A. WHOLESALE ELECTRICITY TRADING
1. Background information
Serbia is a signatory of the Energy Community Treaty.1 The general objective of the Energy Community Treaty is to create a stable regulatory framework in the EU neighbouring countries aligned with the EU energy policies.
The Serbian market is governed by the Energy Act 2011 ("Official Gazette of the Republic of Serbia" no. 57/2011, 80/2011) [Zakon o energetici], which was adopted on 29 July 2011. The aim of the Energy Act 2011 is, inter alia, to harmonise domestic energy regulations with those of the European Union. By adopting the Energy Act 2011, Serbia intends to implement the Second Energy Package, and partially the Third Energy Package.
The Energy Act 2011 envisages liberalisation of the Serbian energy market, introduces market-based mechanisms for determining energy prices, and provides a new incentive structure for electricity generation from renewable sources.
The Energy Act 2011 further aims at the liberalisation of the electricity market, Serbia having committed to completed this process by 1 January 2015. As the last step in the liberalisation process, households customers will be able to freely choose their supplier after 1 January 2015.
2. Licence requirements
2.1. General aspects
The Energy Act 2011 stipulates that a licence is required for performing energy activities. A licence has to be obtained for each energy activity separately. Electricity trading is considered a form of electricity supply. Electricity trading can be performed by a private or public legal entity.
2.2. Conditions for licensing
Pursuant to the Energy Act 2011, a new regulation clearly defining licence requirements has to be enacted by August 2012. To date, no such regulation has been enacted; therefore, currently a private entity performing wholesale electricity trading has to fulfil numerous general technical, organisational, material and financial criteria as set out in the Energy Act 2011.
With regard to establishment requirements, the Energy Act 2011 does not explicitly stipulate whether Electricity Traders have to have a local company or branch in Serbia. However, based on similar provisions of the former Energy Act, the Serbian NRA took the standpoint that only domestic entities can be licensed as Electricity Traders in Serbia. This interpretation is still applied by the NRA in practice.
2.3. Timetable for obtaining the license
A licence is issued by the NRA within 30 days of the day of submission of the application (subject to fulfilment of all requirements by the applicant) and is valid for 10 years.
The licence may be extended upon the licence holder's request. The energy licence cannot be assigned or transferred.
3. Trading requirements
3.1. General aspects
Pursuant to the Energy Act 2011, there are three types of electricity markets in Serbia in which electricity trading takes palace:
3.2. Bilateral market
The bilateral market is the electricity market where purchase and sale of electricity are performed directly among market participants based on a sale and purchase agreement; long-term agreements among market participants may be concluded for a period of maximum 15 years.
3.3. Organised market
The organised market is the electricity market organised by the market operator. The market operator must conclude a balance responsibility agreement with the transmission system operator. On the organised market electricity is traded day-ahead or intraday, based on predetermined standardised products with physical delivery.
3.4. Balancing market
In the balancing market the TSO sells and purchases electricity from market participants for the purposes of system maintenance and balance. Each market participant must conclude a balancing responsibility agreement with the TSO, by which the former will obtain the status of a balancing responsible party. Balancing responsibility can also be determined by a balancing responsibility transfer agreement, which can be concluded with a balancing responsible party.
4. Cross-border trading
Cross-border trading is performed through the cross-border transmission system. Access to the cross-border transmission system is based on the right of use of the system. The capacities have to be assigned to the users in a non-discriminatory and transparent manner. This right is exercised by means of an agreement concluded between the TSO and market participants. The TSO is obliged to enact, subject to prior consent of the Agency, the conditions for the procedure and manner of conferral of the right.
Serbia has several cross-border interconnections with the following countries:
- Bulgaria (440kV);
- Hungary (440kV);
- Macedonia (one of 440kV and two of up to 220kV);
- Montenegro (440kV and two of up to 220kV);
- Albania (up to 220kV);
- Bosnia and Herzegovina (one of 440 kV and one of up to 220 kV);
- Croatia (440kV) and
- Romania (440kV).
Additionally, Serbia is considering the construction of the following connections:
- Serbia-Romania (440kV);
- Serbia-Croatia (440kV); and
- Serbia-Bosnia and Herzegovina.
5. Grid access
The system operator is obliged to provide users with access to the grid based on regulated prices. The price of access is determined on a public and non-discriminatory basis in conformity with technical capabilities and depending on the load level of the transmission and distribution systems. Moreover, system operators (TSO and DSO) are obliged to enable the transit of energy via the transmission/distribution system, in compliance with ratified international treaties.
Grid users must conclude a connection agreement with the system operator, which specifically regulates the delivery point, power/capacity, and calculation period and method. The connection agreement cannot provide for a power/capacity higher than the power/capacity envisaged for the delivery point. Additionally, the connection agreement also regulates technical conditions for connecting to the system, connection point, manner of measurement of the delivered electricity, actual costs of connection to the system and deadline for connection.
B. WHOLESALE GAS TRADING
1. Background information
The Energy Act 2011 also governs Serbia's gas market. It introduces clearer provisions concerning non-discriminatory third-party access to the gas grid, natural gas distribution system management and natural gas storage and management.
The operator must provide system users with non-discriminatory access to the grid at regulated prices.
2. Licence requirements
2.1. General aspects
The Energy Act provides that a licence is required for performing energy activities. A licence has to be obtained for each energy activity separately. Gas trading is considered a form of gas supply, which is defined as the sale of electricity to final customers and other suppliers.
2.2. Conditions for licensing
Pursuant to the Energy Act, a regulation clearly defining the licensing requirements has to be enacted by August 2012. To date, no such regulation has been enacted; therefore, a private entity performing wholesale gas trading currently has to fulfil numerous technical, organisational, material and financial criteria as set out in the Energy Act.
With regard to establishment requirements, the Energy Act 2011 does not explicitly stipulate whether Gas Traders have to have a local company or branch in Serbia. However, based on similar provisions of the former energy act, the NRA took the standpoint that only domestic entities may apply for energy licences in Serbia. This interpretation is still applied by the Energy Agency in practice
2.3. Timetable for obtaining the licence
A licence is issued by the Serbian Energy Agency within 30 days of the day of submission of request (subject to fulfilment of all requirements by the applicant).
A gas trading licence is valid for 10 years. The licence may be extended upon the licence holder's request. The energy licence cannot be assigned (transferred).
3. Trading requirements
3.1. General aspects
Trading is based on bilateral contracts only, there are no gas hubs or commodity exchanges.
3.2. Balancing responsibility
Market participants are bound to pay for their unbalances. Balancing services are offered under a transmission agreement, which lays down the financial responsibility for the difference between the gas supplied at the entrance point and the gas used at the exit point of the transmission/distribution system for the calculation period.
The TSO provides the natural gas required for system balancing and maintenance from the natural gas storage.
4. Cross-border trading
There is currently one cross-border interconnector in Serbia between Serbia and Bulgaria. In addition, Serbia plans to build two interconnectors, one towards Bosnia and Herzegovina and one towards Croatia as part of the gas route for Russian gas "South Stream".
5. Grid access
Grid users must conclude a connection agreement with the system operator. The connection agreement regulates particularly the delivery point, capacity, and calculation period and method.
However, the connection agreement cannot provide for a gas capacity higher than the gas capacity envisaged for the delivery point, or higher than the assigned right of use of storage capacity.
5.2. Feeder pipeline access
The Energy Act 2011 prescribes that access to the feeder pipeline is provided on a non-discriminatory and public basis and is not regulated.
5.3. Gas transmission system access
Access to the natural gas transmission system is obtained based on the right of use of the quantity of gas transmitted at the transmission system entrance and exit points. The right of use is regulated by a transmission agreement concluded between the operator and market participants.
5.4. Gas storage access
The right of use over natural gas storage capacities is allocated by means of an agreement concluded with the storage operator on a non-discriminatory and transparent basis.
Footnote
1. Treaty establishing the Energy Community was signed in October 2005 in Athens, Greece. It entered into force on 1 July 2006.
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