1.1.1 In Slovenia, most of the players in the electricity market are directly or indirectly controlled by the Republic of Slovenia. Despite the government’s privatisation agenda, the companies to be privatised and the exact scope of privatisation and/or strategic partnership remain uncertain. The key legislative framework for the energy industry is provided by the Resolution on the National Energy Programme1 (ReNEP), the Energy Act2 (EZ-1) and the Environment Protection Act3 (ZVO1). Pursuant to the new Energy Act the ReNEP is to be replaced by a new Energy Concept for Slovenia which is to be adopted by the Parliament. In practice, most electricity is purchased under bilateral agreements. Nevertheless, trade is also carried out on the wholesale competitive market via Borzen d.o.o. (Borzen), the Slovenian market operator.
1.2 Structure of electricity market
1.2.1 Pursuant to the Third Energy Package, the regional distribution companies were obliged to unbundle their distribution and supply activities. As a consequence, the following companies were formed:
- Elektro Maribor Energija plus d.o.o. by Elektro Maribor d.o.o.;
- Elektro energija d.o.o. by Elektro Ljubljana d.d.;
- E 3 d.o.o. by Elektro Primorska d.d.;
- Elektro Gorenjska prodaja d.o.o. by Elektro Gorenjska d.o.o.; and
- Elektro Celje Energija d.o.o. by Elektro Celje d.d.
After the unbundling, GEN-I d.o.o. (GEN-I) and Petrol Energetika d.o.o. (Petrol) also entered the electricity supply market and managed to acquire market shares of approximately 22% and 5% respectively in the sector. The unbundling requirements and full implementation of the Third Energy Package were transposed by EZ-1, whereby the creation of two separate (still state-owned) legal entities, governed by two different public authorities (within the meaning of paragraph 6 of article 9 of Directive 2009/72) is envisaged.
1.2.2 Although fully liberalised, the Slovenian electricity market remains rather small and vertically integrated, which creates a difficult environment for new entrants, despite the recent abolition of a general licence requirement for the performance of energy activities by EZ-1.
1.2.3 Once all the required conditions are met, the entrant has to conclude the necessary contracts with the relevant market players.
1.3 Key players
1.3.1 Besides the suppliers mentioned above at paragraph 1.2.1, the key companies operating in the Slovenian electricity market are:
- Elektro-Slovenija, d.o.o. (ELES), the Transmission System Operator (TSO);
- SODO d.o.o. (SODO), the Distribution System Operator (DSO);
- Elektro Celje d.d., a distribution company;
- Elektro Gorenjska d.d., a distribution company;
- Elektro Ljubljana d.d., a distribution company;
- Elektro Maribor d.d., a distribution company; and
- Elektro Primorska d.d., a distribution company;
- Holding Slovenske Elektrarne d.o.o. (HSE), a generation company and
- GEN energija d.o.o. (GEN), a generation company.
1.3.2 The five electricity distribution companies own the distribution grid and rent it to the DSO, who operates it as a public utility service.
1.3.3 All the generators, distributors and suppliers, as well as the TSO, are predominantly or wholly state-owned and no international investment is present. Due to the level of state ownership, the whole electricity sector is arguably fully vertically integrated.
1.4 Current issues and drivers
1.4.1 Despite unbundling and the entry of two new suppliers into the market, the Slovenian electricity sector could benefit from privatisation and/or further market liberalisation. Even where companies are not state-owned, as in the cases of GEN-I and Petrol, the state may still be able to influence their decision-making. Despite privatisations in the electricity sector having been announced in 2012 by the previous government, no serious privatisation efforts were initiated. This may be in part because the companies in the energy sector are among the most profitable of the state-owned companies. Further, privatisation faces opposition from stakeholders as well as trade unions, making it a politically sensitive issue.
1.4.2 While the transmission and distribution grid have generally been able to sustain the transmitted volumes, maintenance and technological improvements require significant investment. According to the Ministry of Infrastructure and Spatial Planning4, EUR 667.3m of investment was expected during the course of 2013, of which EUR 62m was expected to be invested in transmission infrastructure and EUR 105.6m in distribution infrastructure. A further EUR 500m was allocated to supporting generation, with EUR 221m for the Šoštanj thermal generating station (TEŠ6), which is currently under construction, but facing significant financial problems, EUR 73.7m for the nuclear generating station in Krško (NEK) and EUR 15m for the construction of a new hydro generating station on the lower Sava River (HE Mokrice). The government is incentivising these investments through bilateral concession agreements and in order to acquire financing loans from EBRD, Slovenia is granting state sureties (e.g. for TEŠ6).
2. Sector analysis
Structure of generation sector
2.1.1 All generation is carried out by two companies, Holding Slovenske Elektrarne d.o.o. (HSE) and GEN energija d.o.o. (GEN), which are both 100% state-owned.
2.1.2 Although HSE is not active in the distribution or supply sector, GEN owns 50% of GEN-I (the other part being owned by Petrol through IG Energetski Sistemi d.o.o.) which is the current market leader in the electricity supply market.
2.1.3 HSE and GEN operate separate generating stations. HSE operates the hydro generating stations on the rivers Soča, Drava and lower Sava as well as the two major thermal generating stations in Šoštanj (779MW) and Trbovlje (125MW). GEN operates NEK (the nuclear generating station in Krško), the thermal generating station in Brestanica and two hydro generating stations on the river Sava.
2.1.4 NEK, the only nuclear generating plant in the country, produces 24.2% of all electricity generated in Slovenia. The remaining generation comes from hydro generating stations (28.1%) and thermal generating stations (40.3%). The overall electricity generated in Slovenia amounts to approximately 16,000 GWh per year. The key hydro power plants are located on the rivers Drava (Dravograd, Vuzenica, Vuhred, Ožbalt, Fala, Mariborski otok, Zlatoličjeand Formin), Sava (Moste, Mavčiče, Medvode, Vrhovo, Tacen, Boštanj and Blanca) and Soča (Doblar, Doblar 2, Plave, Plave 2 and Solkan). The rest is produced by small generating stations with a capacity of less than 10MW.
2.1.5 NEK is 50% owned by a Croatian company named Hrvatska elektroprivreda d.d. and 50% by GEN and only half of NEK’s generation counts towards the Slovenian market.
2.1.6 As the production of electricity hardly meets the electricity demands of the Slovenian market, investment in new or reconstruction of old generating stations is a frequent topic of debate.
2.1.7 Slovenia is also intensively working towards meeting its obligations to produce 25% of electricity from renewable sources by 2020. As part of this, a number of new generating stations / upgrades to existing ones are to be built (including those detailed at paragraph 1.4.2 above) as well as new gas generating stations. However, the construction programme is facing several challenges, with most of the issues related to financing. The prioritisation of nationally significant projects and policies on spatial planning installation are set out in the 2030 National Energy Programme, which at the time of writing had not yet been formally adopted by the government. If the programme is successful, and subject to the planned grid capacity investments, Slovenia will be in a position to export much of its newly generated electricity to Italy and Croatia.
Structure of transmission sector
2.2.1 The transmission network is understood as a high-voltage electricity network extending from a generator to the distribution network or to a user of the network, as well as a connection between a neighbouring transmission network and the distribution network or a user of the network. ELES, a 100% state-owned limited liability company, is the TSO and owns the 400kV and 220kV transmission networks as well as the majority of the 110kV network (approximately 31% of the 110kV transmission network is still owned by distributors and generators). As the TSO, ELES also provides an hourly balancing mechanism, the detailed rules of which are set forth in the transmission grid operating instructions (Sistemska obratovalna navodila) issued by ELES.
2.2.2 Access to the transmission network is further regulated by the Regulation on the Method for Implementing the Public Service Obligation relating to the Activity of the Transmission System Operator in the Field of Electricity5. In accordance with its public service obligations and the principle of regulated third party access, ELES must grant third parties non-discriminatory access to the transmission grid in a transparent manner. Under the EZ-1, the TSO may refuse access to the network only due to technical or operational restrictions on the network or on the basis of the principle of reciprocity. Consequently, ELES makes decisions on a first-come first-served basis. Third parties must enter into a contract with the TSO before they are given access to the network.
Cross border issues
2.2.3 In 2011 Slovenia was a net exporter of electricity, exporting approximately 1.3GWh per year6. Slovenia has three cross-border interconnections with Austria, two with Italy and eight with Croatia, all of which are managed by ELES. The first connection between Slovenia and Hungary, a new 400kV double circuit line from Cirkovce (Slovenian border) to Pince (Hungarian border), should be completed by 2016.
2.2.4 Cross-border supplies are notified to ELES in the format approved by the Energy Agency of the Republic of Slovenia (EA) by virtue of an operating schedule. Interconnectors with foreign transmission systems are operated by ELES, based on agreements it has entered into with the corresponding system operators.
2.3.1 The distribution network is understood as the network extending from the transmission network to end customers. From March 2007, SODO has performed the tasks of the DSO as a public utility service. SODO is a 100% state-owned limited liability company. It is mainly responsible for: providing distribution services; the maintenance and development of the distribution network; guaranteeing long term capacity demands and the security of the network; ensuring non-discriminatory treatment of network users; providing relevant data to potential network users; and anticipating network usage and adjusting capacities
Structure of distribution sector
2.3.2 There are five regional companies which own the distribution network infrastructure and are sub-contracted to provide distribution services for SODO: Elektro Celje, Elektro Gorenjska, Elektro Ljubljana, Elektro Maribor and Elektro Primorska. Despite the unbundling of electricity supply activities from distribution, these companies are majority-state owned and remain under effective state control.
Although the majority of the suppliers are predominantly state-owned, the market entry of GEN-I and Petrol, and the complete liberalisation of the electricity supply market, provided a more competitive environment as GEN-I and Petrol have been able to offer lower electricity prices.
Structure of supply sector
2.4.1 From 1 July 2007, domestic customers may choose their electricity suppliers and the type of electricity supplied. The Slovenian Competition Protection Office (CPO) found that, at that time, the five distribution companies (which at the time were also suppliers) were engaged in concerted practices and had simultaneously raised their prices on 1 January 20087. Currently customers may choose between seven suppliers. Only open agreements are used on the retail market and a licensee still has the obligation to supply electricity to end users and to large industrial users.
2.4.2 The increase in competition has been accompanied by severe scepticism, riding on fears that cheaper foreign electricity would endanger the Slovenian electricity generators and suppliers. Therefore, despite the interest to welcome new entrants into the market, these companies can still have some difficulties associated with such prejudices and the small market size.
2.5 Energy exchange/trading
Structure of trading market
2.5.1 Pursuant to the Regulation on the Public Service of the Electricity Market Organisation8, entities wishing to trade in electricity must be part of Borzen’s balancing scheme (bilančna shema) to be entitled to enter into agreements for the supply or purchase of electricity. The balancing scheme is a hierarchical arrangement of the organised market, where relations between the members are regulated through membership agreements.
2.5.2 The rules for the operation of the electricity market9 regulate the rights and obligations of the market operator and its members. Borzen was responsible for all energy exchange activities until November 2008, when responsibility was passed to the newly established BSP Regional Energy Exchange, which is currently owned by Borzen and ELES. From May 2008, Borzen has also supervised the management of the balancing scheme, the recording of closed contracts, the details of the indicative operating schedule, imbalance settlements and payments.
2.5.3 In general, the electricity market is divided into a wholesale market and a retail market. Participants in the wholesale market trade through closed contracts (seller and purchaser define fixed amounts of electricity which is traded in a specific time period), while only open contracts (quantities of electricity are not set in advance, therefore payments are dependent on the quantities transferred) are used for trades in the retail market. Trading in the wholesale market is carried out in one of two ways, either through the organised market (the Borza) or bilaterally. Bilateral contracts can be executed using standard-form contracts or as special agreements between electricity suppliers and customers with the principal contractual obligations (i.e. prices and volumes) being reported to Borzen. Contracts can be on a daily, weekly or yearly basis.
2.5.4 Most of the electricity trading in Slovenia is performed bilaterally. Trading is physical in the daily market and both physical and financial on the futures market. The ISDA/EFET standards, or any other standards, may be used, depending on the memberships of the participants.
2.5.5 The established electronic trading system allows continuous trading (supply and demand being constantly matched) and provides the basis for the next-day electricity market. This involves trades for electricity that are made on one day to be generated and consumed the following day. The envisaged trading methods are continuous trading and auctions with bid phases. Standard products, such as base load electricity, peak load electricity, night-time electricity and electricity for individual hours, are traded on the organised market.
Data on traded volumes and price differentials
The trade volumes in 2012 on the organised national market increased by 11.5%10. This was faster than in the 2007 to 2011 period, when the average growth rate was 9.7%. The overall traded volume in 2012 was 81,504.20GWh. The price differential between positive deviations (C+, EUR 60.44 per MWh) and negative deviations (C-, EUR 44.31 per MWh) amounted to EUR 16.13 per MWh in 2012, a decrease from the EUR 33.54 per MWh differential in 2011.
Slovenian suppliers also trade on foreign electricity markets, including the European Energy Exchange and the BSP SouthPool Regional Energy Exchange markets. GEN-I, for example, bought and sold over 3.3GWh in Germany and Austria, 2.5GWh in Bulgaria and Romania, 1.1GWh in Hungary and 2.5GWh in other Southeast European markets in 2010.
2.5.6 Since April 2005, ELES, as the TSO, has allocated cross-border capacities on the basis of daily, monthly or yearly auctions that are organised by the market operator, Borzen. New rules on the mode and conditions of cross-border capacity allocation came into force in June 200711. These rules regulate the participation and execution of the auctions and aim to achieve an efficient allocation of cross-border capacities. To participate, each company must sign either a balancing agreement with the market operator or a compensation agreement with an existing member of the scheme. The participants are entitled to provide limited offers (i.e. specifying the maximum price for a certain capacity) or so called ‘all or nothing offers’ which are only valid if the whole of the specified capacity is available for the specified price.
2.5.7 The Italian and Slovenian power exchanges and market operators (GME SpA and Borzen respectively), jointly with the Italian and Slovenian TSOs (TERNA and ELES respectively), launched a market coupling project on the Slovenian–Italian border. The project started on 1 January 2011 and established an allocation of daily capacities through a market coupling model that simultaneously permits advance allocation of physical daily transmission rights and the clearing of energy bids and offers and has increased the efficiency of the daily capacities allocation on the Slovenian–Italian border.
3.1.1 The Ministry of Infrastructure and Spatial Planning, Directorate for Energy is the government body responsible for Slovenian energy policy. It is supported by the EA as the regulatory authority supervising and regulating the field of electric energy.
3.1.2 The responsibilities of the government and the Ministry of Infrastructure and Spatial Planning with respect to energy policy include:
- drafting and proposing legislation in the energy sector and supervising its implementation;
- drafting energy policy documents as well as co-ordinating and supervising their implementation;
- formally adopting energy policy documents and action plans;
- formally adopting secondary legislation within the limits of the Energy Law; and
- following the developments in the field of renewable energy sources and promoting their use.
3.1.3 The EA’s scope of responsibilities in accordance with the EZ-1 are mainly:
- issuing general legal acts in relation to public utility services (tariff systems, methodologies for the determination and calculation of network charges and recognised costs and determining the shares of particular sources of production to make up the overall generation);
- approving the Rules on the Determination of Capacities of the Interconnection Grids, the System Operating Instructions, the General Requirements for the Supply and Consumption of Electricity from the Transmission and Distribution Networks, the Tariff System and the Rules on the Operation of the Electricity Balancing Market;
- solving disputes in relation to network access, network charges, alleged breaches of general conditions of supply and operating instructions of the system network, complaints against decisions on network access adopted by system operators and end users;
- supervising (i) the independence of system operators and their work (time needed for repair and granting access to the network); (ii) published information on interconnectors, grid capacities and utilisation; (iii) the effective separation of distribution and transmission from generation and supply; and (iv) the transparency and competitiveness of the energy sector; and
- issuing certificates of origin and green certificates.
3.1.4 In the event of a dispute about any decisions made by the EA, appeals may be made to the Ministry of Infrastructure and Spatial Planning.
3.2 Key legislation
The EZ-1sets out the general principles of the Slovenian electricity market and constitutes the framework for most energy-related matters. The provisions of the Environment Protection Act12, (ZVO1) must also be adhered to when planning any investments in the energy sector.
In addition to the EZ-1, electricity trading, distribution and supply are governed mainly by the following regulations, which were annulled by the EZ-1 but are pursuant to the latter still to be utilised until new legal acts (bylaws) are adopted:
- the Regulation on the method for the implementation of public service obligations relating to the organisation of the electricity market13 sets out the legal framework for Borzen’s public service obligation to organise the electricity market;
- the Rules governing the functioning of the organised electricity market14;
- the Regulation on the method for implementing the public service obligation relating to the activity of the transmission system operator in the field of electricity15 sets out the rights of ELES as the TSO;
- the Regulation on the method for the implementation of public service obligations relating to the electricity distribution system operator and public service obligations relating to electricity supply to tariff costumers16 sets out the rights and obligations of SODO as the DSO;
- the Rules on the mode and conditions of cross-border capacities allocation17 regulate the public auctions regime in relation to the cross-border allocation of capacities; and
- the Regulation on the issuing of declarations for production units and of guarantees of origin18 determines the rules and conditions for the electricity produced from renewable energy sources to obtain a guarantee of origin.
3.3 Regulatory framework
3.3.1 Already from December 2006 onwards, no licence was required for wholesale electricity trading, but was still required for trading with end users as well as other energy related activities. The EZ-1 abolished the general licence requirement for all energy related activities as it was recognised as representing an excessive administrative burden.
3.4 Support schemes
3.4.1 The EZ-1 sets out the legal framework for electricity generated from renewable energy sources and thereby fully implements Directive 2001/77 as well as Directive 2009/28. Pursuant to article 4(21) of the EZ-1, renewable sources of energy include wind, solar, geothermal, waves and currents, tidal, hydro or energy generated from biomass, landfill biogas, biogas generated in the course of sewage removal or treatment processes, or the decomposition of plant or animal remains, during the conversion process of the remains into biogas.
3.4.2 Pursuant to the EZ-1, the government will adopt national targets for the future consumption of electricity generated from renewable energy sources over the next ten years. The ReNEP prescribes the future operation of institutions dealing with energy supply and determines goals and mechanisms for ensuring the reliable, competitive and environmentally friendly supply of electricity services. The government adopted an action plan for renewable energy sources for the period of 2010 to 2020 based on Directive 2009/28 and the obligation it set to achieve a 25% share of renewable energy (Action Plan). To date hydro generating stations are the principal source of renewable energy in Slovenia, but the potential for biomass remains high, as approximately 60% of the Slovenian landscape is covered in forests.
3.4.3 In order to receive support, producers of electricity have to prove that their electricity is generated from renewable energy sources by obtaining guarantees of origin, issued by the EA. The guarantee of origin is valid for a period of five years. Only one guarantee of origin can be issued for a particular quantity of electricity generated from a particular generating station.
3.4.4 Pursuant to the EZ-119, support can be granted if:
- the cost of electricity generation exceeds the electricity price on the market; and
- installed capacity of a generating station does not exceed 10MW (20MW for co-generation with high efficiency and 50MW for wind).
The Regulation on Support20 which pursuant to the EZ-1 is still used until a new regulation is adopted, determines the detailed definition of support, the method of determining prices for guaranteed purchases, the level of support provided and ways of obtaining such support.
3.4.5 Support cannot be granted to generating stations which began operating more than fifteen years ago and is granted for a maximum period of fifteen years (or a shorter period), depending on the date of first operation. It may be granted either:
- as a guaranteed purchase of generated electricity supplied to the grid for generating stations whose nominal electrical capacity is lower than 5MW; or
- as financial payment. Support is provided based on electricity generated which such generating stations (i) supply to the grid, (ii) sell on the market or (iii) use on their own premises. Reference costs (in EUR per MWh) form the basis for: (i) the price determination stipulated in the contracts for guaranteed purchase, and (ii) the amount of payment specified in the contracts.
3.4.6 Reference costs in relation to solar PV generating stations have been and continue to be significantly reduced. Multiple regulations21 amending the original Regulation on Support22 implemented changes, so that reference costs were reduced by 30% between 1 January 2012 and 30 June 2012 and by 52.45% between 1 July 2012 and 31 December 2012. Ongoing reductions continue with an automatic reduction of 8% to be applied on 1 January and 1 July of each year.
3.4.7 The ReNEP and Action Plan set out a number of measures and instruments to increase the share of renewable energy sources. These include an investment subsidy for renewable energy sources (on the basis of CO2 payment relief or a direct subsidy), credit facilities with lower interest rates for renewable energy investments and ensuring mid-term stability of electricity redemption prices. A similar regulatory system has been introduced for co-generation sources.
3.5 Upcoming regulatory changes
3.5.1 Although Slovenia has not yet adopted a new National Energy Program, steps towards its adoption such as Environmental Impact Assessment requirements have been published. The latter are also to be considered during the process of the adoption of the new national energy concept as envisaged by the EZ-1.
4. Country Statistics
Figure 1: Production of electrical energy in Slovenia from 1992 to 2011 in GWh per year23:
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Figure 2: Percentage market shares of suppliers for 2011 including the changes from 2010 to 201124:
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