Croatia aims to set up power exchange this year

BUDAPEST, June 19 Thu Jun 19, 2014 4:50am EDT

BUDAPEST, June 19 (Reuters) - Croatia aims to have a spot power exchange operational this year and couple it with the bourses of neighbouring Hungary and Slovenia, the head of Croatian energy market operator HROTE said on Thursday.

The bourse will introduce more competition, develop reliable prices and security of supply and help open up the electricity market in Croatia, HROTE General Manager Ivor Zupanic told Reuters on the sidelines of an energy trading event in Budapest.

HROTE and Croatian transmission system operator HOPS are responsible for organising the exchange and its coupling with other power bourses.

Zupanic said talks on potential partnerships are under way with several power exchanges.

He said the European Union's newest member will become much more self-sufficient in electricity generation once power utility Hrvatska Elektroprivreda (HEP) adds the 500 megawatt coal-fired plant Plomin 3 on the northern Adriatic.

It now imports on average some 30 to 50 percent of its annual electricity consumption depending on weather because while almost half of its production capacity comes from hydro power plants.

Croatia also aims to meet or exceed EU renewable energy targets before a 2020 deadline and add more than 850 MW of capacity mostly in wind power within three years, he said

"The Croatian power system is one of the smallest in Europe but thanks to its geographical position, very well built infrastructure, number of shared borders with the EU countries and those of the Western Balkans, it may become a regional energy hub", Zupanic said.

Neighbouring Serbia teamed up with European exchange EPEX Spot to launch a regional spot power bourse in the third quarter of 2014. It is expected to become fully operational in the first quarter of 2015.

While many traders see the region as potentially lucrative, they cite barriers limiting market growth that include a lack of transparency, difficulties in getting trading licences and the need to win numerous auctions to move around power.

Ljubljana-based BSP Southpool, run by international derivatives exchange Eurex and Slovenian power market operator Borzen, offers power trading for the Slovenian and Serbian markets but liquidity has been poor. (Reporting by Maja Zuvela; editing by Jason Neely)

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