Serbia: Cross border electricity trading characteristics 2014, News Serbia Energy
TSO grid network operator company EMS performs daily auctions for 100% ATC on borders with Romania, Bulgaria and Croatia, and on other borders, for 50% of ATC. For long term auctions, EMS performs auctions for 100% ATC on border with Hungary, and auctions for 50% of ATC on borders with Macedonia, Montenegro, Albania and Bosnia and Herzegovina. On other borders (Croatia HEP OPS, Bulgaria TSO EAD, Romania Transelectrica), neighboring TSO-s perform auctions for 100% of ATC on long term auctions.
Serbian – Hungarian border
Direction Serbia > Hungary
Monthly auctions for this border amount usually 500MW. Exception was February 2012 when export from Serbia was restricted due to extremely cold winter and strong lack of electricity all over the region. This border and this direction is very important for traders in SEE since this is their way to Hungarian market and HUPX where they can balance and optimize their trading portfolio. This direction has usually very low value, equal to safety premium for not depending on daily auctions. But in Q2, if hydrology is good, whole SEE has surpluses of energy and wish to export to Hungary or Austria/Germany and then this direction can have significant price. Exception was Q2 2014 when due to huge floods Serbian lignite mines were severely damaged and Serbia become importer of electricity in Q2 instead of being exporter in Q2. Due to that, SR>HU direction had no significant value in Q2 2014.
Direction Hungary > Serbia
This direction is the main supply route for SEE in case of deficits of electricity. Deficits usually happen in Q1 due to increased electricity consumption in SEE during cold weather, so this direction has the highest price exactly in Q1. The price of this direction was sometimes over 10 EUR/MWh in the period 2007-2009, but after financial crisis in 2008 and drop of consumption and electricity prices, this direction lost value as well. Due to drop of consumption in the period 2012-2014 this border additionally lost its value.
Serbian – Romanian border
Direction Romania > Serbia
This border was very important before 2012 when Romania was big electricity exporter. After the drop of electricity prices all over Europe in 2012, exports from Romania got reduced since Romanian market became isolated due to very high administrative export fees. Evident drop of price of Romanian export capacities happened in 2012 and it lasted till 2014 when export fees got reduced and finally, recently cancelled. Monthly cross border capacities on Romanian borders are characterized with very strong fragmentation and many auctioning periods within a monthly auction. Due to strongly developed wind generation in Romania, cross border capacities have increased value in “windy months”. Also, in months when regional prices spike, RO>SR capacity has increased value since Romania has more constant forward prices than other countries.
Direction Serbia > Romania
This direction has nearly no value since Romanian market usually has lower price than other markets and therefore it is not attractive for imports.
Serbian – Bulgarian border
Direction Bulgaria > Serbia
Since Bulgaria is the biggest exporter of electricity in SEE, this border has strong importance, but available capacity is usually quite low amounting around 100-150MW on monthly basis. In the period 2007-2009, when the regional prices were much higher, this border had prices of even over 20 EUR/MWh. But, similarly as with Romania, when regional prices dropped in 2012, a drop of value of this cross border capacity happened as well. Bulgarian market had too high administrative export fees and the price of export cross border capacities got reduced together with exports. When export fees got significantly reduced in summer 2013, then the price of export cross border capacities got significantly increased and Bulgaria increased exports again. This direction has the lowest value in Q2 since SEE region has no need for electricity in this period. Since Bulgarian prices are quite constant, the price of the cross border capacities fluctuates together with regional forward prices.
Direction Serbia > Bulgaria
Since Bulgaria is big exporter of electricity this direction should not have big price, but starting from middle 2012 this direction had significant price. This direction is usually used for flows of night hours from the region into Bulgaria. Bulgaria exports more peaks hours than off-peak hours, but cross border flows from Bulgaria to Turkey and Greece are almost constant base load. Therefore, certain quantities of off-peak hours are transited from Serbia and Romania via Bulgaria and since available of SR>BG capacity is very low, it easily get high price. This direction has the highest price in Q2 since prices of night hours are the lowest in Q2 due to strong generation of run-of-river hydro power plants.
Serbian – Macedonian (FYROM) border
Direction Serbia > FYROM
Available capacity on this border is around 300-500MW, auctioned 50%-50% by each TSO. Available capacity is quite fragmented and rarely constant during the whole month. Fragmentation is caused by maintenance of transmission lines and therefore the most constant and the highest value of available cross border capacity is during Q4 and Q1 when there are no maintenances. The price of capacity on this border does not go extremely high, but also does not go extremely low. There is not special pattern on price of this border. The price of this border oscillates with availability of cross border capacities and expected Greek market prices.
Serbian – Albanian border
This border is very important route to supply Albania. Albania is 100% hydrology dependent since in Albania there is no other power generation but Hydro generation. Therefore, this capacity has the highest value when hydrology is bad and the lowest value when hydrology is good. Partially, this capacity is used for transits to Greece via Albania.
Available monthly cross border capacity amounts between 150-200MW and it is quite constant with few reductions due to maintenances of transmission lines.
Available cross border capacity on SR>AL border and Montenegro>Albanian border is most of the time high enough to cover Albanian needs and available transits to Greece, but regardless to that, price of this capacity achieves very high values. Patterns of prices of monthly capacities on this border can have shapes that are very difficult to explain. For example, this border had higher prices in Q2 2014 than in Q3 2014. Although needs of Albania are lower in Q2 and Greek prices were lower in Q2 as well, price of cross border capacity SR>AL was higher in Q2 2014 than in Q3 2014. One possible explanation is that price of Albanian import capacities has very high correlation with achieved prices on purchase tenders of Albanian power utilities.
Serbian – BiH border
Border Bosnia and Herzegovina > Serbia
Very small amounts are allocated on yearly auctions, only 50MW each TSO. But on monthly basis there is around 200MW additionally auctioned by each TSO what makes this border around 400-500MW in total. Since Bosnia has the biggest surpluses of energy in Q2, capacity has the highest price in Q2, but price of cross border capacity is much lower than in case of border BiH>HR since Serbia has big surpluses of energy in Q2 as well.