Serbia, Slovenia, Hungary agree to combine power exchanges

The agreement was signed on Tuesday in Budapest by the heads of Serbian electricity grid operator Elektromreza Srbije (EMS), Slovenian peer Eles, Hungarian electricity system operator MAVIR and the European Power Exchange (EPEX SPOT) - all four as shareholders of the Alpine-Adriatic Danube Power Exchange (Adex), the government in Belgrade said in a statement after the signing ceremony.

Last month, Adex Group announced the inclusion of Hungarian power exchange operator HUPX alongside its Serbian and Slovenian counterparts. The go-live of the enlarged Adex Group is expected to happen in the second half of 2024, once all necessary permits are secured.

The head of Serbia's EMS, Jelena Matejic, said in a separate statement on Tuesday that the signing of the agreement establishes a strong joint business infrastructure and synergy among the three power exchanges on a project that was initiated back in 2018.

"Besides, there is another important benefit for Serbia - the merging of the power exchanges enables EMS to continue its cooperation with Hungarian transmission system operator MAVIR in the process of coupling its day-ahead market with the single European market, which fulfills one of the pre-conditions for the Republic of Serbia for scrapping the CBAM [Carbon Border Adjustment Mechanism] tax," Matejic noted.

The EU regulation on CBAM imposes administrative and financial costs on importers of CBAM goods into the EU from third countries. There is a possibility of exempting imported electricity it from CBAM if the third country’s market is integrated with the EU market and meets certain conditions related to climate and energy legislation. The exemption conditions also include implementing an emissions trading system (ETS) by 2030.

In December 2022, Slovenia's Eles and Serbia's EMS inaugurated the first regional power exchange for Central and Southeastern Europe jointly with EPEX SPOT. Adex was established through the corporate merging of Slovenian physical day-ahead market and intraday market operator BSP SouthPool and Serbian licensed market operator SEEPEX.

Adex’ headquarters is located in Ljubljana. Yet, with HUPX now becoming its third fully-owned subsidiary, after BSP and SEEPEX, Adex' headquarters will relocate to Hungary's Budapest in the second half of 2024.

The BSP and SEEPEX spot markets host over 60 members engaged in electricity trading, with the trading volume at Adex Group’s markets reaching 16.3 terawatt-hours (TWh) in 2023, Adex has said.