Reorganisation of the energy sectors in the EU
During the last course of years the energy sector in Europe has been characterised by the processes of reorganisation. This correlates to the processes of functional, accounting and controlling unbundling of vertical, monopolistic companies according to different activities such as production, transmission, distribution and supply. It also correlates to the process of electricity market liberalisation.
When observing current various experiences of Western European countries, in general, we can say that the overall process has started with restructuring of companies which was followed by the liberalisation of the electricity market and privatisation. All the countries have followed this procedure obeying the laws proscribed by the common European legislation. However, countries outside the EU, have mostly kept their vertically-monopolistic organisation of the energy sector. With the accession to the EU, new Member States needed to swiftly fulfil the requirements set by the EU legislation (most importantly the directives on the electricity market).
The processes of liberalisation of the electricity market within the EU have followed the energy sector for years and continue to be a highly debated topic today. One of the main issues during reforms is the issue of the security of supply since it is imperative to be able to provide for the constant supply of both electricity and gas during all times. The initiative of creating a regional energy market in South East Europe (REM SEE) is somewhat unspecific regarding the development of the energy market in Western Europe.
Restructuring of the energy sector in some of the Member States has resulted in significant changes in the work market and the inability of successful interconnection and the creation of a unique market. The imbalances that the reforms created were a result of different interpretations of the guidelines provided by the EU Directives. Because of these issues, the end users have not always been able to fully benefit from the positive outcomes reforms provided. The most successful regional energy market in Europe, the Nordic market (Nord Pool), owes its success to the strong cooperation between the member countries.
In the case of SEE, through its own and recently founded institutions, the EU is trying to encourage the countries of the region to be more determined in taking action towards creating coordinated conditions for organising a common energy market.
The case of South East Europe (SEE)
SEE countries have been going through extensive economic, political and institutional changes already since the nineties. Changes in the infrastructure sector represent an important segment of their transition reforms. The macroeconomic importance of electricity sector arises from its substantial contribution to the GDP and its impact on efficiency and competitiveness of most firms and economy as a whole through the quality and price of the electricity.
The SEE region possesses the potential to constitute an important electricity reform experiment for the whole world. This is because these countries have been given a clear reform model to follow, have been given access to substantial amounts of technical assistance and because reform is happening in the context of associated reforms in other sectors and the government. These are the main reasons why SEE could prove to be a test of both the transferability of the EU reform model within the EU, but also its transferability to a set of developing countries in general.
Considering the aforementioned, it is of utmost importance for the SEE countries not only to work hard in order to achieve successful implementation of the reform model, but also to strive towards strong cooperation between the EU as well as each other.
* presented report includes Greece
* Due to lack of data provided by ENTSO-E, Kosovo results are omitted from the report
Generation portfolio of SEE
Report consists from an elaboration of data obtained from ENTSO-E
Overall installed net capacity in South East Europe (SEE) is just below 83 GW. There are two key technologies that dominate the mix:
Together, hydro and lignite sources account for almost 60% of overall installed generating capacity. This correlates to 48.2 GW of installed power, 24.7 GW of hydro and 23.5 GW of lignite/coal power plants.
Hydro power plants
Lignite based thermal power plants
Observing generating capacities, Romania and Greece have far the largest systems. Interestingly enough, according to data provided by ENTSO-E, both systems recorded a reduction of capacities during the past two years. Overall, during the period from 2014 to the end of 2017, SEE’s generating capacities were reduced by 5.8% (5 GW). Greece, Bulgaria and Romania recorded biggest cuts in capacities related to the closures of several thermal power plants. In 2017, Greece closed 4.4 GW of thermal stations (35% of the overall thermal portfolio of the country) resulting in a reduction of overall generating capacities of over 20%.
The following figure reveals generating capacities per each country of the region and how they evolved during the period between 2014 and 2017.
Changes in generating capacities by country 2014-2017
AL BA BG GR HR HU ME MK RO RS SI SEE
0.0% 9.5% -11.0% -17.7% 11.4% -1.1% 8.2% 8.3% -5.5% -0.5% 5.2% -5.8%
While nuclear and hydro capacities remain constant, thermal and renewable energy generation record considerable changes. Thermal power sector was reduced by 6 GW from 2014. As mentioned, mostly due to Greece (3.5 GW overall reduction). Bosnia & Herzegovina, Croatia and Slovenia were the only countries to add new thermal capacities – 700 MW overall. There was no change in thermal portfolios of Albania, Montenegro and Macedonia. Greece (3.5 GW), Bulgaria (1.5 GW), Romania (1.4 GW), Hungary (220 MW) and Serbia (50 MW) all recorded cuts in their thermal power plant capacities.
Renewable energy sector is the only one that recorded growth rates. However, during past two years, this growth has been put on hold. During years 2016-2017, the entire SEE region installed only 430 MW of new renewable energy. Croatia and Romania led the way by installing 133 MW and 141 MW respectively. Greece is the only country to record a notable reduction in RES capacity with almost 160 MW less in photovoltaic units.
Thermal power sector still dominates the electricity balance of SEE having satisfied just below half of overall electricity demand during the course of the year. Despite the tendency of lower production rates and despite closures in generating capacities, thermal power plants supplied over 141 TWh of electricity. Renewable energy supply is growing and reached over 23 TWh, now having a share of 8%. Looking at the overall electricity balance of the region, 10% of electricity is supplied by imports.
Electricity balance in 2017
Thermal power sector still dominates the electricity balance of SEE having satisfied just below half of overall electricity demand during the course of the year. Despite the tendency of lower production rates and despite closures in generating capacities, thermal power plants supplied over 141 TWh of electricity. Equally important Renewable energy supply is growing and reached over 23 TWh, now having a share of 8%. Looking at the overall electricity balance of the region, 10% of electricity is supplied by imports.
When electricity balance of the region is observed by each month of the year, the following graph is obtained. Average monthly demand in 2017 equalled 23.7 TWh. Demand peaked in January when it amounted to 29.2 TWh and was lowest in May (21.5 TWh). Highest monthly consumption during the summer amounted to 23.6 TWh in August.
Electricity balances by country in 2017
Only four out of eleven countries are self-reliant and do not depend on imports. Albania (41%), Hungary (36%), Montenegro (35%), Macedonia (28%), Croatia (27%), Slovenia (21%) and Greece (15%) all rely on importing electricity to satisfy their demands. The majority of countries have an alarming rate of import.
Three countries of the region managed to export surplus electricity. Bulgaria was the largest net exporter with over 5.1 TWh supplied to neighbouring systems. Bosnia and Romania exported 1.7 TWh and 2.5 TWh respectively.