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Electricity Market and Hydropower in Transitional Countries: the Example of Croatia

The process of power system restructuring and electricity market opening in transitional European countries (former socialist countries and the countries formed after the disintegration of those) has been developing quite intensively for the last few years, following the Western European trends. Relationships in electricity industry in all European transitional countries before the starting of deregulation and privatisation processes were very simple: a full state owned power system utility with absolute monopoly in generation, transmission, distribution, and supply. The basic common characteristics of such utilities were (and in most of them still are): - Low level of work efficiency, as well as a large number of employees. - Relatively good power system security level (generation and transmission part). - Electricity prices are quite below the real level (price regulated by the state, with tariff system which is structured in the way to subsidize households). - Sometimes small share of industrial consumers. - Major political influence on power system utilities. - Technically well versed employees, but low level of organizational and managerial knowledge on all management levels. - Unstable general economic conditions, and in some countries even the political instability. The topic of this paper is an impact of power system restructuring, electricity market introducing, and privatisation of state owned utilities on hydropower sector in transitional countries, examined on the example of Croatia. A short review of common characteristics of deregulation process in transitional countries is presented in the text, as well as the detailed description of the situation in Croatia. The analysis of possible variants of market relations establishing and development is made, as well as of the corresponding repercussions on short-term and long-term hydropower operations and development. Also, the problem of privatisation of hydroelectric sector is examined. Hydroelectric sector often represents a marginal aspect of privatisation in transitional European countries because of a small contribution of hydropower, but not necessarily always. In countries like Croatia, with an average 50% of electric energy production from hydropower, the privatisation mode of hydroelectric assets is very important. Moreover, it is probably the key part of power system restructuring and privatisation process in such countries.

electricity market; hydropower; transitional countries; Croatia; restructuring

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