Tomaž Orešič
energetski blog / energy blog

A Market must exist! (Interview Energetika.Net)

In his blog, Tomaž Orešič, Director Western and Central Europe at EFT Group declares himself above all as an advocate of an open, liberalised and active electricity market. And since we all know that EFT Group is focused primarily on the South-Eastern European region which does not have such a market (yet), and since he is known by the general public as a candidate for the position of the Economy Minister with the former government, while in the energy sector he is known, among other things, for being the organiser of the international Energy conference which has been held for years (this year, it is entitled Energija12) we talked with him about the situation in the electric power industry in Slovenia and across the region. And since he is also a member of the Supervisory Board of Geoplin, we inquired about the (non)functioning of the natural gas market in Slovenia.
As an advocate of an open market, do you believe it is ok if system operators behave in a market-oriented way, let us say in leasing tertiary reserves?
If by that you mean Elektro Slovenije (Eles), we must first realise that they have an extremely important role, being the one entity that bears the most responsibility for secure and reliable power supply. Eles must provide the reserves for the needs of the electric power system, whereby they need to take into account energy and any subject-related regulations, as well as technical characteristics of ENTSO-E. The market must operate within these constraints and I do not agree with the idea that a market only operates when this ‘suits’ us. With the accession to the EU we have adopted certain principles, and free trade is surely one of them.
Well, Brestanica thermal power plant seems to be mentioned frequently in relation to the lease of reserves for the needs of the electric power system, which is basically what its role is supposed to be.
Brestanica thermal power plant will surely have an important role in the future when the demand for such reserves in Slovenia is going to grow. This power plant has been a crucial energy facility as it is, and can offer its system services or their products on the market. All in all, the plant was initially built with the purpose of marketable production, judging by their investment programme as well as the energy permit.
But can it survive until then?
This question should be addressed to the owner who is responsible for the resources to be competitive in the long run and for the management of their production portfolio. The latter should be done so as to activate individual production aggregates in an optimal way, taking into consideration the demand and marginal cost.
As regards cross-border transmission capacities, Aleksander Mervar, second-in-charge at Eles, recently told us that the situation in Slovenia was rather peculiar, as the price of a megawatt hour at the Leipzig exchange was 49 Euros, while that in the Italian market hovered around 71 Euros more or less. With a rather lively situation at the Austrian-Slovenian border, he expressed his concerns that if such differences did persist, our prices would get closer to the Italian figure rather than the German one. What do you expect will happen?
It is this dry season which has persisted since mid 2011 that has opened our eyes and showed us where we stand with regard to electric power industry. The fact is that we are part of the Balkan region and share a common fate with it, judging by the situation concerning our transmission capacities and energy balances of the countries surrounding Slovenia. The common fate of these countries, from Hungary and Slovenia to Greece, is in fact a negative energy balance or import dependence, along with limited transmission capacities from Central Europe, and major dependence on the hydrological situation. The main problem is a negative energy balance of the entire region, and I am afraid that this trend will persist in the future as well, due to growing energy consumption, planned shut-downs of old production facilities, and too little investment activity with regard to new production capacities.

“South-Eastern European region depends on hydropower for 25 per cent of its total supply, so drought has a severe impact on electricity prices on the regional market. Last year, import dependence of the region escalated even further, to as much as 10 terawatt hours, which will put additional pressure on transmission capacities from Central Europe in the future, and in turn raise the prices of cross-border capacities.”

The complete interview is available here: Energetika.NET.
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