4 April 2012, Sofia

University "Sts. Cyril and Methodius“Faculty of Electrical Engineering and Information

Technology, Skopje

REGIONAL ELECTRICITY MARKET IN SEE

Are we ready?

Vienna Economic Talks – Sofia Meeting

Liberalisation of the Energy Market

Assoc. Prof. Vesna Borozan, PhD

EU – The 3rd Energy Package Promotion of the goal to reduce GHG emissions trough

series of measures, popularly named as “20-20-20 by 2020”

Technical precondition for fulfilment of this goal - high voltage Trans-European Super Grid to transmit amount of intermittent production of electricity from renewables

Backbone of the new energy policy is establishment of functioning integrated Internal Market for energy

The European electricity market design is not based on one single concept, but has rather evolved from different regional designs, all fulfilling the requirements of the energy acquis

To boost integration in a single market, EU is developing 7 Regional Markets for electricity

The Energy Community Energy Community Treaty signed in 2005, with

the main objectives: Short term - Create a single and stable

regulatory space coupled with a stable market framework attracting investment

Medium term - Integrated regional energy market that increases cross-border trade in energy, guarantees energy supply and takes into consideration climate and social aspects

Long term - The regional energy market should be fully integrated in the EU internal energy market

Status of development

Energy Community- The 8th Region

Source: Web-site of the Energy Community Secretariat

According to economic conditions/development:• LDC – Low Developed Countries (GDP 3000 )• MDC – Medium Developed Countries• HDC – High Developed Countries

 Populatio

n [million]

GDP [€/per capita]

Electricity consumption

[kWh/per capita]

Installed GC[kW/per capita]

HDC 23.5 16000 5200 1.15MDC 41.0 6200 4000 1.0LDC 12.0 3000 2800 0.8SEE 76.5 8700 4180 1.0

Countries of the SEE and their specific indicators

Source: Prof. Kocho Angjushev, PhD,

EFT Group

Electricity balances- past trend, breakdown by countries -

Countries of the SEE – Electricity balances

Low utilization of hydro potentials (<45%) High proven reserves of lignite (over 23 000 million tons with

annual consumption of slightly more than 220 million tons) Natural gas supply (cost of gas and pipelines to be constructed) Nuclear option – not viable with existing technology and funds

Energy potentials in the Region

15.3 GW of new TPP: 12.1 GW due to increase in demand 3.2 GW due to decommissioning

3 GW of new HPP 1.4 GW of new RES

Generation investment needs

Actual technical

import limit

Electricity balances forecast

Source: Prof. Kocho Angjushev, PhD, EFT Group

Regional Electricity Market Study Study on the “Integration of South East Europe

into the Internal Market for electricity under the specific aspect of the TSO’s role”, July 2011, contracted by SECI, Vienna Office

Study objectives: Addressing the urgent request to clear the

way for development of SEE Regional wholesale market for electricity

Giving an overview about the actual status and providing essential findings and advises

Identifying the main road blockers concerning the technical means of the TSOs’ functions under market conditions

Summary - current state of play Formal transposition of the ECT acquis in the national

legislations without effective implementation measures

Declarative market opening which satisfies legal obligations under the ECT, but in practice minimising the exposure of the customers and the state owned utilities to market conditions

Low economic prospects of the jurisdictions resulting in keeping non cost-reflective tariffs

Resistance to regional initiatives (political conditions and struggle for regional leadership)

Opening of the SEE regional market can only happen through a bottom-up development of the local markets and their phased coupling

Proposed measures Legal and regulatory requirements Technical and organisational preconditions for

access of competition to the customers Socio-economic and political measures -

besides cost-reflective tariffs, as a basic measure, it would be very helpful to establish :

Removal of price distortions Effective social schemes for vulnerable

customers EU incentive measures Eased access to the EU funds Human capacity building

A Way Forward Unbundling and transposition of

the second package on energy Implementation of regulatory and

other measures to achieve fair competition in electricity supply

Urgent need for investments in energy efficiency and new capacities

Phased coupling of local markets

Main challenges still ahead – to be managed only by regional coordination of resources!

Thank you for your attention!

Assoc. Prof. Vesna Borozan, PhDFaculty of Electrical Engineering and Information Technology

University "Sts. Cyril and Methodius", Skopje

vesna.borozan@feit.ukim.edu.mk