Bosnia: Regional electricity exports competition with all new TPPs built by 2023

22. January 2016. / SEE Energy News

SEE countries are likely to compete for exporting electricity to the neighboring countries. Bosnia and Herzegovina will be in direct competition with Serbia for export markets. Strong competition may in particular come from EU Member States, namely Bulgaria and Romania, and possibly in the near future Ukraine and Turkey.

Current pleasant position of Bosnia export potentials will be jepardzied in the next 5-10 years due to the required phase of old power generation facilities. Even with completed new power plants Bosnia will have hard time competing with neighboring countries for export markets, especially Serbia. Considering the historical (2007 – 2013) supply and demand pattern, it is evident that Bosnia and Herzegovina has been able to cover its demand and has been able to export electricity.

At the low growth electricity consumption scenario Bosnia and Herzegovina will be able to maintain excess capacity and hence export electricity up until 2023/2024 if no additional generation capacity would be realized. Thereafter it would turn into a net importer.

The reason for this is the marked downturn in electricity generation capacity that stems from the phasing out of the Tuzla G3, Tuzla G4, and Kakanj G5 power plants. The power plants that are currently under construction (scenario 2) are in part compensating for this phase out of production capacity. This would enable Bosnia and Herzegovina to (barely) meet its electricity demand beyond 2024. If by contrast all planned future capacity (scenario 3) or equivalent was built, Bosnia and Herzegovina would not only maintain its position as a net exporter in the region but would significantly increase its export capacity (the country would have an export capacity of more than double its projected demand). An increased system efficiency that reduces distribution losses may decrease the demand furthermore, enabling Bosnia and Herzegovina to strengthen its position as a net exporter.

In the case of medium consumption growth, Bosnia and Herzegovina would still turn into a significant exporter of electricity if all planned future capacity (production scenario 3) was realized. The completion of the currently constructed plants (supply scenario 2) would entail that Bosnia Herzegovina would have a balanced demand and supply pattern up to 2024 and become a net importer thereafter. Under supply scenario 1, the country would turn into a net importer in 2021 presents the latest engineering energy association conference of Bosnia.

With high electricity consumption demand in Bosnia and Herzegovina scenario, it can clearly be concluded that production scenarios 1 and 2 are not sufficient for maintaining Bosnia and Herzegovina’s position as an exporter. This situation shows that even in the case of high domestic electricity consumption growth, the realization of all of the future planned capacity expansions would lead to a substantial increase in its exporting capacity (the country could export the equivalent of ca. 110% of its national demand).

In case of the low consumption growth scenario it is apparent that the electricity generation capacity decline relating to the phase out of production in the Tuzla G3, Tuzla G4, and Kakanj G5 power plants, turns Bosnia and Herzegovina from a net exporter into a country with a balanced position up until 2024 (supply scenario 1). If the currently constructed generation capacity (supply scenario 2) is being realized, the decline is cushioned and Bosnia and Herzegovina retains export potential throughout the period of examination. The realization of all planned projects (supply scenario 3) would entail that Bosnia and Herzegovina would more than treble its exporting capacity over the course of a few years (during the period 2017-2024).

In the case of the medium electricity consumption growth scenario it is evident that the current efforts to meet Bosnia and Herzegovina’s electricity demand are insufficient. As of 2021 (in the case of production scenario 1) and 2024/2025 (in case of production scenario 2) the country would turn into a net importer of electricity. Therefore at least some capacity extensions must be realized to secure self-sufficiency during the period of examination.

The high electricity consumption growth scenario shows similar but more severe findings to those described in the medium growth scenario above.

As of 2020/2021 (in the case of production scenario 1) and 2023/2024 (in case of production scenario 2) the country would turn into a net importer of electricity, underlining that more generation capacity and/or energy saving measures are required to maintain self-sufficiency.

In 2014 Bosnia and Herzegovina is in a long position. The case study countries (scenario 1) were in a net long position entailing that they could export electricity. Examining the Western Balkans and its immediate neighbours jointly (scenario 2), it is noteworthy that they are in a net short position requiring about 28000 to 35000 GWh of electricity, which is mostly driven by Italy. Widening the framework of reference to the Western Balkans and the EU (scenario 3) shows that the region is in a slight long position.

In 2019, the case study countries (scenario 1) will be in a slight long or in a short position entailing that there might be an export market for Bosnia and Herzegovina’s electricity while the supply-demand scenarios indicate that Bosnia and Herzegovina might be in a long position of around 13.000 GWh. The Western Balkans and its immediate neighbours considered jointly (scenario 2) are in a significant net short position and thus be importing electricity. Widening the framework of reference to the Western Balkans and the EU (scenario 3) shows, however, that there is no excess demand expected in 2019.

In 2024 Bosnia and Herzegovina is most likely in a net long position up to around 19.000 GWh and thus able to export electricity. The case study countries (scenario 1) would be in a long or in a short position entailing that there might potentially be an export market for Bosnia and Herzegovina’s electricity. However, given the range of the net position, it is not clear whether the case study countries will import or export electricity. Again, the Western Balkans and its immediate neighbours considered jointly (scenario 2) are in a significant net short position; this is mostly driven by Italian power demand. Widening the framework of reference to the Western Balkans and the EU (scenario 3) showshowever, that it is unlikely that there will be a lot of excess demand in 2024.

Neighboring regional electricity market in the Western Balkans and the surrounding states are the most important indicator if there is demand for Bosnia and Herzegovina’s electricity. In the region, Bosnia and Herzegovina is directly in competition with Serbia, which has most likely also a long position and will put pressure on the electricity price.

That the EU is in a long position indicates that there will also be other competitors, which can be expected to put pressure on the electricity price, especially for imports into EU. Given that Serbia is most likely in a long position and most likely to export electricity into the Western Balkan neighbourhood, Bosnia and Herzegovina might be likely be at risk of incurring stranded assets if other Western Balkan countries do realize most of their planned projects. For that reason, it might be appropriate to take a closer look at the feasibility of investments that are undertaken to satisfy export demand.

In the course of the next decade Bosnia and Herzegovina will be turning from a strong energy exporter that historically exported up to 20% of its electricity production to an importer, if it does not pursue additional investments in electricity generation (scenario 3 or equivalent measures) or energy conservation measures. If scenario 3 or equivalent measures were realised, the country would have an export capacity ranging between 17.000 to 20.000 GWh in 2024. If Bosnia Herzegovina realized all of its currently planned capacity extension projects or equivalent, the country would extend its export capacity beyond double its domestic demand in 2024 in a high consumption demand scenario. Based on the current government policies it appears that Bosnia and Herzegovina is preparing to significantly strengthen its position as an energy exporter.

This situation would give rise to a substantial dependency on the export market. The export analysis has shown that the case study countries are likely to compete for exporting electricity to the neighbouring countries. Bosnia and Herzegovina will be in direct competition with Serbia for export markets. Strong competition may in particular come from EU Member States, namely Bulgaria and Romania, and possibly in the near future Ukraine and Turkey. A high dependency on the export market therefore exposes the country to create the risk of stranded assets. Determinants of competitiveness should therefore be closely examined. From this point of view, a make-or-buy decision should also be investigated prior to new investments.

Concerning the peak load demand and supply analysis, it bears mentioning that Bosnia and Herzegovina is expected to remain vulnerable. In supply scenario 1 and 2 Bosnia and Herzegovina would also have difficulty to satisfy peak demand, transmits Serbia-energy.eu

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