Serbia: Electricity trading map flow between Republika Srpska and Serbia, hints and tricks vs issues and market rules

29. July 2013. / News Serbia Energy

Serbia has a lack of electricity and its season and daily needs are not harmonized- it has electricity surplus in spring and lack of electricity in winter. It needs more electricity during night than during day.
Republika Srpska has two big producers (TPPs Gacko and Ugljevik) that produce that much electricity during night and day so they have overage and then Republika Srpska’s Power Utility (EPRS) sells this at market.

Serbian power utility EPS does not need all these overages from Republika Srpska energy system, but only winter and night overages. On the other side, EPRS does not want to sell electricity overages this way but it wants to find a buyer who will buy all expenses in total. In other words, electricity surplus from EPRS and electricity lacks in Serbia are not harmonized on daily and season level so it is not profitable for direct trade.

If Repubika Srpska sells electricity surplus to Serbia only when Serbia needs it (for 3 “brother” euro cents) then it wouldn’t need to sell its electricity overages at good prices (for around 6 euro cents) when this electricity is not required from Serbia. Direct bid is irrational for electricity seller and he is always looking forward to get higher price. Republika Srpska sells its electricity overages in packages during winter or summer, night and day (for 5 euro cents approximately) in order to make a profit in electricity production and it makes solid earning this way and traders’ art is to know how to pack all this electricity in daily and season packages and offer it to buyers who lacks it. This flexibility decorates traders so they are impossible to be avoided at electricity market. Besides, all electrical power utilities in region buys electricity this way and so accomplish the best effects.

If Serbia wants to buy electricity in direct bid from producer, it will seriously confront with the law which does not approve direct bid because electricity buying is public purchase. So, tender needs to be announced.
And then the crucial question which EFT confronted to Serbian Minister of Energy Mihajlovic does not have the answer is as follows- what if some trader offers lower electricity price than one Minister achieves in direct bid with the seller? What happens then? Will Minister buy more expensive electricity only to avoid traders no matter if it is irrational for Serbian citizens?

There is one more important reason why Serbian National Energy Company EPS does not need to involve in direct electricity purchase.
If EPS enters in direct bid with EPRS today, it will need to start trading with electricity surpluses and other energy in region (Hungary, Bulgaria, Austria, Romania…) tomorrow. This is speculative market in over limited capacities where millions of EUR is being earned or lost.
If big national electricity companies avoid this kind of trade because of high risk, why would Serbian Ministry of Energy let EPS to do it?

Source;Serbia Energy/EC report on See power trading 2013

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