Comparative Analysis of Support Schemes for Renewable Energy Sources in Europe and Albania. Legal Framework and Implementation Challenges

Abstract

Abstract The transition towards renewable energy has become a central component of European energy, climate, and economic policy. Although technological progress and declining production costs have substantially improved the competitiveness of renewable energy sources (RES), public support mechanisms continue to play an important role in reducing investment risk, accelerating deployment, and facilitating the achievement of national and European decarbonisation targets. Over the last two decades, however, the design of these mechanisms has changed considerably. Traditional feed-in tariffs have increasingly been replaced by market-oriented instruments, including feed-in premiums, competitive auctions, power purchase agreements, and contracts for difference. This evolution reflects a broader shift from administratively determined subsidies towards competitive and market-responsive mechanisms. This article examines the development of renewable-energy support schemes within the European Union and compares the European model with the emerging regulatory framework in Albania. Particular attention is devoted to Directive (EU) 2018/2001, as amended by Directive (EU) 2023/2413 (RED III), the reform of the EU electricity market design, and Albania’s Law No. 24/2023 “On the Promotion of the Use of Energy from Renewable Sources”. The analysis considers the transition from feed-in tariffs towards competitive auctions and contracts for difference and evaluates Albania’s efforts to approximate its renewable-energy framework to the EU acquis. The article argues that Albania has made significant progress in establishing a market-oriented legal framework and attracting private investment in solar and wind generation. Nevertheless, formal legislative approximation alone is insufficient to guarantee an effective renewable-energy transition. Market liquidity, grid capacity, administrative procedures, institutional coordination, permitting, access to finance, balancing responsibilities and regulatory predictability remain critical implementation challenges. The comparative analysis demonstrates that the next stage of Albania’s energy transition should therefore concentrate less on the formal introduction of new support instruments and more on creating the institutional and market conditions necessary for those instruments to function effectively.