV direct line Elbasan2 - Fier.
Study on the possibility of strengthening the transmission network in the Northeast area taking into consideration
the new elements that will be connected in the upcoming years.

42
Study required by OSHEE:
Calculation on the connection of a new 110/20 kV substation in Tirana, near Kombinat area.
Calculation for the evaluation of 110/20 kV “Qendër” Substation load distribution to other substations
due to its displacement.
Study on the possible construction of a second line to supply the 110/20 kV “Tirana Centre” Substation.
Process of evaluating the integration with the transmission network of the new Power Generating Resources.

Regarding the new connection procedures and the status of applications for connection to the transmission
network, during 2016, TSO faced a large number of applications for the connection of new consumers and
distributed generation in different regions of the Albanian Power System, as follows:

“Load” Centers, 2 applications, the total power required 30.4 MW, 1 connection agreement implemented.
“Hydropower Plants”, 14 applications, the total power required 225 MW, 4-connection agreements implemented.
“Solar Power Plants”, 6 applications, the total power required 122 MW, 1 connection agreement implemented.
“Wind Power Plants”, 1 application, the total power required 30 MW, no connection agreement.

In recent years, many new generating sources have been put in operation, mainly hydro power plants connected to
the 110 kV and 220 kV transmission network. The following is a list of plants commissioned during 2016:

Ternova Hpp, 9.35 MW, connected in the 110 kV Line Bulqiza-Gjorica.

Malla Hpp, 6 MW, connected in the 110/TM kV Substation of Lura Hpp.
Rapun 3/4 Hpp, 11.35 MW, connected in the 110 kV Line Fiber-Librazhd.
Banja Hpp, 71.5 MW, connected in the 110 kV line of 110/TM kV Cërrik Substation.
Prella Hpp, 14.9 MW, connected in the 110 kV line of 110/TM kV Shutri Substation.

The total installed power of the power plants connected in the transmission network during 2016 reaches 113
MW. Application for the connection of new sources of electricity to the transmission system have increased, and
according to the forecast, important sources of electricity are expected to be constructed during 2017, but also in
the coming years, mainly hydro power plants, as well as Photovoltaic and Wind power plants.

MAIN PROJECTS COMPLETED IN 2016

a) Strengthening of the 110 kV transmission network of the South of Albania

The project has continued in 2016:
The contract for the Construction of 110 kV Line Extensions was applied to the Orikum and Himara Substations.
The tendering procedure was completed and the contract for the construction of the Orikum and Himara
Substations was signed (which at the end of the project will be transferred as assets to the Distribution Operator).
The contract has become effective on 30.12.2016 and expires after 14 months.

b) New 110 kV line with two circles Rrashbull-Kavaja

The project is funded by TSO 2.2 mil. € and includes:
The construction of new overhead line with two 110 kV Circuit - Rrashbull - Golem - Kavaja, 19 km;
The line conductor will be Aluminum / Steel material with 240/4 mm2 section, where only one line circuit will be
completed firstly. The work has been completed and the line is in operation.

43
 PROJECTS UNDER IMPLEMENTATION
a) 400 kV Interconnection line Albania - Kosovo.
The project is a German Government investment funded by KfW Bank in the amount of € 42 million for the
Albanian Part and includes:
Tirana 2 Substation Extension and installation of 120 MVAr shunt reactor;
Construction of the new 400 kV overhead line Tirana 2 – Kosova B (Border).
The total length of the line is 242 km. The Albanian part is 151.5 km, the first 80 km include the completion of
second circuit of Tirana-Podgorica line, from Tirana to Laç Qyrsaq and 71.5 km of new single circuit line to the
border.
The project is successfully finalized in line with the contractual specifications.

b) 400 kV Koman Substation Expanding

Under the frame of the loan and project “400 kV Interconnection Line Albania - Kosovo”, with a value of 42 million
Euros, there is an unused value of around 7 million Euros.
In accordance with the provisions set in the Loan and Project Agreement (I. Project Plan, 1. Project Details),
the remaining value not used by the project will be invested for further expansion of the 400 kV Tirana-Pristina
Expansion Line with the expansion of the Koman Substation with a new 400/220 kV transformer.
The study for this component was conducted by the consultant INTEC-Gopa, contracted for the project.
This study consists in the optimum utilization of the 400 kV and 220 kV networks by balancing the power flows
and will provide the possibility of direct connection to the 400 kV network of the two aggregates in Koman HEC.
In addition, the investment will lead to reduction of power losses, especially in the 220 kV network, where they are
quite high. Impact is evident when there is high Cascade generation and at best, power losses decrease by 6.4
MW. Furthermore, according to estimates, the reduction of energy losses will be on average 8 million kWh per year.
The completed study demonstrates the feasibility of implementing this project and the positive impact it will bring
to the transmission system.
The total predicted cost under the study for the expansion of Koman substation, with a new 400/220 kV
transformer, is approximately EUR 10 million.

c) New double circuit 110 kV Line, Ulëz - Skuraj

The project is funded by TSO own funds in the amount of € 0.95 million and includes:
The construction of new 110 kV double circuits overhead line Ulëz-Shkopet-Skuraj, 8.7 km;
The line conductor will be aluminum/stainless with section ACS-240/20 mm2, and the line will be completed with
two circuits.
The project is in the implementation phase and the line is expected to be in full operation in 2016. The Project in
the part Ulëz-Shkopet is in the implementation phase and the line is foreseen to be in operation within 2017.

d) Installation of two new 60 MVA Autotransformers in Burreli Substation

The project is funded by TSO own funds in the amount of € 1.7 million and includes:
Installation of two new 220/110/10 kV autotransformers with a power of 60 MVA each;
New autotransformers will have installed Voltage Regulators with 10 kV Voltage and Load Voltage Regulators for
supplying the region that includes the city, villages and Ferro-Chromium Plant.

e) Installation of an Electronic Platform for the Operation of the System and the Market Operator
The project is funded by TSO own funds in the amount of € 1.34 million and includes:
Installation of a Platform which includes the following functions:
Capacity Allocation of the Interconnection Lines
Contractual Notices
Internal Scheduling and cross-border exchange calculation
Management of Energy Data
Archives of data and reporting
Balancing Mechanism
Ancillary services
Direct data exchange with transparency platform of ENTSO-E
The project is in the implementation phase and Electronic Platform is foreseen to be ready for use in 2017.

44
45
 IMPORTANT PROJECTS FOR THE DEVELOPMENT OF THE ALBANIAN
TRANSMISSION SYSTEM

a) 220 kV double circuit line Tirana 2 - Rashbull and the reinforcement of Rrashbull Substation
This project includes:
The construction of new 220 kV double circuit line Tirana 2 - Rrashbull, nearly 18 km, and two 220 kV line bays to
the respective substations.
The reinforcement of the 220/110 kV Rrashbull Substation, 2x150 MVA.

THE BENEFITS:
This project is crucial for the National Transmission System because it solves the following problems: overload of
the existing line, fulfillment of the N-1 security criteria, reduction of the transmission losses and significant amounts
of non-served electricity;
This project will improve the supply of electricity in a wider geographical area that includes the district of Durrës,
Kavaja and having a positive impact in the southern area of Albania;
The project fulfills all the requirements of the Albanian and European legislation regarding environment protection;
The proposed investment is expected to have a positive impact on the total economy and to improve the quality of
life for the Albanian population;
The project will increase opportunities for tourism development due to the improved power supply;
The feasibility study of this project, funded by WBIF projects, was prepared by the COWI / IPF consortium. The
project will be funded by the German Government through KfW Bank.

b) The strengthening of the 110 kV Tirana Ring network and the construction of the new 400/110 kV
Tirana 3 Substation
This project includes:
The construction of new 400/110 kV Tirana 3 substation, 2x150 MVA.
The dismantling of the existing 110 kV overhead lines Tirana 1 - U. Traktori and U. Traktori - Selita, and the
construction of new 110 kV lines (approximately 17 km OHL ACSR 300 mm2 conductors and 7 km cable line XLPE
1000 mm2 conductors).

THE BENEFITS:
Transit of the flow from 400 kV interconnection grid to 110 kV national grid;
Increase of the security of system operation;
Higher quality of electricity supply, as well as a more reliable supply for the Tirana area;
Reduction of the losses in the transmission network;
Reduction of the non-served electricity;
The project fulfills all the requirements of the Albanian and European legislation regarding the environment
protection.
The feasibility study of this project, funded by WBIF projects, was prepared by the COWI / IPF consortium.
The project will be funded by the German Government through KfW Bank.

c) 400 kV interconnection line Albania - Macedonia and extension of 400 kV substation Elbasan 2
This project includes:
Construction of new 400 kV overhead line Elbasan 2 - Bitola, approximately 151 km, 56 km of which are within the
Albanian territory.
Expansion of 400 kV Elbasan substation 2 with two 400 kV double buses, a new 400 kV line output and
a 120 MVAr shunt reactor.

THE BENEFITS:
Development of the existing network by closing the 400 kV ring between Albania - Macedonia - Greece;
Improved network capacity to facilitate foreseen electricity demand and transit growth, new generation

46
connections, in the context of improving transmission capacity in Albania and Macedonia, and in the Balkans
region generally;
Improvement of the reliability of the regional network, the overall security of supply, and flexibility in the operational
of the power system;
Reduction of the transmission system losses;
Improving the quality of electricity supply (normalization of the voltage levels, stabilization of the load flow and the
frequency fluctuations, etc.);
Supporting the potential to develop the regional energy market in South East Europe and creating trading
opportunities with Bulgaria and Italy;
Mutual support between Macedonia and Albania because of complimentarily of generation types (Albania – hydro,
Macedonia - thermal);
Reducing the cost of providing reserve capacity, and providing mutual emergency support.
Feasibility study of this project, funded under the WBIF projects, is prepared by the consortium COVI / IPF. TSO
and MEPSO (MK) have created a joint group to follow this project.

d) New 400 kV Transmission Line Elbasan 2 - Fier

Fier region will become a very important point for the connection of the future energy generation from Gas thermal
power plants and from potential new power plants. The project includes the:
The construction of the 400 kV OHL, Elbasan2 – Fier, about 70 km, including two 400 kV bays at Elbasan 2 and
Fier substations.
The extension of the 220 kV Fieri substation, 1x400 MVA and the connection to the transmission grid.

THE BENEFITS:
Improvement of the overall standard, reliability, quality and efficiency of transmission system in central and in the
southern parts of Albania;
Reduction of the transmission losses (reducing the cost of supply) in the central and southern parts
of 220 kV network;
Improvement of the quality of service in terms of economic and social development;
Boosting of the economic growth in central Albania due to better electricity supply and reduced load shedding;
Reduction of overload in the 220 kV network.

Feasibility study of the project, funded in the context of WBIF is delivered by the consortium Mott Mac Donald/IPF.
For this project and the previous project, TSO is in negotiating phase with KfW Bank, who has expressed interests
in funding both projects (400 kV Interconnection Line Fier-Elbasan and Elbasan-Border) in a joint financial package.
The European community will deliver a grant as part of this project.

47
 VII. FINANCIAL STATEMENTS
TSO has prepared the financial statements for the year 2016, which were audited by an independent audit company
(Grant Thornton). According to the report for the year ended on 31 December 2016, the financial statements present
fairly, in all material respects, the financial position of the Company, its financial performance and its cash flow for
the year ended as of 31 December 2016 in accordance with International Reporting Standards, thus resulting in an
unqualified opinion from the auditors.

1. STATEMENT OF PROFIT AND LOSS FOR THE YEAR 2016

Amounts in ALL 31 December 2016 31 December 2015
Income from exploitation activities
Revenue from transmission services 4,225,025,305 4,389,446,400

Revenue from capacities allocation 1,489,053,307 1,703,543,127

Other revenue 102,146,448 255,936,502

5,816,225,060 6,348,926,029

Expenditures from exploitation activities

Cost of materials 103,434,970 101,430,227

Transmission costs 583,733,603 513,574,919

Other expenditures from exploitation activities 438,528,135 379,109,239

Personnel costs 1,013,470,116 1,020,193,973

Impairment, depreciation and amortization 2,024,071,008 1,629,916,466

Loss from declining asset value - 1,456,785,573

Profit/(Loss) from depreciation/ impairment 983,873 12,873,839
of rights and obligations
Total expenditures from operating activities 4,162,253,959 5,113,884,236
Profit from operating activities 1,653,971,101 1,235,041,793

Financial income 210,575,802 256,655,513

Interest expense 761,761,775 289,642,144

Total net financial income 551,185,973 32,986,631
and expenses

Earnings before tax 1,102,785,127 1,202,055,162

Profit tax expenses 171,637,214 463,090,672

Expenses/(Income) of Deferred Tax 3,628,968 497,178,146

Earnings after tax 927,518,945 1,236,142,636

48
 Revenues for 2016 were realized by transmitting electricity for OSHEE sh.a and qualified suppliers, the allocation
of interconnection capacities and other operating income. Below we present the monthly revenues from the
transmission service and the capacity allocation.

Transmission Service
Service billing data for OSHEE sh.a. and other customers for 2016 are presented according to the following table:

TRANSMISSION TARIFF INCOME MONTHLY INCOME

Other 8%

Income from OSHE sh.a. Income from other network users

600 000

400 000

200 000

0
n b r r y n l g p t v c
Ja Fe Ma Ap Ma Ju Ju Au Se Oc No De
OSHEE 92%

Allocation service
Next, we present a summary table of billings made during the year for the allocation of interconnection capacities:

INCOME FROM ALLOCATIONS MONTHLY INCOME

Allokation from Allocations from 160 000 000

OST sh.a. SEE CAO
140 000 000

120 000 000

100 000 000

80 000 000
60 000 000

40 000 000
20 000 000

0
n b r r y n l g p t v c
Ja Fe Ma Ap Ma Ju Ju Au Se Oc No De

49
 2. STATEMENT OF FINANCIAL POSITION FOR THE YEAR 2016
Amounts in ALL 31 December 2016 31 December 2015
ASSETS

Non-current assets
Property, plant and equipment 51,834,208,965 50,943,268,701

Intangible Assets 283,678,014 85,636,539

Financial Assets 14,495,878 15,201,308

Total Non-current assets 52,132,382,857 51,044,106,548

Current assets
Inventories 655,032,642 711,041,461

Accounts Receivables and others 9,311,517,588 9,549,572,564

Current financial assets 3,496,532 5,132,332

Prepaid Income Tax 311,593,749 43,467,617

Prepayments and deferred expenses 183,134,208 190,661,127

Cash and cash equivalents 225,812,564 612,673,151

Total current assets 10,690,587,284 11,112,548,252

Total assets 62,822,970,141 62,156,654,800

Net equity and liabilities

Equity

Share capital 17,200,692,634 9,694,008,000

Legal reserves 598,537,752 537,509,002

Re-evaluation reserve 10,090,030,511 10,651,362,457

Other reserves - 2,936,204,745

Retained earnings 1,217,768,016 4,760,173,729

Total net equity 29,107,028,914 28,579,257,933

Non-current liabilities
Non-current loans 22,990,558,696 22,579,081,808
Trade and other payables 68,937,233 971,116,948
Grants 593,718,886 620,113,880

Deferred tax on profit 1,443,622,284 1,439,993,316

Total Non-current liabilities 25,096,837,099 25,610,305,952

Current liabilities
Trade and other payables 3,056,359,716 3,377,538,767
Prepayments from clients 48,590,844 203,921,167
Deferred income 62,651,247 55,817,499

Short term loans 5,451,502,321 4,329,813,482

Total current liabilities 8,619,104,128 7,967,090,915

Total Liabilities 33,715,941,227 33,577,396,867

Total Equity and Liabilities 62,822,970,141 62,156,654,800

50