Bosnia and Herzegovina (BiH) Regulatory and Energy Assistance Project (REAP) - Energy Community Regional Integration

The project aimed to facilitate BiH's integration into the regional and EU energy market. BiH expressed its readiness to participate in the regional and EU market by signing the Energy Community Treaty, which is based on EU Directives and regulations. The main goals of the Energy Community include establishing a stable regulatory framework to attract investors, creating a harmonized space for electricity trade, improving security of supply, enhancing environmental protection, and regulating the market structure of non-EU member countries according to current market development in the EU. To achieve these goals, the Energy Community implemented several initiatives, including coordinated and transparent congestion management, development of a wholesale market on the regional level, and coordination of a balancing mechanism on the regional level. The implementation of these initiatives involved several key activities, including the establishment of the Office for Coordinated Cross-Border Capacity Allocation, development of a wholesale market on the regional level, and coordination of a balancing mechanism on the regional level. Additionally, the Energy Community implemented a regional investment plan, ensured transparency, and designed market structures on the national level to ensure compatibility. Regional activities were also underway, including the establishment of the Coordination Auction Office (CAO), which was the 8th region for capacity allocation coordination. The CAO had a Memorandum of Understanding (MoU) in place, which outlined its establishment, business plan, location, and financing. The CAO also harmonized the method for capacity allocation and conducted a "dry run." Furthermore, the Regional Balancing Market-BalanceEnergyTool for SouthEastEurope was in its initial stages, and the Inter TSO compensation mechanism was functioning. BiH and regional activities focused on market opening, including congestion management and balancing mechanisms. BiH was the only country in the region that applied a pro-rata capacity allocation methodology for congestion management. The balancing mechanism was also a key area of focus, with efforts to inform electricity producers (EPs) about the regional process. Tariffs for the export of electricity were also a concern, with BiH being one of the countries that applied an export fee.