Potential of Montenegro Energy Development and outlook for the SEE region as a whole Milka Mumović, Energy Community Secretariat En.Trading 016 Seminar Budva, 1 December 2016 En.trading 016 Seminar

The Energy Community – Extending the EU internal energy market Ratification The Energy Community – Extending the EU internal energy market Where? South East Europe and Black Sea Region Why? Creating single regulatory and market framework to: attract investments, enhance security of supply, improve environmental situation and increase competition in the energy market How? By the Rule of Law European Union Contracting Parties Candidate Parties Observers Candidate Observers En.trading 016 Seminar

The Energy Community for the Future The Energy Community Treaty (ECT) 1st decade – 2006 - 2016 (1 July entered into force) 2nd decade – 2016 – 2026 (extended in 2013) Ongoing discussion on amendments to the ECT EU Acquis communautaire adapted and adopted in the Energy Community: Electricity, gas, environment, competition, renewables, energy efficiency, oil, statistics, infrastructure Network Codes and Guidelines in the EnC No direct applicability of Regulations in EnC Procedure for adoption in the EnC adopted Still some open issues…binding reciprocity? En.trading 016 Seminar

Electricity balance in the Energy Community The Energy Community is mainly net importer of electricity 2015 Net exports: 13.6 TWh - Bosnia and Herzegovina - Serbia - Ukraine Net imports: 17 TWh - Albania - Kosovo* - FYR of Macedonia - Moldova -Montenegro En.trading 016 Seminar

Production, consumption, import and export of electricity En.trading 016 Seminar

Consumption structure 2015 SEE CPs En.trading 016 Seminar

Sales in the competitive retail market En.trading 016 Seminar

Interconnection capacities for cross-border trade in the Energy Community (Barcelona rule:The target agreed in the conclusions of the March 2002 Barcelona European Commission for MSs to have a level of electricity interconnections equivalent to at least to 10 % of their installed production capacity ) Annex IV Regulation No 347/2013: Projects contributing to reaching the minimum interconnection capacity of 10 % installed production capacity Interconnection capacities exceed 10% target (EU) Underground DC cable Montenegro-Italy under construction New interconnectors to be co-financed under Western Balkan 6 initiative ENTSO-E member Part of ENTSO-E CE synchronous area; not ENTSO-E member Not part of ENTSO-E synchronous area CE; En.trading 016 Seminar

Western Balkan 6 initiative well under way… Vienna WB Summit 2015 – process kicked-off Paris WB Summit 2016 – commitment reiterated Rome WB Summit 2017 – forthcoming stopover Towards 2018 implementation targets En.trading 016 Seminar

Western Balkans 6 (WB6) Initiative – political support to the regional electricity market development The heads of government, foreign and economic ministers of both EU Member States and the WB6 in cooperation with the European Commission decided to take steps to improve energy connectivity in the region and for that: agreed to a short list of four investment projects in the area of energy Interconnection Serbia-Montenegro (Trans Balkan corridor) Interconnection Albania-FYR of Macedonia decided to establish a regional energy market agreed on the priority list of ‘energy soft measures’ invited the Energy Community Secretariat to take the lead En.trading 016 Seminar

Spot Market Development Organised day-ahead markets started to emerge in the WB6: in operation SEEPEX in Serbia in the making Albanian Power Exchange (APE) Montenegro (project company to be set-up)  Institutional set-up for organized day ahead-market needed as a precondition for market coupling (adhering to the already established day- ahead markets would be an optimal solution for small markets in WB6) En.trading 016 Seminar

Cross-border Balancing Balancing mechanisms operational in: Bosnia and Herzegovina Montenegro Serbia Cross-border exchange Montenegro and Serbia Montenegro and Serbia - exchange of balancing energy  National reform of balancing mechanism needed for cross- border cooperation En.trading 016 Seminar

Regional Capacity Allocation Regional Capacity Allocation through SEE CAO, except: Macedonia – joined in 2016, MK- GR border as of 2017 Serbia in the admission process Regional Capacity Calculation SCC – BA, ME, RS - members SEE – AL, KS, MK – MoU signatories  Regional coordination and cooperation through RSCs needs to be strengthened En.trading 016 Seminar

Memorandum of understanding Memorandum of Understanding of Western Balkan 6 on Regional Electricity Market Development and Establishing a Framework for future cooperation signed on 27 April 2016 in Vienna Implementation targets for WB6 MC and XB until mid 2018 Signatories: WB6 TSOs, NRAs, PXs and Ministries for energy Framework for cooperation with EU MSs  Italian NRA signed the MoU En.trading 016 Seminar

Memorandum of Understanding : Topics covered Day-ahead Market Integration July 2018 – integration with at least one neighbouring WB6 or EU country Cross-border Balancing Cooperation 31 December 2018 – cross-border balancing cooperation MoU is open for future annexes on regional market development and security of supply This MoU is open for signature by additional WB6 and EU neighbouring stakeholders which are willing and expected to assume a role in the market integration projects En.trading 016 Seminar

A bit about prices En.trading 016 Seminar

Price components: costs of energy Year Avarage Prices (EUR/MWh) 2015: HU 40,60 SK33,57 CZ 32,32 RO 36,42 EUR/MWh PEP (wholesale) baseload IVQ 2015 En.trading 016 Seminar

Wholesale prices in EU 2015-2016 European Market Observatory for Energy En.trading 016 Seminar

Revisit the relevant legislation Business undertaking and incorporation Public Procurement Value added tax Market and trade Financial control … En.trading 016 Seminar

Technical assistance – list of potential projects Spot market SEE WB6 MoU Implementation Project Institutional set-up for DA market (BA, MK, ME) Capacity Building of State Producers Cross-border balancing National balancing market development (AL, KS*, MK) Regional balancing market integration Regional capacity allocation CCC creation based on the RSC(s) Cross-cutting measures TSO unbundling (KS*, ME, RS) DSO unbundling (AL, BA, ME) Price deregulation (KS*, MK) En.trading 016 Seminar

Thank you for your attention! Milka Mumović, Energy Community Secretariat En.trading 016 Seminar