South East Europe: Results of a Study on Power Sector Integration and Market Reform
January 28 2010
Results of a study on power sector integration and market reform in South East Europe were presented to over 30 World Bank staff, on January 25, 2010, in Washington D.C.  Lessons from the Energy Community: Regional Market Design in South East Europe describes how South East Europe (SEE) is pursuing a regional approach to power sector reform by enhancing prospects for integration and electricity trading.

The findings of the study were presented by World Bank’s Lead Specialist for Europe and Central Asia, Kari Nyman. He outlined the development of a Regional Market Design (RMD) and an Implementation Action Plan for participating countries, which is supported by the Energy Sector Management Assistance Program (ESMAP) and the Public-Private Infrastructure Advisory Facility (PPIAF).

Kari Nyman said, “There is a clear preference to engage in country-by-country market couplings - decentralized approach with national control - rather than a direct transition to  a regional, competitive electricity market.”   He stressed the need to pursue power sector integration “realistically” by pursuing a step-by step process that builds trust and implementation capacity over a period of decades.  He said reliable, successful cooperation must come before regional competition and markets.  He also noted the importance of effective implementation mechanisms, citing the Energy Community in SEE and the former Nordel in the Nordic countries.

The speaker highlighted the benefits of short-term (hourly) cooperation (trade) between countries.  Before market programs can be developed, interconnections should be in place and substantial benefits are possible through utility/IPP-to-utility coordination and trading without a regional market.  Experiences in Nordpool and other regions demonstrate that a major part of the benefits achievable through greater integration can be realized through short-term trading.  Doing so requires that utilities from neighboring countries have the capacity and willingness to trade in this way and that creating these conditions is a long-term process that requires leadership from utility managers and governments. 

Nyman, also shared lessons of other regions pursuing similar paths, among other issues:

  • The context and motivation for regional market reform in SEE

  • The design of the proposed Regional Day-Ahead Market and the key role of Transmission Systems Operators

  • Centralized vs. decentralized approaches to increased power trade

  • Developing national markets in parallel with the regional market

  • The challenges of a "top-down" approach to regional market creation

  • Lessons for other regions to facilitate greater power trade and integration


This event is part of a series sponsored by ESMAP's Energy Assessments and Strategies Program (EASP).  Similar events and related discussions will help inform ESMAP’s new Regional Energy Integration Strategies Program which leverages ESMAP/World Bank experience through a global platform to draw, package and disseminate best-practice lessons from regional energy integration efforts around the world.  The event was hosted by ESMAP Regional Energy Team.


Contact: Sameer Shukla, Senior Energy Specialist, ESMAP