Assessing Legal Environment Factors that Impact in the Decision to Invest in Electricity generation from Renewable Resources – Case of Albania

Identifying and assessing the factors impacting investments in electricity generation is important for both private and public decision-makers. Understanding the decision-making process helps to stimulate and increase investments in the energy sector. This paper examines the legal environment factors that affect the decision to invest in electricity generation. Seventeen sub-factors of this environment are identified and its relative importance in the decision-making is measured, by interviewing 68 investors having invested or having obtained the right to invest in the electricity generation. We perform the Principal Component Analysis (PCA) in 17 sub-factors to find more general latent structures (factors) that characterize the legal environment affecting investments. The latent factors discovered are: Legal and Favourable Framework for the Concessions, Protecting Foreign Investments, Government Conditions and Bureaucracy as well as the Cascade Investments and Information. These are the most important factors of the legal environment in the decision-making process to invest in electricity generation.