Status quo market opening / implementation EU law
1.1.1 The electricity sector in Slovakia has recently been experiencing major changes and is still undergoing development.
1.1.2 The Slovak market is fully liberalised and all participants are guaranteed equal and non-discriminatory conditions. The government is interested in making its electricity sector attractive to both domestic and foreign entrepreneurs.
1.1.3 Act no. 251/2012 Coll. on Energy (Energy Act) came into force on 1 September 2012 together with Act no. 250/2012 Coll. on Regulation of Network Industries (Regulation of Network Industries Act). The adoption of these acts fully implemented the Third Energy Package. Apart from incorporating the EU requirements on unbundling and increasing transparency in legal relationships, all significant changes were executed with respect to end-customers. One of the top priorities in the course of preparing these acts was to find solutions for the benefit of end-customers, especially for the protection of vulnerable customers and reduction of energy poverty. The Regulation of Network Industries Act (RONI Act) contains three references related to energy poverty though no actual actions were prescribed in this respect, apart from establishing the definition.
1.2 Structure of electricity market
1.2.1 The electricity market in Slovakia is regulated by way of standard trading forms such as bilateral contracts, auctions and the balancing market.
1.2.2 The number of participants in the electricity market increased significantly when a numbers of new players joined the market to take advantage of the fact that a licence for the generation or supply of electricity was not required. Under the Energy Act, a facility with a total installed capacity of up to 1MW (including energy from renewable sources) can operate based solely on a notification submitted to the Regulatory Office for Network Industries (RONI) within 30 days of the commencement of operations. Confirmation of such a notification serves as a licence for the generation and supply of electricity. Recently, most of the new market players operated on the basis of such notifications.
1.3 Key players
1.3.1 The main player in the Slovak electricity generation market is Slovenské elektrárne, a.s. (SE), a joint stock company of which 66% is owned by Enel,1 the Italian based multinational group, with the other 34% owned by the Slovak state. The entire electricity transmission network is owned by Slovenská elektrizačná prenosová sústava, a.s. (SEPS), a wholly state-owned company. Three are also regional Distribution System Operators (DSO),partially privatised and now co-owned by the state (51%) and a private investor (49% and management control). See paragraph 2.3.1 below for further details.
1.3.2 The electricity sector is comprised of a number of electricity traders. OKTE a.s. (organiser of the short-term electricity market) began its operations on 1 January 2011. It has been established as a subsidiary joint stock company and is owned by SEPS. OKTE a.s. organises and evaluates the short-term electricity market and ensures the settlement of any deviations. In the future, its scope of activities is expected to be extended to broader management and collection of the measured data as well as the central billing charges related to the operation of the power system, in order to simplify the financial and billing services.
1.4 Current issues and drivers
1.4.1 The Second Energy Package, requiring the unbundling of transmission and distribution of electricity by establishing separate legal entities, has been fully implemented by Act No. 656/2004 Coll., and amendments to the previous act on the regulation of network industries.
1.4.2 When further steps regarding unbundling were required pursuant to the Third Energy Package, the completely harmonised Energy Act was adopted.
1.4.3 For the last few years, the daily electricity markets between the Czech and Slovak Republics have been interconnected.
1.4.4 On 11 September 2012, the Slovak electricity markets were fully connected to those in Hungary as a result of long-term negotiations between the two countries.
1.4.5 Significant progress in international relations at the political level is visible in common cooperation related to further interconnections. The representatives of national regulatory authorities, Transmission System Operators (TSO) and the market operators from Slovakia, the Czech Republic, Hungary, Poland and Romania met in Budapest on 28 January 2013 to negotiate integration and expansion of the electricity markets. The parties agreed to launch a joint project to assess possible options and select the best, most efficient, form of market integration. After signing of the memorandum of understanding, which established the basic scope and main features of this cooperation, several workshops and meeting took place within the last months. The process was completed on 19 November 2014, when the CZ-SK-HU-RO Market Coupling has been launched. According to the related press releases each of the involved parties claims that on the first date of the integration, all the processes within this coupled mechanism operated smoothly and in line with the expectations.
2. Sector analysis
Structure of generation sector
2.1.1 Nuclear power is the most important source of energy in Slovakia, it produces more than half of the total generated energy in the country. In view of such high representation, and its potential and objective growth, solving the problem of obtaining uranium ores as a strategic raw material is a political priority. Currently, 100% of solid fuel for nuclear power plants is imported from Russia.
2.1.2 SE is the main generator of electricity in Slovakia and, based on the available installed capacity, is the second largest generator of electricity in central and eastern Europe. It owns the two nuclear generating stations in Slovakia as well as two coal-fired generating stations, two solar photovoltaic (PV) generating stations and 34 hydro generating stations.
2.1.3 The market for electricity generation was opened to competition in 2002. Investment opportunities in a number of new combined heat and power generating stations are available to investors (domestic or foreign). In the past, Slovakia was a net exporter of electricity. However, after the closure of several plant (in compliance with the EU Accession Treaty, the first unit of the nuclear generating station in Jaslovské Bohunice was shut down on 31 December 2006, the second unit was shut down at the end of 2008 and a coal-fired generating station in Nováky operated by SE was also shut down), approximately 20% of total installed capacity has decreased and Slovakia is no longer a net exporter of electricity.
2.1.4 JAVYS a.s., the state-owned enterprise, and ČEZ a.s., the dominant Czech electricity generator, have established a joint venture (Jadrová energetická spoločnosť Slovenska, a.s.) with the purpose of constructing a new nuclear generating station in Bohunice. After finalising the feasibility study, containing an analysis and evaluation of the proposed technical alternatives, the suitability of sites, the supply system, project management, financial security and economic analysis, the project is currently undertaking its environmental impact assessment (“EIA”). The EIA process is expected to be finalised in 2016, when the final opinion on the project shall be issued.
2.1.5 In 2012, electricity generated from renewable energy sources (RES) was about 10% of total electricity consumption. The majority (68.3%) was generated by solar PV generating stations, and biomass amounted to 21.9% of the generation capacity (see section 4 below).
2.1.6 The Slovak National Council passed the Act on Support of Renewable Sources of Energy and on Highly Effective Combined Production and on Amendment and Supplementation of Certain Acts on 19 June 2009 (Renewable Act). The Renewable Act came into effect on 1 September 2009, setting the ground for the support of generation from RES and combined heat and power (CHP) generating stations.
2.1.7 Pursuant to the Renewable Act, renewable electricity generators benefit from preferential (priority) connections to regional distribution grids. They also have:
- priority access to the grid;
- priority transmission, distribution and supply of electricity;
- the right to offtake electricity at the electricity price on loss;2
- the right to payoff tariff;3 and
- the right to take over the liability for divergence by the regional DSO.
- the right to a priority connection of the generation station to the regional distribution grid and the right to priority access to the grid apply to all generating stations, regardless of their output volumes.
2.1.8 The right to offtake electricity and the right to payoff apply only to:
- electricity generation facilities with an overall installed capacity of 125MW or less; and
- electricity generation facilities with an overall installed capacity of 200MW or less, provided that the electricity is generated by highly effective combined generation and the share of renewable sources in the fuel exceeds 30%.
However, pursuant to the amendment to the Renewable Act, from 1 July 2013, the extent of the RES support and high-efficiency cogeneration was decreased. This affects solar generating stations especially, in respect of which the support applies only to facilities with an overall installed capacity of up to 30kW (reduced from 100kW). These steps have been taken to lower costs for the regional distribution systems.
2.1.9 The guaranteed offtake of electricity and the tariffs apply for a period of 15 years from the year the facility enters operation (or, if applicable, from the year of reconstruction or modernisation of the generating station). In addition, electricity offtake is guaranteed for the whole operating life of generating stations with an overall installed capacity of 1MW or less.
2.1.10 The price of electricity generated from RES or CHP is regulated by the RONI. An electricity generator who wishes to claim support under the Renewable Act must submit, to the regional DSO, a certificate of origin which is issued by the RONI.
2.1.11 The construction of wind generating stations in Slovakia was suspended since the end of 2009, until the impact assessment regarding their influence on the national transmission grid is complete. Therefore SEPS, as the TSO, has not issued any new construction authorisations for wind generation. SEPS justifies this on the basis of balancing problems and the limited capacity of interconnection points with neighbouring systems (especially Hungary). This approach has also affected solar plant.
2.1.12 According to SEPS, further construction of wind and solar generating stations could jeopardise the operational safety and reliability of the electricity transmission system and may “put unsustainable, unpredictable pressure on electricity price” on the state budget.4
2.1.13 In 2012, solar generating stations with a total installed capacity of 480MW were operated in Slovakia.5 However, due to support limitations (as described above), no new solar generating stations are expected in the near future. Instead, new investment is expected in planned new nuclear generating stations.
Structure of transmission sector
2.2.1 SEPS, as the sole TSO, is responsible for:
- the operation of the transmission system;
- the balancing of the transmission system in accordance with international rules;
- the transmission of electricity using the principles of transparency and non-discrimination; and
- cross-border electricity transmission.
2.2.2 The connection of generators to the transmission and distribution grids is regulated by the RONI Act and relevant secondary legislation.
2.2.3 The generators are connected to the transmission grid on the basis of a connection agreement with SEPS. Connection is usually subject to fulfilment of the grid operator’s technical and commercial terms and conditions. Access to the grid, including fees, is regulated by the RONI.
2.2.4 The operation of the transmission grid is administered by SEPS, who also provides system operating services at regulated prices and is obliged to ensure the purchase of ancillary services. As part of its system management duties, SEPS prepares ten-year network development plans in accordance with the Energy Act. These are based on current and future supply and demand and transmission system capacity, taking into account reasonable assumptions on electricity demand, consumption, electricity exchanges with other countries, EU network development plans and regional investment plans. The network development plans are prepared in cooperation with the RONI and are subject to consultation with existing and potential users of the transmission system, who may make reasonable objections or suggestions.
2.2.5 One of the most important investment objectives of SEPS is the modernisation of the existing 400kV grid lines. In the meantime, all the 200kV grid lines that will be gradually replaced by the 400kV grid lines must be kept operational at the lowest possible cost until decommissioned.
2.2.6 In addition, Slovakia aims to secure the development of 110kV distribution line in order to fulfil the safety, reliability and quality of energy supply prescribed by SEPS’ operating rules.
2.2.7 Cross-border transfer of electricity is controlled by SEPS. Cross-border transmission capacity is allocated by auctions and based on bilateral agreements between TSOs. Established auction rules are followed for yearly, monthly, weekly and daily auctions.
2.2.8 The Slovak transmission system provides a transit system for all neighbouring transmission systems, except the Austrian system. In particular, the Slovak TSO interacts with ČEPS in the Czech Republic and MAVIR in Hungary.6
2.2.9 Another expected international investment, identified as strategic by the European Commission, is the development of North-South electricity interconnection in Central, Eastern and South-Eastern Europe (NSI East Electricity). Currently, this is in the planning stage, with the exact date of its operation yet to be determined.
Structure of distribution sector
2.3.1 There are three regional electricity distribution companies in Slovakia (ZSE Distribúcia a.s., SSE - Distribúcia a.s. and Východoslovenská distribučná a.s.), each of which has a natural monopoly in its particular region. They are all partially privatised – 51% of the shares in each company are held by the state and the remaining 49% are held by foreign investors. E.ON indirectly holds 49% of the shares in ZSE Distribúcia a.s., the western Slovakia distribution company; EDF holds 49% of the shares in SSE - Distribúcia a.s., the distribution company operating in central Slovakia; and RWE Energy AG holds 49% of the shares in Východoslovenská distribučná a.s., the eastern Slovakia distribution company.
2.3.2 According to the Commercial Code amendment adopted in 2012, any price increase proposal may only be submitted to the RONI on the basis of a resolution adopted at the company’s general meeting. Through this measure, the state can control the price policy applied by distributors where it no longer has management control but continues to hold the majority (usually 51%) of shares. This measure was abolished in 2011 but reintroduced in 2012.
Structure of supply sector
2.4.1 Electricity supply is conducted under a licence issued by the RONI. Since the adoption of the Energy Act, an entity registered seat in a state within the European Economic Area, and if such entity holds an electricity supply licence within such state, it will be granted an “authorisation for a foreign entity”, which grants supply rights in Slovakia. All valid licences are published by the RONI.7
2.4.2 Companies operating in the wholesale electricity market are not subject to any price control or limitation. However, in line with EU law, prices for end-customers (i.e. households and small enterprises) are controlled and determined by the RONI, which determines the calculation of the maximum price which may be charged.
2.5 Energy exchange / trading
Structure of trading market
2.5.1 The electricity market was opened to all customers except households from January 2005, allowing them to choose their electricity supplier. From July 2007, the electricity market was also opened for household customers. Since the adoption of the Energy Act, the customers’ position has been significantly strengthened by various new provisions, these include the simplification of the procedure, for changing the electricity supplier, the introduction of quality standards for the supply of electricity and compensation for non-compliance with such standards.
2.5.2 The structure of the trading market has recently been coupled with the markets of the Czech Republic, Hungary and the Slovak Republic. The cooperation agreement between the three states was executed on 30 May 2011 and the full connection became operational on 11 September 2012. This step is fundamental to achieving a common market between these member states
2.5.3 Only one private entity, Energy Trading Company, s.r.o., participates on the EEX. The company mainly operates within western Slovakia, based on a licence issued by the RONI.
Data on traded volumes
2.5.4 According to information available from OKTE,8 since the market coupling between the Czech Republic, Hungary and the Slovak Republic, for the period of 12 September to 11 October 2012, the total traded volumes were:
- 669,833MWh between CZ-SK; and
- 509,623MWh between CZ-SK-HU.
2.5.5 According to the information available from OKTE,9 price differentials during this period were:
- maximum price SK – EUR 103.09 per MWh (achieved on 9 October 2012);
- maximum price HU – EUR 170.01 per MWh (achieved on 22 September 2012);
- maximum price CZ – EUR 87.00 per MWh (achieved on 24 September 2012); and
- minimum price CZ-SK-HU – EUR 9.29 per MWh (achieved on 24 September 2012).
3.1.1 Regulation of the sector is carried out by the following: (i) the Ministry of Economy; (ii) the RONI; (iii) the Nuclear Regulatory Authority; and (iv) the State Energy Inspection.
The Ministry of Economy
3.1.2 The Ministry of Economy is the government department responsible for the Slovak energy policy. It is also responsible for monitoring security of supply and grants permits to build new generating facilities. Furthermore, it is the authority that issues opinions on proposed regulatory policy, which ensures the fulfilment of obligations arising from EU treaties and under international laws.
3.1.3 The main role of the RONI is to ensure transparent, non-discriminatory competition in the sector. It is also the authority responsible for issuing licences. Its functions include:
- determining and approving the manner, measures and conditions for the calculation of prices for generation, transmission, distribution and supply of electricity; and
- approving the grid code for TSOs and DSOs.
3.1.4 RONI adopts related secondary legislation and issues guidelines and guiding principles in areas of its competency.
Nuclear Regulatory Authority
3.1.5 The Nuclear Regulatory Authority supervises nuclear generating station safety, regulates the use of nuclear energy and issues licences under Act No. 541/2004 Coll. on the peaceful usage of nuclear energy (Atomic Act).10 This authority is also responsible for the review of nuclear safety rules and controls compliance with the principles, and performance of the obligations, set out in the Atomic Act.
The State Energy Inspection
3.1.6 The State Energy Inspection, controlled by the ministry of economy, is an inspectorate organisation with the power to impose fines for breaches of the energy legislation. It is led by a central director who is appointed by the minister of economy and is responsible for the organisation’s activities. The State Energy Inspection has been established by operation of law and it is independent from RONI.
3.1.7 Generation, transmission, distribution and supply (including retail) all require a licence issued by the RONI. For nuclear installations, consent must be obtained from the Nuclear Regulatory Authority. A licence is usually issued for an indefinite period of time, unless requested otherwise by an applicant.
3.1.8 If an entity is granted a licence for supply of electricity in any Member State of the European Union or in the European Economic Area, and it wishes to supply electricity in Slovakia, it may request a supply licence from the RONI. Such entity does not need to fulfil any additional obligations except for including an official Slovak translation of its existing licence with its request.
Permits and consents
3.1.9 Consents and permits (such as compliance certificates, zoning and building permits, consents from various environmental protection authorities and permits to use hydro-energy potential) are required for the construction of a generating station.
3.2 Key legislation
3.2.1 The Energy Act and the RONI Act are the main laws governing the electricity sector.
3.2.2 The Renewable Act governs RES support schemes. Given the current developments in the field of RES, and based on the previous years’ statistics, an amendment to the Renewable Act was adopted at the beginning of 2013. The amendment has removed the range of support schemes open to RES generators, high efficiency cogeneration and biomethane. The rights and obligations of the generators have also been modified, including in respect of their duties towards the RONI and the determination of regulated pricing.
3.2.3 These regulations also include the RONI’s new regulation for the internal electricity market rules for the functioning of the internal gas market (Grid Code) and the regulation establishing price controls for small electricity entities.
3.2.4 Given the importance of the nuclear industry in Slovakia, specific legislation such as the Atomic Act and amendments to other acts (applicable to nuclear installations and facilities) must be considered in the context of key legislation for the Slovak electricity sector. This is in addition to environmental legislation such as the Environmental Impact Assessment Act and acts on water, air and soil protection, as well as strategic documents issued by the government such as the energy policy, the Strategy for Energy Sufficiency and the Strategy for Increased Utilisation of Renewable Sources.
3.3 Regulatory framework
3.3.1 The basis of the regulatory framework is the primary legislation (such as the Energy Act). RONI then adopts related secondary legislation and issues guidelines or guiding principles detailing the obligations. Technical rules are set out in the Grid Code. Since 1 September 2012 the Grid Code is issued by RONI, before that the Slovak government was the entity responsible for its issuance. RONI also acts as the licence issuing authority.
3.3.2 Competition law in the energy sector focuses primarily on agreements restricting competition and abuse of a dominant position (many significant market players in the Slovak electricity market are historical monopolies with strong market positions).
3.3.3 The Slovak transmission grid, as well as the three regional distribution grids, are essential facilities and their operators (SEPS a.s., Západoslovenská distribučná a.s., SSE - Distribúcia a.s. and Východoslovenská distribučná a.s.) are undertakings in dominant positions. Therefore, access to the grid, and the transmission and distribution of electricity, is regulated to ensure it is operated in a transparent and non-discriminatory manner.
3.3.4 The three main electricity traders (Západoslovenská energia a.s., Stredoslovenská energetika a.s. and Východoslovenská energetika a.s.) were unbundled from the above mentioned DSOs and still hold a significant market share. However, due to the increasing competition caused by the unbundling and liberalisation of the electricity market, they are slowly losing their dominant position.
3.3.5 EU competition law is directly applicable in the Slovak Republic in scenarios where anti-competitive practices may affect trade between Member States.
3.3.6 The latest Antimonopoly office of the Slovak Republic (AMO) case dealing with the abuse of a dominant position in the electricity sector was a DSO who was fined EUR 150,000 for excessive meter reading fees when customers changed supplier.11 This was the first case in which the AMO sanctioned an abuse of a dominant position. Although the RONI regulates prices, AMO has stated that it can apply competition rules any time the competitive market is threatened.
3.4 Support schemes
3.4.1 In order to increase the generation of electricity from RES, support schemes were introduced by the Renewable Act. After fulfilment of the requirements, electricity generators may benefit from preferential connections to regional distribution grids. Please see paragraph 2.1.7 above for further details.
3.5 Recent regulatory changes
3.5.1 An amendment to the Renewable Act was adopted in 2014, stipulating improved conditions for the installation of small energy sources with outputs of 10kW or less in households that do not require support and where these resources cover the majority of their energy consumption. The amendment also broadened the definition of preferred fuel: in addition to renewable energy sources, gas generated as a by-product of a metallurgical production process has been included.
3.5.2 Under the Renewable Act the electricity producers has to follow several obligations each year in order to maintain the entitlement to support (e.g. submit to the regional distribution grid operator a certificate of origin of the electricity, notify the regional distribution grid operator of the characteristic of its planned supply of electricity etc.). According to the above mentioned amendment to the Renewable Act, for not meeting the prescribed obligations an explicit and strict sanction in form of losing the right to receive support for the following calendar year has been introduced.
4. Country Statistics
Figure 1: Generation of electricity in Slovakia12
Click here to view table.
4.1.1 4.1.1 Based on information from the RONI for 2013, more than 50 % of total electricity generation was from nuclear generating stations.
4.1.2 4.1.2 Electricity generation in Slovakia has increased since 2012. In 2013, 28,590 GW/h was produced. However, electricity consumption has decreased since 2012; in 2013 it was 28,681 GW/h. According to the RONI, the generation and consumption of electricity is expected to help support a gradual economic recovery.
4.1.3 4.1.3 Electricity imports reached 13,472 GW/h, with 13,079 GW/h exported. For the fifth consecutive year, the Slovakian electricity system has been dependent on imports, although this is mainly for commercial reasons rather than a lack of installed capacity. The commissioning of the third and fourth units in the Mochovce nuclear generating station in 2016 is expected to give Slovakia a small surplus of electricity.
Figure 2: Renewable energy sources13
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