The transmission system operator is not unbundled in compliance with the Electricity Directive. The distribution system operator is legally unbundled, but functional unbundling requires the Government’s approval of the amendments to the funding act of the distribution system operator.
Access to the system
Access to the system
Third party access is ensured in a compliant manner. Transposition of Connection Network Codes and full implementation of the Transparency Regulation depend on amendments to the Energy Law.
The wholesale market is formally deregulated. Competition on the day-ahead market is growing. The transmission system operator is procuring losses in the free market. The balancing energy market is operational, whereas prices of balancing reserves continue to be regulated. REMIT has not been transposed.
The retail market is formally liberalised, but dominated by the incumbent supplier EPS, which is also the universal supplier of small customers and households. Prices of universal supply continue to be regulated at a level which does not incentivize the development of competition.
Regional cooperation is mainly limited to bilaterally coordinated capacity allocation and balancing exchanges. Capacities on interconnections with Bulgaria and Croatia are allocated through JAO, others only bilaterally. Market coupling initiatives are still in an early phase.
State of compliance
Electricity market reform in Serbia has entered a period of stagnation. There was no tangible progress towards completion of Third Energy Package implementation. The necessary amendments to the Energy Law to allow for transposition of the Connection Network Codes and REMIT were not adopted. As a result, the development of competition was very modest and the incumbent utility EPS maintained its dominance in the wholesale and retail market.
Ownership unbundling of the transmission system operator is still not completed in a compliant manner because the final decision-making for all energy activities, including transmission, still remains with the Government.
Independence of the legally unbundled distribution system operator, EPS Distribution, in terms of organisation and decision- making is also not yet ensured, as concluded in the company’s 2017 compliance report. Rectifying the situation requires amendments to the statute of the distribution system operator. They are to be approved by the Government. Thus, the regulator has not issued a licence to the distribution system operator. The annual compliance report for 2019 was submitted to the regulator for approval.
Transposition of the Network Codes and REMIT, which was due in 2018 and 2019 respectively, is still pending amendments to the Energy Law. The transmission system operator partially implemented the Connection Network Codes through changes of the grid code adopted in 2020.
The transmission system operator is publishing data in line with the Rules on Publication of Key Market Data, which transposed Regulation (EU) 543/2013. However, the publication of generation data, which are considered as commercially sensitive information, requires amendments to the Energy Law and other relevant regulations.
The retail market remains highly concentrated and the dominance of the incumbent supplier has even increased in 2019. The regulated price of universal supply to small customers and households, which is significantly below the market price, is impeding the development of competition. Despite that for the third consecutive year the regulator recommends decreasing the gap between the regulated universal service price and market prices, no actions were taken.
The organised market, operated by the power exchange SEEPEX, continues to grow. However, coupling with neighbouring markets will be crucial for its further development. Market coupling projects with Montenegro, Albania and Italy (AIMS), and with Bulgaria and Croatia, are still in an early phase. The Energy Community Regulatory Board recommendation on the designation of a nominated electricity market operator in line with the CACM Regulation was not implemented.
Regionally coordinated allocation of interconnection capacities exists on the interconnectors with Bulgaria and Croatia only. They are performed through the Joint Auction Office (JAO) to which the transmission system operator became a shareholder. Joint auctions are performed on other interconnectors, also with Montenegro as of 2020. Cross-border balancing cooperation is still limited to bilateral exchanges with the transmission system operators of Bosnia and Herzegovina, Montenegro, Hungary and Romania. Regional coordination in terms of capacity calculation and allocation and day-ahead and balancing market integration should be stepped up in order to increase utilisation of cross-border capacities and competition in the electricity market. As a prerequisite, a legal framework for the implementation of Network Codes and guidelines should be established by amending the Energy Law.