The Process of Liberalization of Electricity Market in Albania

Abstract

The motivation for electricity liberalization differs slightly between countries; however most of the countries share common ideological and political reasons regarding disaffection with the vertically integrated monopoly model of the past and a strong belief that the success of liberalization in other industries can be repeated for the electricity industry. The introduction of competition in the electricity industry has been justified by the perceived benefits of introducing market forces in an industry previously viewed as a natural monopoly with substantial vertical economies. Therefore the motivation behind electricity liberalization is to promote in the long run efficiency gains, to stimulate technical innovation and to lead to efficient investment.First the project is reviewing from the literature, the available information on market power monitoring in electricity markets. There are briefly explained definitions, strategies, indices and methods of mitigating market power as well as the several methods of detecting market power used from market monitors/regulators. After, the general features of the electricity industry are presented briefly as background for the analysis. The main aspects of the liberalization process of this industry and the role it has played in the creation of PX-s is described.