Ahead of the Energy Week Western Balkans which will take place on 9-10 October in Budva, Montenegro, we spoke with Simon Shutinoski, CEO of the Macedonian Electricity Market Operator – MEMO about the main challenges in establishing North Macedonia’s first power exchange, the successful launch of the organised electricity day-ahead market and the next steps to develop the organised intra-day market and its coupling with neighbouring intra-day markets.
Q: Reflecting on your five years as CEO and founder of MEMO as the Electricity Market Operator, what were the initial challenges you faced in establishing North Macedonia’s first power exchange?
A: The beginnings were more than seven years ago when the Electricity Market Operator was part of the Macedonian Electricity Transmission System Operator (MEPSO). As the director of the branch Market Operator, responsible for market operations and member of the management board of TSO, my vision was to establish a stand-alone company that would perform the functions of a market operator and to have the possibility to establish and operate the organised electricity market in North Macedonia. The challenge was to build the National Electricity Market Operator (MEMO) in accordance with the law and to expand its activities by introducing and running an organised electricity market in several trading segments.
It is a privilege that despite all the challenges, together with my team we managed to achieve the goals we set at the National Electricity Market Operator – MEMO. We all had a common goal in which we strongly believed: starting the day ahead market for electricity trading and to be prepared for market coupling with EU member states, would greatly contribute to the modernisation of the energy sector.
MEMO commenced operations as a stand-alone company after receiving its first license from the National Regulatory Authority in October 2019. The period that followed was filled with challenges and the world energy crisis that had an impact on our business operations. We have managed to establish the day ahead market and our focus is on achieving a liquid market and its market coupling according to the PAN European model of electricity market.
The National Electricity Market Operator – MEMO continuously invests in the growth and development of the company and the Macedonian energy sector. We cooperate with the entire region of the Western Balkans and Europe to provide the best service for our participants.
I can conclude that the initial and the biggest challenge that we encountered was accepting the idea that in North Macedonia we will introduce a new way of electricity trading that will be transparent with relevant referent prices of electricity on hourly basis. We believed that our electricity market was ready for this new segment and with the support from the relevant institutions, public and the private sector we just needed to deliver a transparent market in line with the best European practice. In this sense, that is exactly what we deliver.
All the steps that have been implemented so far are in accordance with the plan and are the result of the dedicated work of MEMO, the support of our partners from EPEX – one of the largest power exchanges in the Europe and BSP – the Slovenian energy exchange, as well as support from the Government, the Secretariat of the Energy Community, USAID and all stakeholders in the energy sector in North Macedonia. I’m proud that today MEMO is a modern company which is providing the best European practice in electricity trading in our country and it is a part of a big European family of power exchanges. I believe that in the future, our projections and plans outlined will be realised with the support of all relevant stakeholders.
Q: In 2023, MEMO successfully launched the organised electricity day-ahead market. What key factors contributed to this achievement and how has it impacted the electricity market in North Macedonia so far?
A: A key factor in the successful launch of the day ahead market was the dedication of my team to deliver a top-of-the-line experience while fostering a new generation of electricity traders in North Macedonia. Additionally, in a public procurement procedure, we engaged one of the top service providers in this field, EPEX Spot and BSP South Pool. Also given the fact that a lot of international companies already operated on our bilateral electricity market, the support from the private sector was always there.
Now, the Macedonian Day Ahead Market for electricity trading has successfully operated for a year. The first day ahead Trading was on 10 May 2023 with 22 electricity trading companies and traded volume of 256 megawatt-hours (MWh), now more than 30 registered companies are using the benefits offered by the Macedonian power exchange and we have more than average of 2,500 MWh daily traded volume.
From the very first day of trading on the power exchange, we facilitated trading every hour of the day, achieving satisfactory volumes of traded electricity at real market prices. Since then, electricity has been traded on the power exchange every hour, seven days a week. The supply and demand are constantly growing, which is a good indicator of the growth of a young and small electricity market such as the Macedonian one.
The establishment of the Macedonian power exchange and the functioning of the day ahead market is a significant milestone in the operation and understanding of the wholesale electricity market. This framework enables all participants to trade transparently and non-discriminatorily, aligning with the principles of the single European organised electricity market.
Q: What are the next steps and key milestones for MEMO in developing the organised intra-day market and its coupling with neighbouring intra-day markets?
A: MEMO is actively working on introducing new trading segments to the organised electricity market, including the intra-day market. Comprehensive analyses are being prepared to determine the most suitable moment for launching this market segment. All these efforts are related to the development of the existing day-ahead market and its coupling with the European single electricity day ahead market and integration of the intra-day market segment with the European single intraday market.
Q: With the establishment of the Register of Guarantees of Origin and the organised market for GOs in North Macedonia, how do you envision this initiative contributing to the transparency and sustainability of the electricity market?
A: We are actively working on the establishment of the Register of GOs. In coordination with institutions, we are prepared to complete all activities necessary to establish the Registry. Subsequently, we plan to conduct auctions for trading GOs.
Q: The integration of electricity markets is crucial for the regional connection between the Western Balkans and the EU. What specific benefits do you foresee for North Macedonia and its neighbouring countries?
A: Integration of the Western Balkan electricity market is a hot topic in the European Union. This integration will create a larger market for our members.
The benefits are manifold for all countries: it enhances security of supply, increases liquidity, equalises and facilitates cross-border electricity trade, thereby optimising the distribution of cross-border capacities within the energy system.
Connecting with the electricity markets of neighbouring countries and EU member states provides direct access to regional markets, increases market opportunities for participants in the Macedonian electricity market and offers greater flexibility in energy trading. This cooperation between EU member states and Energy community contracting parties is crucial. It represents another step towards the energy integration of North Macedonia and other Western Balkan countries into the European Union.
Q: Looking ahead, what are your expectations for MEMO’s role in North Macedonia’s journey towards EU membership, especially in terms of energy market integration and legislative alignment with European standards?
A: North Macedonia is a country negotiating membership with the European Union. As such, all the projects we implement receive support from the Government, the Energy Community Secretariat and USAID. Our main objective is to align our country with EU standards for full membership. Our plans are progressing towards this goal, and I believe we are positioned as a modern institution operating according to established standards.
More precisely, through projects implemented by MEMO, processes for transposing European regulations into domestic legislation are being conducted, thereby addressing some of North Macedonia negotiating positions in the Euro integration process. The introduction of the organised market, its expansion into additional trading segments and the market coupling projects are key elements in these processes.