Belarus will not be able to fully trade its electricity in EEU common market
<p> Brief: </p> <ul type="disc"> <li>In 2020, electricity consumption in Belarus increased by just 0.31% year on year, or 0.3bn kWh, to 38.02bn kWh. Meanwhile, since November 2020, the moment the first BelNPP unit was synchronised with the country's power grid, the plant has generated over 1.5bn kWh of electricity, which has probably been exported.</li> <li>Lithuania seeks to completely block import of Belarusian electricity by EU countries, while Ukraine has declared its separation from the Russian and Belarusian energy systems in 2022, following synchronisation with the European common energy system.</li> <li>Under these conditions, the surplus energy could be supplied to the EEU market once BelNPP becomes commercially operational. However, the common Eurasian energy market will not be operational until 2025 (as planned) and the monopoly system of Belenergo must be reformed in order to enter it.</li> <li>Obviously, Lukashenko is unlikely to support a reform of Belenergo. A refusal to implement the reform would mean that Belarus would not be able to fully trade its electricity in the EEU common market.</li> </ul> <p> Since November 2020, when the first unit of the Belarusian nuclear power plant (BelNPP, Astravyets, Grodno Oblast) was synchronised with the country's grid, the plant has generated over 1.5 billion kWh of electricity. Earlier, the Ministry of Energy of Belarus noted that all of this volume was sold in the domestic market. However, demand for electricity in the country during this time could hardly have increased by 1.5 billion kWh, given that Belarus has been stagnating recently - in 2020, electricity consumption increased by only 0.31% year on year, or by 0.3 billion kWh, to 38.02 billion kWh. </p> <p> It is likely that Belarus still manages to export some of its electricity to the Baltic states, despite the boycott of BelNPP electricity supplies. Lithuanian Energy Minister Dainius Kreivis noted that the measures taken to prevent the BelNPP electricity from reaching Lithuania were insufficient: according to the Lithuanian State Energy Regulatory Service, Belarusian electricity is still supplied to the country from Latvia, where it is purchased on the Riga Stock Exchange. Lithuania now plans to prepare a plan for a complete blockage of electricity from the BelNPP. </p> <p> In addition, Belarus resumed electricity exports to Ukraine as of 1 January 2021, although Ukraine's forecast balance for the current year does not foresee this. According to Ukrainian media, amid the cold winter, electricity imports to Ukraine from Belarus and the Russian Federation amount to 4m kWh every day. </p> <p> Acting head of the Ukrainian Energy Ministry Yuriy Vitrenko said in early March that the Ukrainian energy system will separate itself from the Russian and Belarusian energy systems in 2022 after synchronization with the unified energy system of Europe. </p> <p> <span style="color: #005b7e;">Commentary</span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> In the absence of an opportunity to fully increase exports to Ukraine and European countries after the BelNPP launch, Belarusian energy companies will have to balance the operation of existing power generating facilities. In order not to significantly limit electricity production at the existing cogeneration plants and TPPs, Belarus is likely to try to increase supplies to the common electricity market of the Eurasian Economic Union (EEU - Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia). </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> They plan to adopt the basic rules of the common electricity market in the EEU by July 1, 2022, Iya Malkina, assistant chairwoman of the Eurasian Economic Commission Board, said in December 2020. The document includes such mechanisms as trading under free bilateral contracts, fixed-term contracts and day-ahead contracts, as well as settlement of hourly deviations of actual electricity flows from the planned values. Rules for determining and allocating inter-state cross-sectional capacity and rules for access to inter-state transmission services are also planned to be adopted by that date. Rules for information exchange between participants in the common electricity market are planned to be adopted by July 1, 2023. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The EEU common electricity market will become fully operational once all trading rules come into force. This is expected to happen no later than January 1, 2025, Malkina stressed. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> In 2014, the EEU countries agreed that the international treaty on a common EEU electricity market would come into force no later than July 1, 2019. However, while the parties tried to align their approaches, it became clear that the Eurasian G5 are not ready for a common electricity market, as the national electricity markets in each EEU country are different. For example, the Russian energy system has been operating under market conditions for more than 10 years, and has the necessary infrastructure, retail markets, and exchange trading. At the same time, Belarus still has no electricity market. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> Therefore, on 29 May 2019, the presidents of the EEU countries signed a protocol of amendments to the EEU Treaty, which envisages the creation of a common electricity market by 2025 and links it to the creation of a common gas market (also planned for 2025). </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The documents signed stipulate that once a common gas market is established in the EEU, countries will not be able to independently determine the wholesale market entities for electricity trade in the common market. They will also have to exclude vertically integrated companies (companies that simultaneously generate electricity and transmit it through networks, like the Belarusian monopoly Belenergo) from the number of suppliers. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> In order to trade in electricity on the Eurasian market, Belarus needs to establish a wholesale and retail electricity market and market entities. Also, the energy monopoly should be unbundled into generation, transmission and distribution activities. However, the law on the electricity sector, which envisages the reform of the energy system and should create a legal framework for operation in the common Eurasian market, has not yet been adopted in Belarus. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> In 2020, the Ministry of Energy of Belarus took a step towards creating the first wholesale electricity market entities in the country. These may be block-stations of enterprises with a capacity of 25 MW or more (the EAEU countries have agreed that they may become subjects of the wholesale electricity market). </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> Currently, Belarusian block stations can use the generated energy for their own needs of enterprises and supply the surplus to Belenergo’s grid. The ministry has prepared a draft ordinance "On the development of competition in the electricity sector", which allows the owner of a block-station to sell surplus energy, which is generated in excess of consumption for own needs, to other consumers for their economic activities at tariffs not regulated by Belenergo. However, this ordinance has not been signed yet. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> On January 21, 2021, the development of the electricity sector was discussed at a meeting with government leaders by President Alexander Lukashenko. It was noted that the government offered to allow producers to sell surplus electricity to consumers in any region of Belarus. In this regard, Lukashenko noted that decisions on such issues should be taken at the ministerial level. “The main thing for me is not to destroy the unified energy system,” he said. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> Thus, the Ministry of Energy of Belarus may get the right to independently decide on the establishment of the first entities of the wholesale electricity market. At the same time, it is clear that Lukashenko is unlikely to support the reform of Belenergo. A refusal to implement the reform would mean that Belarus would not be able to fully trade its electricity in the EEU common market.</span> </p>
2021-03-16
Primepress
Belarus will not be able to fully trade its electricity in EEU common market
Brief:
- In 2020, electricity consumption in Belarus increased by just 0.31% year on year, or 0.3bn kWh, to 38.02bn kWh. Meanwhile, since November 2020, the moment the first BelNPP unit was synchronised with the country's power grid, the plant has generated over 1.5bn kWh of electricity, which has probably been exported.
- Lithuania seeks to completely block import of Belarusian electricity by EU countries, while Ukraine has declared its separation from the Russian and Belarusian energy systems in 2022, following synchronisation with the European common energy system.
- Under these conditions, the surplus energy could be supplied to the EEU market once BelNPP becomes commercially operational. However, the common Eurasian energy market will not be operational until 2025 (as planned) and the monopoly system of Belenergo must be reformed in order to enter it.
- Obviously, Lukashenko is unlikely to support a reform of Belenergo. A refusal to implement the reform would mean that Belarus would not be able to fully trade its electricity in the EEU common market.
Since November 2020, when the first unit of the Belarusian nuclear power plant (BelNPP, Astravyets, Grodno Oblast) was synchronised with the country's grid, the plant has generated over 1.5 billion kWh of electricity. Earlier, the Ministry of Energy of Belarus noted that all of this volume was sold in the domestic market. However, demand for electricity in the country during this time could hardly have increased by 1.5 billion kWh, given that Belarus has been stagnating recently - in 2020, electricity consumption increased by only 0.31% year on year, or by 0.3 billion kWh, to 38.02 billion kWh.
It is likely that Belarus still manages to export some of its electricity to the Baltic states, despite the boycott of BelNPP electricity supplies. Lithuanian Energy Minister Dainius Kreivis noted that the measures taken to prevent the BelNPP electricity from reaching Lithuania were insufficient: according to the Lithuanian State Energy Regulatory Service, Belarusian electricity is still supplied to the country from Latvia, where it is purchased on the Riga Stock Exchange. Lithuania now plans to prepare a plan for a complete blockage of electricity from the BelNPP.
In addition, Belarus resumed electricity exports to Ukraine as of 1 January 2021, although Ukraine's forecast balance for the current year does not foresee this. According to Ukrainian media, amid the cold winter, electricity imports to Ukraine from Belarus and the Russian Federation amount to 4m kWh every day.
Acting head of the Ukrainian Energy Ministry Yuriy Vitrenko said in early March that the Ukrainian energy system will separate itself from the Russian and Belarusian energy systems in 2022 after synchronization with the unified energy system of Europe.
Commentary
In the absence of an opportunity to fully increase exports to Ukraine and European countries after the BelNPP launch, Belarusian energy companies will have to balance the operation of existing power generating facilities. In order not to significantly limit electricity production at the existing cogeneration plants and TPPs, Belarus is likely to try to increase supplies to the common electricity market of the Eurasian Economic Union (EEU - Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia).
They plan to adopt the basic rules of the common electricity market in the EEU by July 1, 2022, Iya Malkina, assistant chairwoman of the Eurasian Economic Commission Board, said in December 2020. The document includes such mechanisms as trading under free bilateral contracts, fixed-term contracts and day-ahead contracts, as well as settlement of hourly deviations of actual electricity flows from the planned values. Rules for determining and allocating inter-state cross-sectional capacity and rules for access to inter-state transmission services are also planned to be adopted by that date. Rules for information exchange between participants in the common electricity market are planned to be adopted by July 1, 2023.
The EEU common electricity market will become fully operational once all trading rules come into force. This is expected to happen no later than January 1, 2025, Malkina stressed.
In 2014, the EEU countries agreed that the international treaty on a common EEU electricity market would come into force no later than July 1, 2019. However, while the parties tried to align their approaches, it became clear that the Eurasian G5 are not ready for a common electricity market, as the national electricity markets in each EEU country are different. For example, the Russian energy system has been operating under market conditions for more than 10 years, and has the necessary infrastructure, retail markets, and exchange trading. At the same time, Belarus still has no electricity market.
Therefore, on 29 May 2019, the presidents of the EEU countries signed a protocol of amendments to the EEU Treaty, which envisages the creation of a common electricity market by 2025 and links it to the creation of a common gas market (also planned for 2025).
The documents signed stipulate that once a common gas market is established in the EEU, countries will not be able to independently determine the wholesale market entities for electricity trade in the common market. They will also have to exclude vertically integrated companies (companies that simultaneously generate electricity and transmit it through networks, like the Belarusian monopoly Belenergo) from the number of suppliers.
In order to trade in electricity on the Eurasian market, Belarus needs to establish a wholesale and retail electricity market and market entities. Also, the energy monopoly should be unbundled into generation, transmission and distribution activities. However, the law on the electricity sector, which envisages the reform of the energy system and should create a legal framework for operation in the common Eurasian market, has not yet been adopted in Belarus.
In 2020, the Ministry of Energy of Belarus took a step towards creating the first wholesale electricity market entities in the country. These may be block-stations of enterprises with a capacity of 25 MW or more (the EAEU countries have agreed that they may become subjects of the wholesale electricity market).
Currently, Belarusian block stations can use the generated energy for their own needs of enterprises and supply the surplus to Belenergo’s grid. The ministry has prepared a draft ordinance "On the development of competition in the electricity sector", which allows the owner of a block-station to sell surplus energy, which is generated in excess of consumption for own needs, to other consumers for their economic activities at tariffs not regulated by Belenergo. However, this ordinance has not been signed yet.
On January 21, 2021, the development of the electricity sector was discussed at a meeting with government leaders by President Alexander Lukashenko. It was noted that the government offered to allow producers to sell surplus electricity to consumers in any region of Belarus. In this regard, Lukashenko noted that decisions on such issues should be taken at the ministerial level. “The main thing for me is not to destroy the unified energy system,” he said.
Thus, the Ministry of Energy of Belarus may get the right to independently decide on the establishment of the first entities of the wholesale electricity market. At the same time, it is clear that Lukashenko is unlikely to support the reform of Belenergo. A refusal to implement the reform would mean that Belarus would not be able to fully trade its electricity in the EEU common market.