niki6
03 Feb 2010, 09:21
CEE markets still need regulatory development
Alan Svoboda, head of trading at Czech utility CEZ said Tuesday
that Central and Eastern Europe (CEE) was still “a wild East” from
the regulatory and trading perspectives.
Svoboda said that transmission fees for the export of electricity
still existed in many countries, such as Bulgaria, Romania, Bosnia
and Macedonia. Sometimes these amount to up to 10% of the
price of the electricity being traded, while import fees also exist
in Romania, Greece and Kosovo. Coupled with this, Svoboda said
there were still regulations that are barriers to market
development, such as caps on household power prices.
The Czech Republic had by contrast managed to produce a
competitive market — and lower electricity prices as a result —
in 2002 and 2007. Liberalization has helped ensure that CEZ,
the country’s main power producer and supplier, is now trading
10-15 times its total generation capacity and baseload electricity
prices in the wholesale market are now close to those of
neighboring Germany, the CEZ manager said.
Svoboda added however that the whole region was “living off”
ageing power plants with few new generation projects planned.
“There are only 37.6 GW of projects in the pipeline [which] is
running dry,” he said.
In South East Europe, all these problems are further
exacerbated by the small size of national markets. Although work to
integrate these markets via the coordination of cross-border capacity
are ambitious, Svoboda said the implicit market coupling of the
Czech and Slovak markets in 2009 was a good model for the
region. The full coupling of the Central European region that includes
Germany would be achievable by 2012 at the latest, he added.
Nicola Cotugno, director Enel-Slovenske Elektrarne, said
electricity demand in Slovakia had fallen by 9% in 2009
compared with 2008. That had forced Slovenske Elektrarne (SE)
and Italian utility Enel, which is its main shareholder, to take
stock of previous predictions. Expectations now are that 2008
levels will not recover until 2013.
Longer term, there are risks that electricity demand will be
undermined by a shift by industry to cheaper locations further
east of Slovakia. In addition, energy saving measures could cut
household demand for electricity by 20% and in the services
sector by 15%.
In spite of this, the market outlook and the fact that existing
electricity prices mean that no new entrants “could make a
profit”, Cotugno said Enel was committed to its large investments
in new power generation in Slovakia. These include the
completion of two nuclear power blocks at the Mochovce plant.
But the overall stress is on quality of projects rather than
quantity, with the aim to lower SE’s CO2 emissions. Coal plants
at Vojany and Novaky would be refurbished with the idea of them
providing peak load power when needed.
In spite of the challenges in the CEE region, some foreign
utilities are looking for a foothold. Raquel Blanco, head of
business development Europe at Iberdrola Generacion, said the
Spanish company had obtained an electricity trading license in
the Czech Republic and hoped it would be in a position to open
an office in Prague by the summer. Iberdrola already has offices
in Warsaw and Bucharest.
She said that GDP growth in the CEE region was encouraging.
In Poland, for example, GDP grew in 2009 by 1.7% despite an
almost 4% fall in electricity consumption.
Alan Svoboda, head of trading at Czech utility CEZ said Tuesday
that Central and Eastern Europe (CEE) was still “a wild East” from
the regulatory and trading perspectives.
Svoboda said that transmission fees for the export of electricity
still existed in many countries, such as Bulgaria, Romania, Bosnia
and Macedonia. Sometimes these amount to up to 10% of the
price of the electricity being traded, while import fees also exist
in Romania, Greece and Kosovo. Coupled with this, Svoboda said
there were still regulations that are barriers to market
development, such as caps on household power prices.
The Czech Republic had by contrast managed to produce a
competitive market — and lower electricity prices as a result —
in 2002 and 2007. Liberalization has helped ensure that CEZ,
the country’s main power producer and supplier, is now trading
10-15 times its total generation capacity and baseload electricity
prices in the wholesale market are now close to those of
neighboring Germany, the CEZ manager said.
Svoboda added however that the whole region was “living off”
ageing power plants with few new generation projects planned.
“There are only 37.6 GW of projects in the pipeline [which] is
running dry,” he said.
In South East Europe, all these problems are further
exacerbated by the small size of national markets. Although work to
integrate these markets via the coordination of cross-border capacity
are ambitious, Svoboda said the implicit market coupling of the
Czech and Slovak markets in 2009 was a good model for the
region. The full coupling of the Central European region that includes
Germany would be achievable by 2012 at the latest, he added.
Nicola Cotugno, director Enel-Slovenske Elektrarne, said
electricity demand in Slovakia had fallen by 9% in 2009
compared with 2008. That had forced Slovenske Elektrarne (SE)
and Italian utility Enel, which is its main shareholder, to take
stock of previous predictions. Expectations now are that 2008
levels will not recover until 2013.
Longer term, there are risks that electricity demand will be
undermined by a shift by industry to cheaper locations further
east of Slovakia. In addition, energy saving measures could cut
household demand for electricity by 20% and in the services
sector by 15%.
In spite of this, the market outlook and the fact that existing
electricity prices mean that no new entrants “could make a
profit”, Cotugno said Enel was committed to its large investments
in new power generation in Slovakia. These include the
completion of two nuclear power blocks at the Mochovce plant.
But the overall stress is on quality of projects rather than
quantity, with the aim to lower SE’s CO2 emissions. Coal plants
at Vojany and Novaky would be refurbished with the idea of them
providing peak load power when needed.
In spite of the challenges in the CEE region, some foreign
utilities are looking for a foothold. Raquel Blanco, head of
business development Europe at Iberdrola Generacion, said the
Spanish company had obtained an electricity trading license in
the Czech Republic and hoped it would be in a position to open
an office in Prague by the summer. Iberdrola already has offices
in Warsaw and Bucharest.
She said that GDP growth in the CEE region was encouraging.
In Poland, for example, GDP grew in 2009 by 1.7% despite an
almost 4% fall in electricity consumption.