Croatia, Bosnia, Montenegro, Serbia: The role of the regional capacity allocation office CAO

14. July 2015. / SEE Energy News

A coordinated auction office established in Podgorica, Montenegro is currently in charge of capacity allocation and a secondary market on two regional borders, namely Croatia-BiH and BiH-Montenegro. Serbian TSO EMS is still due to join the platform.

The long-term market segment, mainly used for the purposes of price hedging emerging from a volatile (spot) market spread, but also used for speculation deals, is currently organised in the form of cross-border capacity allocations. Following the centralised approach applied in Central-West and Central-East Europe, where the CASC.eu and CAO auction offices were established quite some time ago, a similar centralised approach has been followed by some South-East European TSOs (SEE TSOs).

A coordinated auction office has been established in Podgorica, Montenegro which is currently in charge of capacity allocation and a secondary market on two regional borders, namely Croatia-BiH and BiH-Montenegro.

Enlargement and coverage of additional borders is expected during 2015, the first being Albania-Montenegro to follow from April this year.

In such a way, it will be ensured that the requirements of the Forwards Network Code (NC) are fulfilled, such as the establishment of a Single Allocation office in Europe. The first step in such a direction is a merger of CASC.eu and CAO, which is on its way and is to be finalized during 2015. In parallel, one set of capacity allocation rules will be drafted and energy traders will have a unique interface towards a single European IT platform for allocation of long-term transmission capacities – a so-called ‘one-stop-shop’ solution for Europe.

Although still not prescribed, one could expect development of this market segment either towards CfDs (Contracts for Differences) and/or FTRs (Financial Transmission Rights), the second being either options or obligations. While FTRs are referenced to the actual transmission capacity available for physical delivery, CfDs are pure financial products where the counterpart is a market participant. , transmits Serbia-energy.eu

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