2015 promises to be an exciting year for the Balkan markets, provided the set deadlines are actually met.
Two day-ahead power exchanges are expected to launch next year - in Croatia and Serbia. They were initially set for the first quarter of 2015 but exact dates are yet to be confirmed. A question mark hangs over a third one in Bulgaria with traders sceptical about a launch before 2016.
The Bulgarian exchange project has been dragging on for years now. The last known launch deadline derived from the project’s business plan was the end of 2014 but the Independent Bulgarian Energy Exchange (IBEX) company has so far remained silent about any further details.
Once up and running the exchanges would provide reference prices for each of these highly illiquid and opaque power markets. Furthermore, they are considered a step towards integrating the southeast region markets with the rest of Europe.
Serbia has already expressed its intention to join the 4M market coupling initiative of Hungary, Romania, Slovakia and the Czech Republic, as early as 2016, while Croatia is yet to decide whether to join the same initiative or to go with Slovenia and Italy as potential market coupling partners.
However, traders have expressed concern over potential liquidity issues on all three exchanges, saying that one common Balkan exchange would have been a better option.
Bulgaria will have to find a permanent solution for its strained electricity system, which accumulates €128m deficit per quarter mainly because of obligations on state-owned incumbent NEK to purchase electricity from renewable and conventional resources.
The country is awaiting a decision by the European Commission on potential state aid issues connected with the renewable feed-in tariffs and long-term purchase contracts with privatised coal-fired power plants. If the commission approves the renegotiation and change of the two schemes, renewable and some coal-fired producers could be steered towards the free market, while NEK could see some welcome debt relief.
The question about the Bulgarian electricity export tariff remains open with no indication from the energy regulator whether it is likely to be increased, decreased or scrapped next year.
In Serbia, the market will be fully liberalised from 1 January with end-users given the right to choose their supplier.
Serbian state-owned utility EPS is preparing to expand its trading activities into Hungary and Slovenia. At the same time the company is working to overcome coal production issues caused by the floods last May with traders expecting EPS to be back on the selling side from Q2 ’15.
For the rest of the non-EU member states in the Balkan region, steps towards further market liberalisation and integration will remain on the agenda with each of them at a different stages of development. Irina Peltegova