Current status and ongoing activities in the Energy Community Jasmina Trhulj, Energy Community Secretariat Energy Trading Seminar: “Understanding SEE Power Market” Tirana, 21 April 2016 Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
The Energy Community Extending the EU internal energy market to South East Europe and beyond Energy Community Contracting Parties : Albania Bosnia and Herzegovina Kosovo* FYR of Macedonia Moldova Montenegro Serbia Ukraine European Union Contracting Parties Observers Candidate Parties Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
The Energy Community objectives Creating single market framework within a single regulatory space to: increase energy trade, attract investments, enhance security of supply, improve environmental situation and increase competition in the energy market, based on the legally binding framework. Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
EnC - what makes the difference? − Rule of Law − Based on Energy Community Treaty − Difference to other voluntary regional cooperation − Common legal framework − Aligned with EU acquis − Covering EnC and EU members Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
EnC Legal Framework Acquis communautaire adapted and adopted in the Energy Community Infrastructure Environment Competition Electricity Renewable Statistics Efficiency Gas Energy Energy Oil Energy Community Acquis Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
3 rd Energy Package implementation - electricity The Energy Community Contracting Parties committed to implement the 3 rd Energy Package : as of 1 January 2015 Compliant laws adopted in Serbia, Albania and Montenegro Transposition of the 3 rd Energy Package into national legislation is still ongoing in: Bosnia and Herzegovina – drafting phase finalised Kosovo* – first reading in the Parliament (10 th March) FYR Macedonia – still in drafting phase (no tentative roadmap for adoption) Moldova – approved by the Government Ukraine – approved by the Council of Ministers Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Network Codes - Keeping Up the Pace With EU EnC Ministerial Council decision on the 3 rd Energy Package implementation includes provision on: Guidelines/Network Codes application in EnC Guidelines/Network Codes are to be adopted by PHLG Decision upon proposal of the European Commission Regulation (EU) 2015/1222 (CACM) implementation in the EnC as a priority Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Generation capacities installed in EnC (2014) 72 GW 17 GW - MD-UA Other RES; Thermal- Thermal- Other 1.5% Thermal- oil; 1,8% oil; 0,5% Thermal- RES; 0,4% gas; 3,2% gas; 14% Thermal- coal; 46% Thermal- coal; 46,6% Nuclear; 19% Hydro; 48% Hydro; 19% Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Generation capacities – main characteristics Main characteristics: Dominant coal thermal power plants (lignite) Aged and obsolete power plants – last commissioned in 1991 Non-compliant with environment protection requirements – environmental upgrade needed New power plant Stanari (BiH) in the commissioning phase – 300 MW Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Generation capacities – large hydro power plants Installed capacities in large hydro power plants: 13 GW (excl. UA 7,7 GW) 17% (excl. UA 44%) Out of which hydro pump storage power plants: 1,9 GW (2,6%) Bosnia and Herzegovina – 420 MW Serbia – 614 MW Ukraine – 861,5 MW Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Generation capacities – Renewable Energy Sources Total installed capacity in RES - end 2014 (excluding large hydro) Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Cross-border transmission network in the EnC Interconnection capacities exceed 10% target (EU) EnC CPs which are part of ENTSO-E synchronous area Continental Europe (CE): Albania (not a member of ENTSO-E) Bosnia and Herzegovina Kosovo* (not a member of ENTSO-E) FYR of Macedonia Montenegro Serbia EnC CPs which are not part of synchronous area CE and not members of ENTSO-E: Moldova ENTSO-E member Ukraine (except UA-W, so called Burstyn Part of ENTSO-E CE synchronous area; not ENTSO-E member island) Not part of ENTSO-E synchronous area CE; not ENTSO-E member Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Production and consumption in EnC (2014) In comparison to 2013: Production: 231.5 TWh 65 TWh Production decreased 15% - MD-UA Consumption decreased 2.2% Consumption: 233 TWh 71 TWh Energy Energy TSO sector; 1% TSO losses; sector; 2% losses; 3% 3% Non- Non- residential DSO residential; DSO losses; 42% 55% losses; 15% 11% Residential Residential; 38% 30% Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Energy balance in EnC in 2014 In 2014 in the Energy Community: Net Net exporters: importers: Energy Community net importer! 8.5 TWh 14.5 TWh 30 TWh 25 24 20 17,6 Net import 15 14,5 14 Net export 10 8,5 8 5 0 2012 2013 2014 Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Energy Community – an emerging electricity market Balancing market Day-ahead market development Regional Capacity Allocation Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Regional Capacity Allocation TSO shareholder in SEE CAO TSO not participating in any auction office TSO allocates capacities through JAO TSO allocates capacities through JAO & SEE CAO Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Spot Market Development Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Regional Balancing Market – Under construction SHB Block SMM Block OST/KOSTT cooperation Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Reality check – balancing reserve requirements Most of the Western Balkans’ power systems designed to be part of larger power system The biggest generation unit is often disproportionally big in comparison to the 8% 7% total generation capacity installed (%) Required level of tertiary reserve sometimes difficult for transmission system operator to 23% 28% procure within national borders However, 14% 9% Nationally-oriented approach is still dominant Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Reality check – procurement of balancing capacity Procurement of balancing capacity is characterized by: Non-market based procurement procedure (except in BiH where market-based mechanism is applied) one single dominant balancing service provider 3 BSP 1 BSP (incumbent production company) with the obligation to provide all needed reserve Annual procurement 1 BSP Regulated prices, fixed by NRA (in some cases based 1 BSP on the lump sum for all ancillary services) 1 BSP Regulatory framework for pricing of balancing capacity is missing transparency 1 BSP market price signal is missing Market based procurement no incentive for new BSPs (DSR) Non-market based procurement Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Procurement of balancing capacity – changes needed TSO shall gradually move to closer to real time, market-based procurement: TSO procures and provides balancing capacity at fully regulated market: annual Tariff Closer to contract system real time 1 Balancing Separate Balance Network Balancing regulated regulated market price TSO responsible service tariff for users service parties providers capacity provider primary FRR no separate secondary RR tariffs for Market PSO balancing tertiary makers services Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
Reality check – procurement and activation of balancing energy Procurement of balancing energy is characterized by: Legislation defines market-based procurement of FRR and RR, but the implementation is lagging behind Different level of development Nationally-oriented Market based procurement – common merit order list with pay-as-bid pricing method Regulated market – regulated ancillary services contract between TSO and BSP No separate tariff for balancing energy activated No settlement of activated volumes Remuneration usually through regulated generation price CMO list with pay-as-bid pricing Regulated market Energy Community Secretariat Energy Trading Seminar Energy Community Secretariat
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