Sustainable Asset Valuation of the Kalivaç and Poçem Hydropower Projects

This report provides a Sustainable Asset Valuation (SAVi) assessment of the Kalivaç and Poçem hydropower projects (HPPs) on the Vjosa River in Albania. It compares these projects against hypothetical solar PV and onshore wind alternatives, integrating environmental, social, and economic externalities into cost-benefit analyses (CBA), levelized cost of electricity (LCOE), and financial performance models. The assessment finds that the HPPs are uneconomic and socially costly compared to solar PV, primarily due to high dredging costs and significant losses in agriculture and tourism.

• The cost-benefit analysis (CBA) indicates that both HPP Poçem and HPP Kalivaç are uneconomic, producing higher costs and societal burdens than benefits. The final SAVi net results, which include externalities, are negative EUR 233 million for HPP Poçem and negative EUR 321 million for HPP Kalivaç.
• Solar PV is identified as the most beneficial and viable alternative for generating a comparable amount of electricity in Albania. Its final CBA result of negative EUR 75.6 million is approximately 7.3 times less negative than the combined results of the HPPs, and its integrated LCOE is more than 2.5 times lower than that of the HPPs.
• The highest negative externalities for the HPPs are caused by the inundation of agricultural land, resulting in a total foregone value added of EUR 174 million. This leads to foregone tax revenues for the public sector exceeding EUR 26 million, which is higher than the expected additional corporate taxes from electricity producers.
• Sediment dredging is a critical and expensive operational requirement for the HPPs to maintain full capacity. During the 35-year concession period, dredging costs are estimated at almost EUR 18.5 million for HPP Poçem and more than EUR 140.3 million for HPP Kalivaç, with dredging accounting for over 40% of the conventional LCOE for HPP Kalivaç.
• The construction and operation of the HPPs are expected to cause a loss of tourism potential valued at more than EUR 10 million over their lifetime (rising to over EUR 22.5 million if a lower discount rate of 6.75% is applied). This is attributed to the destruction of the pristine ecological conditions of the Vjosa River.
• Financial analysis shows that at a domestic electricity price of EUR 55 per MWh, the HPPs are not financially attractive, with a project IRR of 9.32%, which is below the required hurdle rate of 13.5%. To achieve a project NPV of zero in a baseline scenario, the price would need to be EUR 78.47 per MWh, or EUR 108.39 per MWh if dredging costs are included.
• Climate change projections, specifically a projected average reduction of 20 mm of precipitation per month by 2100, have a marginal overall effect on the SAVi net results but adversely impact financial performance. While reduced precipitation lowers dredging costs, it also reduces electricity generation and subsequent revenues.
• The HPPs are expected to cause significant biodiversity loss and ecosystem degradation along the Vjosa River, including the disruption of migratory fish species like the critically endangered European eel and the loss of flood protection services from wetlands. These impacts were not monetized in the SAVi results due to a lack of quantitative data.

APA

Wuennenberg, L., Bassi, A. M., Perera, O., Uzsoki, D., Pallaske, G., & Rugova, Q. (2020). Sustainable Asset Valuation of the Kalivaç and Poçem Hydropower Projects. International Institute for Sustainable Development. https://www.iisd.org/system/files/2020-08/savi-hydropower-albania.pdf

Chicago

Wuennenberg, Laurin, Andrea M. Bassi, Oshani Perera, David Uzsoki, Georg Pallaske, and Qendresa Rugova. Sustainable Asset Valuation of the Kalivaç and Poçem Hydropower Projects. International Institute for Sustainable Development, 2020. https://www.iisd.org/system/files/2020-08/savi-hydropower-albania.pdf.

Wikipedia

{{cite report |last1=Wuennenberg |first1=Laurin |last2=Bassi |first2=Andrea M. |last3=Perera |first3=Oshani |last4=Uzsoki |first4=David |last5=Pallaske |first5=Georg |last6=Rugova |first6=Qendresa |title=Sustainable Asset Valuation of the Kalivaç and Poçem Hydropower Projects |publisher=International Institute for Sustainable Development |date=June 2020 |url=https://www.iisd.org/system/files/2020-08/savi-hydropower-albania.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wuennenberg2020sustainable, author = {Wuennenberg, Laurin and Bassi, Andrea M. and Perera, Oshani and Uzsoki, David and Pallaske, Georg and Rugova, Qendresa}, title = {{Sustainable Asset Valuation of the Kalivaç and Poçem Hydropower Projects}}, institution = {International Institute for Sustainable Development}, year = {2020}, month = jun, url = {https://www.iisd.org/system/files/2020-08/savi-hydropower-albania.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }