Bosnia and Herzegovina The Regional Electricity Market

Contents Bosnia and Herzegovina Liberalisation Bosnia and Herzegovina Market Design Southeast Europe Regional Market Regional Market Sarajevo Bosnia and Herzegovina Proposal

BiH Liberalisation: Current Organizations Three Vertically Integrated Power Utilities (Production, Transmission and Distribution) ZEKC (Joint Power Coordination Centre) Business Association of three Power Utilities Role: coordinate operation of the high voltage power network in BiH

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

BiH Liberalisation: Current Projects Current Project in BiH: POWER III World Bank Project (USD 250 MM) Primary sub-projects: Reconstruction of substations. Reconstruction of transmission lines. SCADA/EMS and Telecomm. System BiH. Environmental Projects. Projects related to production and distribution.

BiH Liberalisation: Market Restructuring Projects Establishment of Single Transmission Company (CIDA, SEETEC) ZEKC – ISO Transformation Project (DFID, KEMA) Market Rules and Market Design Project (CIDA, SEETEC) State Electricity Regulatory Commission (USAID, Pierce Atwood)

BiH Liberalisation: The Future Resynchronisation of UCTE Zones I and II (related to implementation of POWER III Project). Continuing process of reform and restructuring of the power sector. Market opening. Privatisation.

BiH Liberalisation: Utility Unbundling and Regulator Three power utilities unbundling: Transmission divisions merge into STC Several DISCOs Several GENCOs ZEKC ISO SERC

BiH Liberalisation: Time Frame Reconstruction of substations and transmission lines by mid-2004. Resynchronisation related to a.m. Power III sub-projects. SCADA/EMS and telecommunication system by end of 2006. Unbundling of utilities by mid 2003. ISO, STC, SERC – by end of 2003. Grid Code finalized by end of 2003 (already drafted).

Time Frame Cont’d ISO Law, STC Law Currently being drafted. Expected to be passed by BiH Parliamentary Assembly by end of 2003. Market Rules available by mid 2004. Balancing market opens mid 2005. Exchange opening undecided.

BiH Market Design Future BiH market based on bilateral contracts. Focus on physical wholesale transactions. No separate market operator foreseen for initial phase. ISO to initially operate Balancing Market.

Regional Market: Definition What is the Regional Market? Implementation of EC Directives at the national level and participation in the Internal European Market, and Possible implementation of a regional electricity market within the Internal European Market.

Regional Market: Functions What operational and market functions could the countries of the region combine? Coordination of system operation. Regional market for ancillary services, including balancing market. Power Exchange. Congestion management (e.g., auctions, market splitting). Common transmission plan. Common indicative generation plan for private investors.

Regional Market: Challenges SEE countries at different stages of liberalisation. Detailed specifications of the regional market functions possible after: Pace of reform increases in countries. Liberalisation processes are equalized. Legislative and regulatory issues must be harmonized at the regional level.

Regional Market: Organisation Regional market functions could be operated from one or more locations. E.g., Power Exchange in coordination with technical and commercial Coordination Centre. International staff from participating countries. Technical pre-conditions met. SECI Teleinformation Project Various national projects, etc.

Regional Market: Sarajevo Bosnia and Herzegovina should be the location of the future regional functions. Reliability assured by: Rehabilitation of the existing transmission and interconnection links scheduled to be complete. The reconnection of UCTE Zones I and II with a vital supraregional grid components inside BiH .

Regional Market: Sarajevo Advantages Installation of a state-of-the-art SCADA/ EMS system with telecommunication support assures adequate technological support. Completely rehabilitated and upgraded transmission system will assure sufficient capacity for transit of energy between buyers and sellers within and outside of the region.

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

Regional Market: BiH Proposal Create separate regional coordinating entities for the following functions: Technical aspects of system operation (UCTE). System security. Real time operation.

Regional Market: BiH Proposal Commercial aspects of system operation (ETSO) Coordination of scheduling Regional market for ancillary services (including the balancing market). Allocation of cross-border capacities.

Regional Market: BiH Proposal Regional Power Exchange. Regional development studies. Common transmission plan. Indicative generation plans.

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