Croatia: RWE Energy Croatia eyes Bosnian electricity market

14. November 2014. / SEE Energy News

Liberalization really sounds nice, but when you really open up the market in a way to allow everyone access to the end customer, then it is liberalization. All before that is liberalization under the veil, a farce. This is essentially a form satisfying and there is not content. Thus, when the conditions for it would be acquired, you can expect us said Zoran Milisa, director of the company RWE Energy Croatia.

The liberalization of the electricity marketis expectedin FBiH next year. Can we expect RWE on BiH market since 2015thas a company that bids energy for households and businesses in BiH?

– Next year, I do not know, but in the next period when by market liberalization would be createdthe conditions and enough space for us to return investmentas investors, certainly yes. As we enter Croatia, so we plan enter all countries of the former Yugoslavia, at the moment when it would be enabled.

You mentioned countries in the region, which of them is most attractive to you?

– These are definitely the distributed markets, where there is space for return on investment, but let’s go tell that it is Slovenia, and Serbia slowly goes in that direction.

Marketestablishment

Is BiH in last place?

– No, it is not so at all. We are not orientedat all in the sense that we watch what country is it, but where are opened regulatory frameworks,so that we can generate some profits. We cannot make a profitin Bosnia, because the selling is lower there than we can produce electricity out there, and it is not interesting to us.

What do you think when this might happen?

– I hope in a short period, which is for us a five-year period.

What new to the consumers can bring the market opening?

– The most important, each monopoly, in Croatia called it natural monopoly, is bad. You have to establish a market in order that it regulates prices. At the moment when someone has a position to determine by a monopoly, in a way, if he needs money to raise the price, and if there is a surplus to reduce it, you do not have a real sense that you have what is the best on the market. If you have someone to whom is payable to offer cheaper from someone else, and he works in the area, you will quickly get the best price for the consumers. The more choice optionsyou have, you go where the most favorable is. It is like in the stores, at the beginning when you had only one store, you could only buy there; now when you have twenty, you choose one that is most convenient.

Do you have experience in doing business with companies from BiH, what is it like?

– For now not. RWE is a company that I brought to Croatia, so I was the owner of the company which RWE bought and for the first time in their history they bought a company that did not have in its possession any of the estate. They would have usually bought some productive capacity, and then bought only the company that was engaged in supply. It is a model whichwe will probably transmit to other states, and when it passes the time when we stop capital investment, especially in hydropower potential, we will continue to invest not only in Bosnia but in the entire region. For now we are not able due to problems in the market, but the moment when it all would be resolved, certainly yes.

We mention the countries of the region, what about the other countries of Europe?

– It is very interesting. There is reverse situation – now in stock markets you have days when producers pay you to take power. There are enormous surpluses. We have created a huge monster, and these are renewable energysources which are subsidized, they can give energy after they have paid off and recoup its production capacity and energy that can sell indefinitely. They can sell for one euro and it is profitable to them. You now have nuclear power plants that cannot be excluded from the network just so and they have to produce, and have nowhere to place the energy, then you practically pay that someone takesthis energy from you. We have got absurd theory.

Therefore Europe has fallen into their own trap by promoting renewable energy sources.

-Exactly, what BiH and Croatia do, goes down a very dangerous path for an economy that does not have its own production, and that is to declare large hydro power plant as renewable energy sources. It’s not so thoughtfully, nor is itso intended. The countries that have great potential in hydro productionpush this, it is Croatia, and I think that BiH is leader in quantity. Croatia has 34 percent of production, and we have heard that BiH has 44 percent of the production from hydropower. If large hydro power plantswould be declared as renewable energy, then we will be in trouble. This then is not what is intended. Small hydropower plants, up to ten megawatts,are renewable energysources and if it passes, then BiH somehow solves its problem. Why there would not be investments and 50 or 100 small producers who would work small hydropower plants which would be subsidizedwith the small differences in price. This is a dangerous precedent for opening ofany serious market. We are talking about liberalization, which is possiblein this way.

There are many obstacles

Giving concessions for small hydro power plants is the problem in BiH, what about the Croatian and Slovenia?Has it been resolved there?

– It is even bigger problemwith us because by entering the EU we must to respect the environment protection, which has further complicated the already complicated processes that allow obtaining concessions for the production of small hydro power plants. I’m sorry, for one time we have been seriously engaged in studying the business case for small hydro power plants, but we have seen that there were a lot of obstacles. In BiH takes four years to obtain concessions, here is the same thing, maybe worse.

So, when everything would be settled, we can expect you in BiH?

Liberalization really sounds nice, but when you really open up the market in a way to allow everyone access to the end customer, then it is liberalization. All before that is liberalization under the veil, a farce. This is essentially a form satisfying and there is not content. Thus, when the conditions for it would be acquired, you can expect us.

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