Serbia, Bulgaria: Competition between two key TSOs holds back the regional trading platforms

25. May 2015. / News Serbia Energy

After recent decision to establish partnership with Nord Pool and decision not to join regional CAO SEE, Bulgaria decided to await start up of EU cross border capacity auction platform. Competition with Serbian TSOs intention to establish regional training platform is present as well. According to the Energy Community, both Serbia and Bulgaria are key countries for successful regional trading platform.

Plans to create a single European cross-border capacity auction platform is holding back the Bulgarian transmission system operator (TSO) from joining the regional platform. This is despite the fact a joint European auction platform might only be operational by 2019.

Victoria Popovska, head of the electricity market department at Bulgarian grid operator ESO, said the TSO was not planning to join the recently established coordinated auction office for Southeast Europe, SEE CAO, and instead wait for the new joint EU auction office JAO. “We don’t have agreements with SEE CAO. We’ll wait for JAO,” Popovska said.

Currently, three regional platforms to sell cross-border electricity capacity exist:

CASC for the market areas of central west and south Europe and Switzerland;

the central allocation office (CAO) for the market areas of central east Europe and Croatia;

and CAO SEE for the south east European market area.

A single European platform where market participants can bid for cross-border capacity is part of upcoming European regulation, as stated in the network code on forward capacity allocation.

It is meant to serve as a single point of contact for companies bidding in explicit auctions to acquire long-term transmission rights, according to the draft code.

In explicit auctions only the transmission capacity is sold, rather than both capacity and the power to be transmitted, as in implicit auctions.

The platform should also allow companies to sell any transmission rights they have bought but do not need to other market participants.

The platform is only likely to be operational by the second half of 2019.

First, the European Commission and officials from national government will add details to the code during a comitology process expected to take around 12 months.

This implies the code could enter into force in summer 2016.

TSOs then expect to spend slightly more than two years preparing the implementation of the platform, with actual implementation taking around a year, a timeline set out by the European network of TSOs for electricity shows.

Regional platforms will stop auctioning primary capacity 12 months after the single platform has been established, so possibly at the end of 2020. They can still provide a venue for participants to trade secondary capacity, however.

While the Bulgarian TSO is reluctant to join a regional auction platform the Serbian TSO EMS is taking a different view.

Milos Mladenovic, corporate director for international and regulatory affairs at Serbian grid operator EMS, said that EMS had started discussions with SEE CAO to set up harmonised auction rules. EMS could use the auction platform for some of its borders before it joins JAO.

“It would be good to have all our borders under one mechanism for cross-border capacity,” he said. Serbia is bordering nine countries including Kosovo.

SEE CAO had faced numerous delays before it launched in the end of last. The grid operators of Croatia, Bosnia and Herzegovina, Kosovo, Greece, Turkey, Montenegro and Albania are shareholders in the auction office but it currently only holds daily and monthly auctions for the borders between Croatia, Bosnia and Herzegovina, Albania and Montenegro.

The participation of the Bulgarian and Serbian TSOs was considered crucial for the success of the action office and they together with Macedonia were potentially facing dispute procedures if they failed to comply. In the end of March a representative of the Energy Community stated that the organisation expects Serbia to participate in the 2016 coordinated yearly capacity auctions held for the southeast European (SEE) power markets.

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