In terms of market economy, in the case of small HPPs, the invisible hand of Adam Smith is clearly visible. It does not act based on the market supply and demand, but only as a function of unsolicited supply.

Lavdosh Ferruni

Being aware of the great water resources of the country, the communist government of Albania supported the policy of electricity production in the cascades of large hydro power plants in the rivers where it could maximize the economic benefit, especially over Drini river. There were very few small HPPs built by the communist state in some villages in remote mountainous and border areas, avoiding this way the economic benefit resulting from the energy production, for the sake of ensuring electricity self-sufficiency for remote mountain communities of the country, especially in border areas.

In the case of small HPPs, in terms of market economy, the invisible hand of Adam Smith, is clearly visible. It does not act based on the supply and demand in the market, but only as a function of unsolicited supply.   The paradox is that the Government of Albania has joined the unsolicited offer by establishing legal facilities to the benefit of bidders, with no studies, no consultations, to the detriment of the state budget, to the detriment of the inhabitants of mountainous areas living along the tributaries of the rivers, to the detriment of the ecosystems and biota of these valleys. Small HPP bidders receive a 30-year subsidy for the produced energy. Bidders are legally allowed to drain the river for miles and put it into pipes. Allegedly in the law it is written that the HPP must allow water flow into what is called an ecological stream. The government defined by law an old formula (called Q355), according to which, during the whole year the average daily ecological feed is equal to the average of 10 days with the lowest annual feed, a formula that is not used any more in other countries, as this flow disrupts the normal functioning of the ecosystem.  Being aware of the fact that in Albania, as a Mediterranean country, many streams that supply rivers, dry up on hot summer days, the bidder can build a HPP and get 100% of the water from the water source all around the year. Fortunately, the number of the HPPs built so far and already functional in Albania, does not exceed 3 digits, although the approved concessions are epidemic and go up to 700. In the vast majority, bidders operate with zero ecological leakage, regardless the fact that in any EIA the law requires that the ecological flow should be respected. Certainly, there is no monitoring in place.

In the last 10 years, the Albanian government has made a great relief to the HPP concessionaires, which can be of any kind, but who must have a “sympathy” for the ruling party or the trusted man of the ruling party, as they actually do with some exceptions,  promoting the great successes of government on HPP policies.

In 2011 Prime Minister Sali Berisha encouraged bidders by saying: “Albania will become a small energy superpower in the region” and that “the government is ready to provide the legal framework with more incentives for the construction of HPPs”.

In 2017 Prime Minister Edi Rama wrote regarding the permits given for the construction of 2 HPPs in Valbona National Park: “It will simply not be the virgin it used to be, but … it will remain a wonderful sylph with two incomprehensible marks on its body.”

Promoted in this way, the epidemic of HPPs erupted in 3 strong waves in the years of parliamentary elections.



Adam Smith’s invisible hand became visible in the case of small HPPs in Albania. At the beginning of 2019 the Government said it was paying 30 million EURO per year as a subsidy for small HPPs and that the subsidy should be stopped. A few months later, Prime Minister Edi Rama seems to have reversed the situation when he described small HPPs as “leeches … that suck the blood of the country’s body …”.  In 2020, no construction permits were approved for small HPPs.

Will there be a fourth wave of the HPP epidemic?


Lavdosh Ferruni is an activist and environmental expert in Albania.  He runs an organization in the field of agriculture.