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Integrating electricity markets

THE CZECH Republic, Slovakia and Hungary are coupling their domestic electricity markets. Before the end of June 2012 Hungary plans to become part of the short-term electricity market that was created in September 2009 by Slovakia and the Czech Republic, thus helping to move the central European region closer to the EU's goal of creating a European-wide energy market in 2014, the SITA newswire reported, citing information published by Hospodářské Noviny, a Czech financial daily, in late September.

THE CZECH Republic, Slovakia and Hungary are coupling their domestic electricity markets. Before the end of June 2012 Hungary plans to become part of the short-term electricity market that was created in September 2009 by Slovakia and the Czech Republic, thus helping to move the central European region closer to the EU's goal of creating a European-wide energy market in 2014, the SITA newswire reported, citing information published by Hospodářské Noviny, a Czech financial daily, in late September.

Integration may advance even further next year as efforts will be directed towards integration of the central region with the western and northern European regions. Energy specialists expect that market coupling in Europe will facilitate cross-border trading in electricity, as well as significantly increasing the liquidity of energy exchanges in trading day-ahead electricity.

“During the first month after the Slovak and Czech markets were coupled, the amount of sold electricity doubled,” said Igor Chemišinec from OTE, the Czech electricity and gas market operator, as quoted by the daily.

In an ideal case, coupling of markets also leads to unification of electricity prices. This is how it operates, for example, between the Czech Republic and Slovakia, where electricity prices differ for only a few days in a year. The coupling with the Hungarian market will be more complicated however, as transmission capacity across the Slovak-Hungarian border is currently insufficient. A similar problem may occur during additional market-coupling across Europe.

“You simply cannot transmit electricity without wires,” stated Jiří Strnad from ČEPS, the Czech Republic’s transmission system operator. “If there is trade integration but insufficient transmission capacities, zones with different prices will be created.”


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