A few days ago, a message appeared in the media that in July Greece increased its electricity exports to the neighboring Balkan countries, and the trend is expected to continue in August. In this rather unexpected situation for Greece, which has become a net exporter of electricity while traditionally a net importer, the country is helping its Balkan neighbors deal with acute electricity shortages.
Along with the sharp rise in natural gas and electricity prices in Europe, the countries of the Western Balkans are further affected by production and supply problems. In much of the region, such as Serbia, Kosovo and North Macedonia, limited coal availability and technical problems at coal-fired power plants have led to reduced production and an increased need for imports.
This summer, Greece is facing no power generation problems, still importing relatively cheap Russian gas and has cargoes of LNG. According to the rules of the interconnected market, electricity moves from the more affordable to the more expensive markets. Therefore, energy traders can now take advantage of the lower price in Greece and sell it where the price is higher.
According to the latest data from the Independent Electricity Transmission Operator (IPTO) for July, the country has dramatically increased its exports and has become a net exporter in the second month of this year.
In July, Greece exported: 351 GWh to Italy, 253 GWh to Albania and 184 GWh to North Macedonia. Exported natural flows increased by 976% compared to the corresponding month last year.
It should be noted that the underwater interconnection between Greece and Italy stopped functioning on August 19 and is scheduled to remain offline until September 3 due to technical problems.
The result is that Greek exports to Italy and vice versa were reduced to zero during this period. Given that Italy is directly affected by the increase in electricity prices in France, during these days Greece manages to keep the wholesale price of electricity lower than that of Italy.
The difference in market prices leads to more exports.
Italy has a relationship with Greece and with Albania. As only the latter is currently in operation, Greece is partially protected from the price increase in Italy. In contrast, the Western Balkans are more exposed to high Italian prices, which is why it is financially beneficial for them to import Greek electricity.
The fact that Greece maintains a lower price than Italy means that it can export more electricity to Albania and North Macedonia, as long as their interconnections allow it. This electricity can also lead to a small but measurable indirect difference in wholesale prices in other countries further north, such as Serbia, which is also facing significant production problems.
On August 26, Greece exported 130 MWh to Albania, 129 MWh to North Macedonia and 20 MWh to Bulgaria, or a total of 279 MWh. Three days later, the exported amounts of electricity for Albania were 159 MWh and 129 MWh for North Macedonia, with the expectation that the upward trend will continue.
Current regime and energy crisis in the region
On August 15, Kosovo’s network operator KEDS announced that it was starting a blackout in the country due to the lack of sufficient electricity generation. High prices on European markets make imports impossible. The mode is six hours with power supply and two hours without.
At the beginning of August, the parliament declared a state of emergency over the energy crisis, giving the government the opportunity to take any measures to deal with the problems.
Kosovo relies mainly on coal (90%) and renewable energy sources for electricity production. Currently, however, half of the facilities are undergoing scheduled repairs to be prepared for the winter months. Then electricity consumption more than doubles as homes are heated with electricity.
A few days later, on August 25, the government of the Republic of Macedonia also announced a crisis situation regarding the supply of heat energy in the area of the city of Skopje and in the supply of electricity at the national level. Both decisions will start to be implemented from September 1 and will be effective for a period of 30 days.
From the beginning of September, the measures to save electricity come into force and will be valid until the end of March next year. The Commission for Public-Private Dialogue will become a crisis body through which the government and business will work together to address the energy crisis. Competent institutions have assured that there will be electricity during the upcoming winter period and that restrictions are not an option if the plans of the North Macedonian electricity industry come to fruition.
The Minister of Economy, Kreshnik Bekteshi, recently stated that talks are being held with the Ministries of Energy of Serbia and Bulgaria, so that cross-border capacities are not stopped and there are no problems with supplying consumers on the free market.
In anticipation of the coming winter, which is being described as the worst in 70 years, the government adopted a package of energy-saving measures on August 16, which is due to come into force on September 1.
With them, state institutions have specific obligations that they must comply with, such as turning off the decorative lighting on the facades of public buildings and cultural monuments, not using light bulbs when there is enough light, setting the air conditioners at a temperature not lower than 27ºС during the summer season and no higher than 20ºС during the heating season, replace old light bulbs with economical ones and turn off computers. The package of savings measures also includes recommendations for citizens and companies. With the package of austerity measures, savings are expected to be up to 15%.
In Serbia, there will almost certainly be a power cut in the winter. Although Serbia’s electricity company strongly denies this, claims have appeared in Serbian media that blackouts are being planned.
“There will not be enough electricity, and the big question is whether it will be possible to import the necessary electricity. Even if there are surpluses on the electricity exchanges, EPS /National Electricity Company of the country, note ed./ has no money and nowhere to borrow it “, a source close to Serbia’s electricity company claimed. And the reason why the company cannot take out a loan is that “it is completely pointless for EPS to take out loans to buy electricity at a price of 750 euros and sell it at 45 euros per megawatt hour”.
Experts predict that EPS will be short of a total of 2.2 million kilowatt hours of electricity this winter. According to the current electricity prices on the stock exchanges, this means that Elektroprivreda Srbije will have to pay around 1.5 billion euros for the missing quantities during the winter season. And the company does not have these funds.
With such a shortage, consumers will remain without power for a longer period of time.
Mining and Energy Minister Zorana Mihajlovic said there are no plans to limit electricity for households, nor that the government has decided to increase the price of electricity for the economy, and that the state’s plan is to ensure more electricity production.
Serbia’s Finance Minister Sinisa Mali, however, announced that the price of electricity for the economy would increase.
The role of Bulgaria
Against the background of this gloomy perspective, it is good to specify the place and role of Bulgaria in solving the electricity crisis occurring in the neighboring countries.
In the first half of 2022, Bulgaria ranks third in Europe in terms of net exports of electricity in absolute terms. The data of the energy think tank Enappsys show that the country has exported a net 6.6 ТMWh of electricity to other countries, most often these are neighboring Romania, Greece, Turkey, North Macedonia, Serbia.
During participation in the forum of the regional platform Re-Source Southeast Hub, the Bulgarian Minister of Energy, Alexander Nikolov, announced that there is a huge demand for electricity in the Balkans, which makes prices among our neighbors one of the highest in Europe.
According to experts’ estimates, Bulgarian capacities satisfy all domestic needs and there is a huge surplus of electricity that can be exported to neighboring countries.
From a purely financial point of view, the high electricity prices in Europe actually bring dividends to Bulgaria, because through the export of electricity, the Bulgarian energy companies register huge revenues. A separate question is how these revenues could compensate for the high costs of electricity for Bulgarian consumers. /BGNES
The analysis of the International Department of BGNES.