State power utility Elektroprivrede BiH (EPBiH) intends to buy electricity from renewable energy power plants and high-efficiency cogeneration plants, allowing virtual power plants to bid for procurement deals as well, in a first such move by a state power utility in the region.
Virtual power plants aggregate the production of multiple smaller power plants, most commonly renewable energy plants, making it easier for their owners, who can be prosumers, to sell the energy they generate. Besides electricity sale, aggregators, through virtual power plants, also offer balancing services.
EPBiH has issued a public call for the procurement of electricity produced from renewable sources and through high-efficiency cogeneration, which is open to all producers, as well as virtual power plants, or aggregators, whose capacities are connected to the grid in Bosnia and Herzegovina, in any location.
Kušljugić: EPBiH’s move will encourage the construction of small facilities for distributed power generation
EPBiH will conduct negotiations with all bidders in order to agree technical terms for electricity deliveries and power purchase periods, as well as the purchase price. An initial ask price is not a requirement for EPBiH to conclude an agreement, and the capacity of the power plant is not limited either. The deadline to apply is September 30, according to the public call.
Mirza Kušljugić, professor at the Faculty of Electrical Engineering at the University of Tuzla, has told Balkan Green Energy News that the decision to allow the aggregation of small producers has clearly triggered competition in electricity generation in BiH.
EPBiH’s involvement in these processes, as a public power utility, is positive, he added.
Large producers and suppliers will start buying green electricity directly from small producers
This will bring about a trend where large producers and suppliers will buy green electricity directly from small independent producers, and offer it on the market. It will certainly encourage the construction of small facilities for distributed power generation, says Kušljugić, who is also a member of the Regional Center for Sustainable Energy Transition (RESET).
The motive behind this move, according to him, is probably EPBiH’s intention to get involved in renewable energy flows which it doesn’t own, but part of the reason is certainly the rise in prices on regional power markets. In recent days, electricity prices across Europe have been hitting all-time highs.
BiH has allowed virtual power plants to join the market
In June, the Independent System Operator in Bosnia and Herzegovina (NOSBiH) adopted a decision, which was later confirmed by the State Electricity Regulatory Commission (DERK), to allow the production of small, distributed power plants, mainly hydropower and solar plants, to be aggregated into virtual power plants, and then offered on the market.
According to Kušljugić, there is a minimum required capacity for trading on wholesale markets, while for export there is a minimum cross-border capacity that needs to be leased in auctions.
BiH doesn’t have a virtual power plant yet, but several such facilities are in the pipeline
“For very small capacities, the costs of trading on regional exchanges are relatively high. That’s why the only way for small distributed power plants to participate in the market is to aggregate their production. The technical term for aggregation is a “virtual power plant,” which does not exist in physical form, but acts as any other power plant,” explains Kušljugić.
Due to exceptionally high electricity prices on regional markets, it is to be expected that the output from virtual power plants will be exported. BiH doesn’t have a virtual power plant yet, but several such facilities are in the pipeline, mainly through private initiatives. However, there is no reliable data on the status of these projects.
Initial activities of aggregators suggest a tendency to export the output of virtual power plants, says Kušljugić.
Of note, the first virtual power plant in the region was set up by KOER in Croatia.