The entity ministries of energy have recently finally agreed on the text of the Electricity Law, which should be adopted by the state authorities. In addition, they have agreed to the establishment of a national electricity exchange.
Source: klix.ba
The Electricity Law and the electricity exchange are conditions for the European Union to exempt Bosnia and Herzegovina from the Carbon Border Adjustment Mechanism (CBAM).
CBAM implies that the EU taxes all imports from outside the EU that result in carbon emissions, including electricity. This means that through such taxation, the money of Bosnian exporters would remain in EU countries. If Bosnia and Herzegovina fails to meet the mentioned conditions, CBAM will apply to it starting next year. As a result, the losses for Bosnia and Herzegovina could amount to billions of BAM.
In addition to these conditions, to avoid CBAM, Bosnia and Herzegovina must establish an emissions trading system (EU ETS), which has existed in the EU since 2005. This system allows companies to buy and sell quotas or the “right to pollute” from each other. In this way, the budgets of Bosnia and Herzegovina would be filled, instead of the EU’s.
What will the exchange mean for citizens?
The general public is unfamiliar with what the formation of an electricity exchange will mean for citizens and businesses. The Ministry of Energy, Mining, and Industry of the Federation of Bosnia and Herzegovina (FMERI) responded to this question for Klix.ba. They first explained what it will mean for citizens.
“An exchange allows the price of electricity to be determined publicly and transparently, based on supply and demand, which in the long term can lead to more harmonized and stable prices. Citizens will not immediately feel changes in their bills directly, but this process inevitably brings several important benefits for everyone. Greater competition among suppliers can also mean better conditions for end consumers in the future,” they stated.
Furthermore, as they added, stronger regional market integration contributes to more secure electricity supply. With changes in the energy market, they explained, indirect benefits for citizens are also possible, such as lower electricity prices for businesses, which could result in lower prices of their products and services for end consumers.
What will the exchange mean for businesses?
FMERI further discussed what the formation of the electricity exchange will mean for businesses.
“Businesses will have the opportunity to choose between multiple electricity providers and sign more favorable contracts, which can significantly reduce their costs, especially in energy-intensive industries. The exchange also enables greater flexibility, transparency, and market competition, giving businesses tools to better plan costs and reduce risks. This makes them more competitive both domestically and internationally,” they emphasized.
They noted that the formation of the electricity exchange is an important step toward establishing the EU ETS. We asked what the entire power system of FBiH will gain from the formation of this exchange.
“The entire energy sector gains a platform for more efficient and fair functioning. Instead of prices being determined by closed bilateral agreements, everything now takes place publicly, through supply and demand, which increases competition and market efficiency. The exchange also facilitates easier connections with neighboring markets, which strengthens our energy stability and opens the door to greater exports and better integration into the European energy system,” they stated.
Headquarters in Mostar
In response to the question of why it was decided that the exchange headquarters will be in Mostar, they emphasized that institutions responsible for the power sector are distributed throughout the country – the transmission company is in Banja Luka, the system operator (NOS) is in Sarajevo, and the state regulatory commission is in Tuzla.
By choosing Mostar as the seat of the exchange, they believe, the practice of evenly distributing institutions across the territory continues, contributing to balanced development and representation of all parts of Bosnia and Herzegovina.