common electricity market kosovo albania - europa · kosovo and albania currently are characterized...
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- K O S O V A N T R A N S M I S S I O N S Y S T E M & M A R K E T O P E R A T O R - O P E R A T O R I I S I S T E M
I T, T R A N S M I S I O N I T & T R E G U T T Ë K O S O V Ë S -
Common Electricity Market Kosovo – Albania
Presented by Naim Bejtullahu, CEO of KOSTT
Content
1) Restructuring process and Country characteristics
2) Why Common market
3) Optimization analysis and cost benefit
4) Legal framework for common market
2
Liberalization and restructuring process
3
KS & AL Countries
of 8th region
Implementation of Acquis Communautaire Creation of single mechanism for cross-border
transmission and electricity trade Increase of investment
From 2003 - 2013 Developed Primary Legislation in Energy Sector Liberalization and restructuring in power sector is
ongoing process • TSOs unbundled from Generation and supply • Unbundled Distribution and Supply from Generation
Signatories of MoU on the establishment of CAO Shareholder and founders of PTC for establishment
of CAO
Development of Secondary Legislation
Market Designs, Market Rules, Technical Codes
Signatories
Current Cooperation in power sector from electricity market point of view
Agreements of cooperation between the respective Ministries of Kosovo and Albania in energy sector
Agreement of understanding between national regulatory Authorities (ERE and ERO)
Inter TSO agreement between OST-KOSTT
Agreement on electricity exchange between power producers (KEK-Kosovo & KESH-Albania)
Ongoing discussion on establishing common market KS-AL
4
Country Market characteristics
relatively small size of national power markets
lack of generation capacity to meet growing demand
lack of diversity and adequacy of the generation capacities
wholesale activities are limited to import and exports
regulated electricity tariffs below recovery cost
long term supply arrangements between supplier and state owned generators
The short term market in Kosovo and Albania is immature with no real trading activities.
There are no day-ahead auctions organized and
It is unlikely that at this stage the spot auction market will be organized.
5
Kosovo and Albania currently are characterized with :
Power market Information
6
Info - 2012 Units Albania Kosovo KS-AL
Population Milion 3.2 2.1 5.3
Area (103) Sq km 29 11 40
Generation capacities MW 1,433 942 2,375
Electricity Production GWh 4,722 5,471 10,193
Electricity Demand GWh 7,617 5,493 13,110
Production % coal - 98.4 52.8
Production % hydro 100 1.6 47.18
Peak Demand MW 1,485 1,168 ˂2,653
Import GWh 2,894 570 3,464
Average import price €/MWh 63.63 79.46 71.55
Export GWh 300 370 670
Average export price €/MWh 31.16 31.16 31.16
* Source TSOs(KOSTT & OST) , NRA(ERO&ERE)
7
2015
2023 2025
2030
TRANSMISSION SYSTEM LONG TERM VISION ( MASTER PLAN 2012-2025)
KS
AL
RSS
MNES
MCS
GRS
200 (800)
400kV interconnections
400kV future interconnections
220kV interconnection,
800
600 (1200)
Existing MW (Future MW)
600
800 0 (600)
600 (600)
400 (400)
0 (600)
Interconnection capacities(natural transfer values)
Why common market KS-AL?...
Will meet the objective of governments for security of supply
Will be more competitive and will provide truthful signals for: investment in power generation and its diversity and
Investment in power networks
The market characteristics in Kosovo and Albania suggest that integrated market would:
benefit the consumers in both countries
optimize the use of generation resources and import export needs.
Increase the reliability of both power system
interconnection capacities and generation mix in both countries enable full integration of the markets.
Operation as a single bidding zone allows: efficient and optimal use of generation resources, reserves and transmission network.
Improvement of the security of supply.
9
Common electricity market
Common market of Kosovo and Albania in line with EU target model – objective of Energy community
a single bidding zone in all markets’ timeframes interconnections KS-AL will be considered as internal lines
No capacity booking or scheduling requirement
would be coupled with other zones on the day ahead and intraday markets
cross-border capacities with other zones would be allocated in line with the Forward Network Code
The generation mix would allow generators to optimize their generation portfolio
will link a hydro-based system of Albania with a lignite-based system of Kosovo
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Imp/exp optimization analyses (ex-post )
four days in different seasons are considered in KS&AL High demand days
low demand days
the utilization of generation resources in Kosovo and Albania and their import/export as two market zones are observed
Assumption - no network congestion between KS-AL and
two national markets could operate as a single market
generation output and consumption are merged into a single diagram
import and export with associated prices are netted
daily benefits for the common market are assessed considering the real generation output on the specific days
optimizing only import and export
benefits from import and export optimization are assumed up to EUR 150k per day
11
Individual high demand cases (31/12/2012)
12
0
200
400
600
800
1000
1200
1400
1600
1 3 5 7 9 11 13 15 17 19 21 23
MW
h
Imp/Exp AL Hydro AL Consumption AL
-400
-200
0
200
400
600
800
1000
1200
1 3 5 7 9 11 13 15 17 19 21 23
MW
h
Thermo KS Imp/Exp KS Consumption KS
in Albania import is used as a baseload
import prices in Albania assumed at 68 EUR/MWh – region market price
in Kosovo import is used as a peak load
import prices in Kosovo 80 EUR/MWh on average for winter season
Export price off TPP in Kosovo is considered 31 EUR/MWh
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-500
0
500
1000
1500
2000
2500
3000
1 3 5 7 9 11 13 15 17 19 21 23
MW
h
Thermo KS Imp/Exp AL Hydro AL Imp/Exp KS Consumption AL+KS
Merged high demand cases (31/12/2012)
By applying the netting of export and import needs the daily benefits for the common market are assumed close to EUR 93k
14
0
200
400
600
800
1000
1200
1 3 5 7 9 11 13 15 17 19 21 23
MW
h
Imp/Exp AL Hydro AL Consumption AL
-600
-400
-200
0
200
400
600
800
1 3 5 7 9 11 13 15 17 19 21 23
MW
h
Thermo KS Imp/Exp KS Consumption KS
Individual low demand case (07/05/2012)
in Albania import is used as a baseload
import prices in Albania assumed at 58 EUR/MWh – average for April in region
in off-peak periods thermal plants in Kosovo are sufficient to meet demand
Export price off TPP in Kosovo is considered 31 EUR/MWh- average for 2012
15
-500
0
500
1000
1500
2000
1 3 5 7 9 11 13 15 17 19 21 23
MW
h
Thermo KS Imp/Exp AL Hydro AL Imp/Exp KS Consumption AL+KS
By merging the markets the benefits for the common market for this day are assumed close to EUR 158k
Merged low demand case (07/05/2012)
Cost benefit of imp/exp optimization
assuming that in 85% of the days there are benefits from optimized import and export, yearly benefit will be around EUR 24 million
16
Import
Costs AL
Import
Costs KS
Costs Common
market
Net
benefit
EUR EUR EUR EUR
PEAK AL (31/12/12) 647,406 11,592 565,957 93,041
OFFPEAK AL (01/05/12) 516,627 -15,069 439,347 62,211
PEAK KS (31/01/12) 738,042 514,540 1,252,582 0
OFFPEAK KS (07/05/12) 544,319 -142,817 243,626 157,876Daily costs/benefits
on average611,599 92,062 625,378 78,282
Days
analysed
Benefits from the common market
Lower system costs (for both systems)
Higher security of supply
Encourage power market competition
Encourage economic development through lower tariffs
Preparation for the European Internal Market (EU Membership)
Meeting European objectives 20:20:20 (20% reduction of emissions, 20% renewable energy, and 20% improvement of energy efficiency by 2020)
Harmonization of primary legislation of contracting countries
legal structure of the common market must be determined
identify the options for regulating the common market
Coordination in tariff reforms, supporting the aimed market;
develop the detailed design of the common market All time frames markets;
Balancing and auxiliary services market;
Retail market(s), etc.
Harmonization and adoption of secondary legislation for implementation of the common market;
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Harmonization and development of legal, regulatory, market and operation framework.
Legal framework for common market
Government Approval to establish the Common Market
Conclusion
1. Optimizing import and export needs in a common market provides extra benefits for both countries. (Estimated EUR 24 million annually)
2. There is a high potential to optimize the generation portfolio through economic dispatch. The generation mix allows for a short term market to be developed and efficient use of generation reserves.
3. Common market is in line with the EU target model and is flexible to future integration into regional market.
19
There are three main conclusions drawn from our assessment:
Thank You
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