Serbia & SEE Exclusive report: Electricity exchange platforms, who will take majority of SEE electricity trading

, News Serbia Energy

By the end of the year, the electricity exchange should be opened in Serbia. The organized SPOT market in Serbia is the subject of recently signed Cooperation Agreement between PE ElektromrežeSrbije and company EPEX SPOT. The agreement concretizes the long-term cooperation of the two companies and its goal is founding a company SEEPEX, where the ownership ratio between EMS and EPEX SPOT would be 75:25. The partnership should contribute to the setting of an organized electricity market in Serbia and its integration later on into the unique European market.

SEEPEX is also a strong signal for setting the regional market as the first phase of the integration.

SPOT market also complies providing the platform for regional day-ahead market (Regional DAM). It is expected that the exchange reaches its full capacity in 2018, and the profit should be 400,000 EUR.

The deliverers of electricity, apart from the producers, will be the traders which are registered according to the current laws. The most active electricity traders, apart from EPS, are the companies EFT, Aliq, GEN, ČEZ andRudnap. The daily auctions at the market will be organized by the system called EPEX Trading System, which was gradually introduced to the markets in France, Germany, Austria and Switzerland, as well as to the Hungarian market the manager of which is EPEX in the name of HUPX.

The idea is to make the exchange which would outgrow the national frames and through which a great number of transactions with electricity from the neighbor countries could be organized. The EPEX SPOT company is necessary as a bigger and more eminent partner which customers can trust. It is a company with its seat in Paris and branch in Leipzig, which manages the SPOT markets for short-term trading in Germany, France, Austria and Switzerland, using day-ahead market principle.

The advantages of opening of the stock exchange are the defined and open rules of electricity trading, the development of market and technological knowledge connected to the operation of the specific electricity market. Unlike the traditional ones, the electricity exchanges operate in virtual space. All the participants in these stock exchanges go through rigorous licensing procedures based on which their technical and financial capability to trade at these platforms are determined.

According to the data of Association of Europe’s transmission system operators, Southeastern Europe region has electricity capacity of total installed power 80.6 GW, out of which 44.1 GW are thermal capacities, 23.4 GW hydro capacities, 5.9 GW nuclear power plants and 7.1 GW are renewable energy sources. The review of yearly balances shows that Bulgaria, Romania and Bosnia and Herzegovina represent the net exporters of electricity, while the other countries import the electricity, the biggest importer of them is Hungary, then Croatia and Macedonia while Serbia has certain, mainly spring and summer electricity excesses.

The whole region is import-oriented, which stresses the need for building the new capacities. The average import during the previous decade was 8.4 TWh, and maximal import was recorded in extremely dry year of 2012 and it amounted 16.7 TWh.

Fournationalstockexchange markets are active in the region at the moment – in Hungary, Romania, SloveniaandGreece. One of the first electricity exchanges in the South Eastern Europe Region is OPCOM with the head office in Bucharest. Before entering of Romania into the European Union, the established stock exchange had not recorded any more significant scope of trading but during the last years, the traders showed larger interest in it due to neighboring countries deficit. The key of success of this stock exchange is in the fact that all the electricity producers from there are obliged to market a part of their production through the stock exchange. This stimulates the growth of the market and it enables the producers to have higher income. The operator has also the stock for bilateral agreements and the market of green certificates intended for the renewable sources electricity producers.
It is interesting that by the decision of the European Union OPCOM was punished with one million euros because of the restrictive measures that it imposed to the foreign traders on the wholesale electricity market of that country. OPCOM was punished because between 2008 and 2013 it claimed from the participants on the market to possess the Romanian VAT registration, refusing to accept the traders that have already been registered as VAT payers in some other European Countries.

The plans for OPCOM to be raised to the level of regional stock exchange were thwarted by establishing the Slovenian stock exchange, regarding the fact that none of the former Yugoslavian countries had its own stock exchange at the time. Namely, Slovenian stock exchange, BSP South Pool, was established with the ambitions to attract the traders from Romanian, Albanian and Bulgarian market. According to the analysts’ opinion, the Balkan region got the area for electricity export, regarding the fact that the demand is increasing constantly, especially in the industrial sector.

On the Slovenian stock exchange45 electricity traders were registered. Among them are:Borzen, Alpiq, Edison Trading, Enel Trading, GEN and HEP and Vattenfall Energy Trading. EPS is not the memeber of the stock exchange BSP. But it has the status of the observer.

Croatia established the electricity stock exchange that has not been active yet. The Croatian operator of the electricity market and Croatia operator of the transmission system signed the agreement on business cooperation in establishing the electricity stock exchange. The establishment of the stock exchange is going to contribute to the wholesale market for delivery of electricity day-ahead and is going to make the conditions for connecting the Croatian stock exchange with the national electricity stock exchanges in the region. The electricity market in Croatia was completely liberalized on July 1st, 2008 that enabled the new suppliers to come into the market. For the time being the most significant participant beside HEP and the Company GEN is also RWE Energy.

The full market opening in the Region will bring the regulated electricity prices, existence of the defined market rules and much-needed investments in the energy sector. The development of the electricity stock exchanges does not occur in the same way. The Romanian stock exchange OPCOM records a great success while other stock exchanges still have to realize their ambitions to unite fragmented market and attract larger number of partners. Individual markets in South Eastern Europe are small and their union is necessary in order to create a valid platform. In some countries of the Region it is necessary to create the conditions for safe investing, that also underestimates stabile political environment.