Bosnia and Herzegovina (BiH) has reached an agreement on the long-awaited draft law regulating electricity regulation, transmission, and market.
During a high-level meeting in Vienna with the director of the Energy Community Secretariat Artur Lorkowski, representatives of BiH (relevant state and entity ministers) harmonized the text of the law from the electricity sector and thereby ended a decade-long legislative deadlock in this area.
“We have every reason to be extremely satisfied with the agreement reached, especially taking into account the current circumstances in which BiH finds itself,” said the Minister of Energy, Mining and Industry of the Federation of BiH (FBiH) Vedran Lakic. “This is a key step towards exempting BiH from the obligation to pay the European Union (EU) carbon tax, which will allow us to protect exporters from all parts of the country and redirect funds that would have gone to the EU to projects within BiH.”
It was especially emphasized that with this law, BiH not only fulfills one of the key conditions for exemption from CBAM but also finally gets an electricity exchange with its headquarters in Mostar, which it did not have until now.
After obtaining the necessary opinions, the law will be submitted to the Council of Ministers of BiH for consideration.
The electricity exchange is a market where electricity is bought and sold – similar to a stock exchange, except that instead of shares, kilowatt-hours (kWh) or megawatt-hours (MWh) of electricity are traded.
What is the purpose of the electricity exchange?
The purpose of the electricity exchange is: transparent price formation based on supply and demand; fairer competition among electricity producers; more efficient distribution of electricity from different sources (thermal power plants, hydroelectric plants, wind farms, solar power plants…); easier integration with European markets, which is important for the export and import of electricity.
What does it look like in practice?
Electricity producers (e.g. power utilities) offer a certain amount of energy at a certain price, while buyers (e.g. industry, electricity traders, system operators) submit their offers. The system automatically “matches” supply and demand, and transactions are concluded at so-called spot prices (price for real-time or next-day delivery), Forbes writes.
