Zhecho Stankov: Market unification with Greece in "Day ahead" facilitates consumers and traders and has no impact on prices

Market mergers in the day-ahead segment of the Greek border on the electricity markets between Greece and Bulgaria have been under attack since their implementation in May. Moreover, it is believed that it is the basis of higher prices of electricity traded in this segment of the Bulgarian Independent Electricity Exchange (IBEX). The claim is that market unification with Romania should have taken place first.

At the same time, the fact that higher prices are observed on the electricity exchanges in Romania and Hungary, which also recently merged in this segment, seems to be overlooked. For example, with a delivery day on August 27, the price there is 5 euros higher, and this is not the first time such a difference has been observed. From this point of view, the claim about the influence of the Bulgarian-Greek market union on the price levels in the "day ahead" segment of the IBEX seems exaggerated.

With regard to market mergers, it should be borne in mind that there we comply with certain requirements of the EC and in particular of the Directorate General for Energy, related to the markets. operators. Over time, unification with Greece has outpaced that of Romania for the simple reason that colleagues from Romania and Hungary have delayed their unification. They were not technically ready, former Deputy Minister of Energy and current MP (from GERB) Zhecho Stankov commented for 3e-News.

"In this regard, the physical union itself facilitates traders rather than influences prices. As can be seen on the platforms, at the moment with a delivery day on August 27, the price on Bulgarian territory is 109.38 euros per MWh. It is the same on Greek territory. While in Romanian it is exactly 5.5 euros higher. I say that there is no influence because the capacity of the Greek and Bulgarian markets is 600 MW. Bulgaria has always been a net exporter, so energy has always flowed from Bulgaria to Greece (and other countries in the region), "said Stankov.

He clarified that "tests with Romania will start on September 22 and the weather will show whether unification will be possible in October" at the Romanian border as well.

"Time will tell what the impact of this unification will be on the markets in the region. But the merger as such is extremely useful for consumers and traders - to provide access to energy from different markets without having to play in monthly, quarterly and any other auctions. They get the opportunity to transfer energy after buying it, "he added.

In practice, the main effects of the market union with Greece are in providing direct access of consumers and producers of electricity on the Bulgarian market to energy and consumers from neighboring countries. This in turn increases competition and reduces market concentration, especially on the supply side. For the Bulgarian market, this detail is extremely important, given the fact that the term in the BEH / electricity case has expired. Among the effects should be mentioned the increase in the liquidity of the energy exchange. The fact is an increase in traded electricity.

Another issue is the emergence of electricity shortages during the period in which Bulgaria was hit by a heat wave.

"I am optimistic about market associations. I am optimistic that market alliances make it easier for both consumers and traders. Naturally, the creation of greater competition in different markets will lead to better and more attractive prices for business, which is our main goal, because business is, so to speak, the backbone of any budget, " Stankov also commented, not forgetting to point out that according to the analyzes, the higher prices generally cover Hungary, Romania, Serbia, Bulgaria, Greece and Italy.

"Undoubtedly, I consider it a mistake that TPP Maritsa East 2 was not activated earlier and this one week of delay, during which the Minister did not take the decision to operate the plant, wasted time, which affected the Bulgarian business and I stand by the words that this could not have happened, especially if the plant had been launched earlier. Then it would not reach levels of the order of BGN 400 and above for certain hours, "said Stankov.

He paid attention to the "temperature" factor. By the way, experts point out that August this year is characterized by about 3 degrees higher temperatures (Celsius) than the previous one.

"We have always fought for prices to be market. Usually in this part of the year, apart from the industry for which there are no holidays, as it has to fulfill its orders, the high temperatures also have an impact. To a large extent, they also lead to an increase in consumption - much of the energy from both industry and households is used for cooling. This is also felt in the event of a sharp change in winter temperatures, "Stankov explained.

As it is known during the hearing, which was held a few days ago, the executive director of TPP "Maritsa East 2" Zhivko Dinchev, for his part, also explained the reasons for the reaction in such a period of time.

At the same time, the question remains about the instruments available to the state to limit pressure. Since the market is free the mechanisms are not so many. According to the former Deputy Minister of Energy, the "capacity mechanism", which was recently negotiated with the European Commission, could definitely serve as a tool.

"As a tool for providing additional energy on the market would be the capacity mechanism, which also provided an opportunity for regulated state aid," explained Zhecho Stankov, adding that this mechanism guarantees financial stability for TPPs and an opportunity from this point of view and to react in similar situations.

"As far as I understand from the ministry, the talks we had with the EC regarding the various roadmaps that need to be adopted are not being implemented," he explained.

Testing of the market integration in the day-ahead segment with Romania begins in September. Upon successful transition, the unification is expected to become a fact in October. From now on, it can be said that the impact in terms of traded volumes will be positive.

The unification with the Macedonian market zone, planned for next year, is also expected to be positive.

The LIP14 project can be defined as the most significant. As the Executive Director of the IBEX Konstantin Konstantinov recently explained,“ the launch of LIP 14 will mark the completion of the integration process within the European Union of the Bulgarian market area. The implementation of this project will significantly increase the access of Bulgarian producers, consumers and traders to the energy offered on the European markets, ie. demand and supply will be diversified with a horizon "Within the day", which in combination with the provision by the IBEX of opportunities for automation and robotization of trade in this segment, will increase its importance, and hence its share in total electricity energy  trade".