Bosnia and HerzegovinaBosnia and Herzegovina

And And

The Regional Electricity MarketThe Regional Electricity Market

ContentsContents

• Bosnia and Herzegovina LiberalisationBosnia and Herzegovina Liberalisation

• Bosnia and Herzegovina Market DesignBosnia and Herzegovina Market Design

• Southeast Europe Regional MarketSoutheast Europe Regional Market

• Regional Market SarajevoRegional Market Sarajevo

• Bosnia and Herzegovina ProposalBosnia and Herzegovina Proposal

BiH Liberalisation:BiH Liberalisation:Current OrganizationsCurrent Organizations

• Three Vertically Integrated Power Utilities Three Vertically Integrated Power Utilities (Production, Transmission and Distribution)(Production, Transmission and Distribution)

• ZEKC (Joint Power Coordination Centre)ZEKC (Joint Power Coordination Centre)

» Business Association of three Power Business Association of three Power UtilitiesUtilities

» Role: coordinate operation of the high Role: coordinate operation of the high voltage power network in BiHvoltage power network in BiH

BiH Liberalisation: The LawBiH Liberalisation: The Law

• Act on Transmission of Electric Power, Act on Transmission of Electric Power, Regulator and System Operator of Bosnia Regulator and System Operator of Bosnia and Herzegovina (Adopted in April, 2002, and Herzegovina (Adopted in April, 2002, Official Gazette No. 7/02). Authorises Official Gazette No. 7/02). Authorises establishment of:establishment of:» Independent System Operator (ISO)Independent System Operator (ISO)» Single Transmission Company (STC)Single Transmission Company (STC)» State Electricity Regulatory Commission State Electricity Regulatory Commission

(SERC)(SERC)

BiH Liberalisation: Current ProjectsBiH Liberalisation: Current Projects

• Current Project in BiH: POWER III World Bank Current Project in BiH: POWER III World Bank Project (USD 250 MM)Project (USD 250 MM)

• Primary sub-projects: Primary sub-projects:

» Reconstruction of substations.Reconstruction of substations.

» Reconstruction of transmission lines.Reconstruction of transmission lines.

» SCADA/EMS and Telecomm. System BiH.SCADA/EMS and Telecomm. System BiH.

» Environmental Projects.Environmental Projects.

» Projects related to production and distribution.Projects related to production and distribution.

BiH Liberalisation: BiH Liberalisation: Market Restructuring ProjectsMarket Restructuring Projects

• Establishment of Single Transmission Establishment of Single Transmission Company (CIDA, SEETEC)Company (CIDA, SEETEC)

• ZEKC – ISO Transformation Project ZEKC – ISO Transformation Project (DFID, KEMA)(DFID, KEMA)

• Market Rules and Market Design Project Market Rules and Market Design Project (CIDA, SEETEC)(CIDA, SEETEC)

• State Electricity Regulatory Commission State Electricity Regulatory Commission (USAID, Pierce Atwood)(USAID, Pierce Atwood)

BiH Liberalisation: The FutureBiH Liberalisation: The Future

• Resynchronisation of UCTE Zones I and II Resynchronisation of UCTE Zones I and II (related to implementation of POWER III (related to implementation of POWER III Project).Project).

• Continuing process of reform and Continuing process of reform and restructuring of the power sector.restructuring of the power sector.

• Market opening.Market opening.

• Privatisation.Privatisation.

BiH Liberalisation: BiH Liberalisation: Utility Unbundling and RegulatorUtility Unbundling and Regulator

• Three power utilities unbundling:Three power utilities unbundling:

» Transmission divisions merge into STCTransmission divisions merge into STC

» Several DISCOsSeveral DISCOs

» Several GENCOsSeveral GENCOs

» ZEKC ZEKC ISOISO

• SERCSERC

BiH Liberalisation: Time FrameBiH Liberalisation: Time Frame

• Reconstruction of substations and transmission Reconstruction of substations and transmission lines by mid-2004.lines by mid-2004.

• Resynchronisation Resynchronisation related to a.m. Power III sub-related to a.m. Power III sub-projects.projects.

• SCADA/EMS and telecommunication system by SCADA/EMS and telecommunication system by end of 2006.end of 2006.

• Unbundling of utilities by mid 2003.Unbundling of utilities by mid 2003.• ISO, ISO, STCSTC, SERC – by end of 2003., SERC – by end of 2003.• Grid Code finalized by end of 2003 (already Grid Code finalized by end of 2003 (already

drafted). drafted).

Time Frame Cont’dTime Frame Cont’d

• ISO Law, ISO Law, STCSTC Law Law

» Currently being drafted. Currently being drafted.

» Expected to be passed by BiH Expected to be passed by BiH Parliamentary Assembly by end of 2003.Parliamentary Assembly by end of 2003.

• Market Rules available by mid 2004.Market Rules available by mid 2004.

• Balancing market opens mid 2005.Balancing market opens mid 2005.

• Exchange opening undecided.Exchange opening undecided.

BiH Market DesignBiH Market Design

• Future BiH market based on bilateral Future BiH market based on bilateral contracts.contracts.

• Focus on physical wholesale transactions.Focus on physical wholesale transactions.

• No separate market operator foreseen for No separate market operator foreseen for initial phase.initial phase.

• ISO to initially operate Balancing Market.ISO to initially operate Balancing Market.

Regional Market: DefinitionRegional Market: Definition

• What is the Regional Market?What is the Regional Market?

» Implementation of EC Directives at the Implementation of EC Directives at the national level and participation in the national level and participation in the Internal European Market, andInternal European Market, and

» Possible implementation of a regional Possible implementation of a regional electricity market within the Internal electricity market within the Internal European Market.European Market.

Regional Market: FunctionsRegional Market: Functions

• What operational and market functions could the What operational and market functions could the countries of the region combine?countries of the region combine?» Coordination of system operation.Coordination of system operation.» Regional market for ancillary services, including Regional market for ancillary services, including

balancing market.balancing market.» Power Exchange.Power Exchange.» Congestion management (e.g., auctions, market Congestion management (e.g., auctions, market

splitting).splitting).» Common transmission plan.Common transmission plan.» Common indicative generation plan for private Common indicative generation plan for private

investors.investors.

Regional Market: ChallengesRegional Market: Challenges

• SEE countries at different stages of SEE countries at different stages of liberalisation.liberalisation.

• Detailed specifications of the regional Detailed specifications of the regional market functions possible after:market functions possible after:

» Pace of reform increases in countries.Pace of reform increases in countries.

» Liberalisation processes are equalized.Liberalisation processes are equalized.

• Legislative and regulatory issues must be Legislative and regulatory issues must be harmonized at the regional level.harmonized at the regional level.

Regional Market: OrganisationRegional Market: Organisation

• Regional market functions could be operated from Regional market functions could be operated from one or more locations.one or more locations.

» E.g., Power Exchange in coordination with E.g., Power Exchange in coordination with technical and commercial Coordination Centre.technical and commercial Coordination Centre.

• International staff from participating countries.International staff from participating countries.

• Technical pre-conditions met.Technical pre-conditions met.

» SECI Teleinformation ProjectSECI Teleinformation Project

» Various national projects, etc.Various national projects, etc.

Regional Market: SarajevoRegional Market: Sarajevo

• Bosnia and Herzegovina should be the Bosnia and Herzegovina should be the location of the future regional functions.location of the future regional functions.

• Reliability assured by:Reliability assured by:» Rehabilitation of the existing transmission Rehabilitation of the existing transmission

and interconnection links scheduled to be and interconnection links scheduled to be complete.complete.

» The reconnection ofThe reconnection of UCTE UCTE Zones I and II Zones I and II with a vital supraregional grid with a vital supraregional grid components inside BiHcomponents inside BiH ..

Regional Market: SarajevoRegional Market: SarajevoAdvantagesAdvantages

• Installation of a state-of-the-art SCADA/ Installation of a state-of-the-art SCADA/ EMS system with telecommunication EMS system with telecommunication support assures adequate technological support assures adequate technological support.support.

• Completely rehabilitated and upgraded Completely rehabilitated and upgraded transmission system will assure sufficient transmission system will assure sufficient capacity for transit of energy between capacity for transit of energy between buyers and sellers within and outside of the buyers and sellers within and outside of the region.region.

Regional Market: SarajevoRegional Market: SarajevoAdvantagesAdvantages

• Principles of the Stability Pact and the Principles of the Stability Pact and the MOU declaration of intention to establish a MOU declaration of intention to establish a Southeast Europe competitive regional Southeast Europe competitive regional electricity market indicate that BiH is the electricity market indicate that BiH is the right location for the regional market.right location for the regional market.

Regional Market: BiH ProposalRegional Market: BiH Proposal

Create separate regional coordinating entities Create separate regional coordinating entities for the following functions:for the following functions:

• Technical aspects of system operation Technical aspects of system operation (UCTE).(UCTE).

» System security.System security.

» Real time operation.Real time operation.

Regional Market: BiH Proposal Regional Market: BiH Proposal

• Commercial aspects of system operation Commercial aspects of system operation (ETSO)(ETSO)

» Coordination of schedulingCoordination of scheduling

» Regional market for ancillary services Regional market for ancillary services (including the balancing market).(including the balancing market).

» Allocation of cross-border capacities.Allocation of cross-border capacities.

Regional Market: BiH ProposalRegional Market: BiH Proposal

• Regional Power Exchange.Regional Power Exchange.

• Regional development studies.Regional development studies.

» Common transmission plan.Common transmission plan.

» Indicative generation plans.Indicative generation plans.

ThanksThanks

For Your Attention!For Your Attention!