Influence of market coupling with large energy markets on the operation of the Serbian energy system

This paper examines the integration of Serbian newly formed Power Market with the European Power market and the influence that this coupling has on the Serbian energy sector. The integration of the spot electricity markets in Europe, which is well on the way, will lead to multi-area power exchanges that will substitute the local markets, providing the opportunity to increase overall welfare in power trading through market coupling and price coupling of regions. In view of the “target model” that will be enforced in all European markets and the forthcoming coupling/integration of the Serbian and European power market through interconnections with the 4M market of Slovakia, Czech Republic, Hungary and Romania, a price coupling between a Power Exchange and a power pool is implemented in this paper. The benefits and issues of this approach are quantified, and the attained results are compared with the results of a single market approach, in terms of electricity prices, overall social welfare and renewable energy sources integration. Since the overall difference in installed capacity between the systems is not so wast, in this paper it is examined if Serbian power market can influence the price on the 4M markets and by how much.