INTERVIEW with BSP Energy Exchange's CEO Anže Predovnik
Abstract from an interview with Anže Predovnik MSc. by portal Energetika.net (complete interview available here)
The electricity market in Slovenia has been fully liberalised since 1 July 2007. Was this a significant milestone for BSP?
Ever since final consumers in the Slovenian electricity market were given the right to freely choose their supplier, the hunt for new business models has been driving competition among the suppliers. New providers emerged in addition to the existing ones, and with them the need to set up an organised environment for electronic trade in electricity. The BSP exchange responded to this initiative in a measured way. Since 2008 we have operated an organised day-ahead electricity market for standardised projects. Since late 2012, as a result of the growing integration of renewable generation in wholesale electricity markets, members of the exchange have also been able to trade in standardised products in intraday and balancing markets. This way, market participants can continue submitting orders up to the point of delivery.
Could you perhaps quantify what you have just told us?
We expect the 2017 trading volume to be 7 TWh in the day-ahead market, and 1 TWh in the intraday market, including the balancing market. Two companies have entrusted us with organising customised auctions for long-term products: the Slovenian TSO for electricity ELES, and the Slovenian DSO SODO. By means of such an auction, ELES selects an electricity supplier for long-term covering of losses in the transmission network in the amount of 30 MW of base load product, or 0.26 TWh per year, while SODO selects a supplier for long-term covering of losses in the distribution network in the amount of 60 MW of base load product, or 0.52 TWh per year.
What are the latest developments in the process to integrate the Slovenian power exchange market with the neighbouring markets?
Early next month, two years will have passed since BSP was designed by the Energy Agency as a Nominated Electricity Market Operator (NEMO) in accordance with the Commission Regulation (EU) 2015/1222.
In the day-ahead market, we have introduced over the last three years implicit auctions on the Slovenian-Italian and Slovenian-Austrian borders. This has made the Slovenian power exchange market part of the single European electricity market in the day-ahead timeframe. By introducing implicit auctions on the Slovenian-Croatian border, we will make it possible for the Croatian power exchange market to be integrated in the single European market, as well.
The intraday timeframe has not yet reached the stage of development of the day-ahead timeframe. Implicit auctions for available intraday cross-zonal capacity have been held on the Slovenian-Italian border since 21 June 2016. On the other two borders, capacity is allocated on a first come, first served basis. However, major changes are in sight in this respect. Since 2014, BSP has been involved in the EU-wide XBID Market Project, where power exchanges together with transmission system operators are developing the technology and procedures for single intraday market coupling.
“In 2017, the value of financial settlement of the transactions made in the day-ahead or intraday market will exceed EUR 300 million. Including the prices and volumes achieved in the two auctions I mentioned, we can say that the value of trades in the Slovenian power exchange market is more than EUR 340 million. Slovenia’s annual electricity needs are valued at just over EUR 650 million – assuming that consumption is 13.5 TWh and the price at BSP is 50 EUR/MWh –, which means that more than half of all end-use power in Slovenia is traded in the power exchange market.”
How are implicit day-ahead auctions expected to impact the trading volumes and prices in the Slovenian power exchange market?
Judging from our experience of launching implicit auctions on the Slovenian-Italian and Slovenian-Austrian borders, we can expect the go-live of market coupling on the Slovenian-Croatian border to give the Slovenian power exchange market an additional liquidity boost. This is a direct result of increased efficiency of cross-zonal capacity allocation using an implicit allocation method. Considering the large volumes of available cross-zonal capacity, prices on both power exchange markets will level out in all hours, at the level of the Slovenian electricity price index SIPX. Thanks to high liquidity in the Slovenian power exchange market and the role of this market in multi-regional coupling on two additional borders, SIPX is more robust than the price index of the Croatian power exchange market.
BSP seems to be looking at a year of challenges. You have recently been appointed for a second term as General Manager. What is your vision for the company?
Next year we are celebrating 10 years since BSP establishment, full of optimism and knowing that in the 10 years of trials and tribulations and with the responsible job we have done so far, we have gained enough experience to continue operating a very important part of Slovenia’s electricity market.