Central and Southeastern Europe power markets to stay niche, report

Central and Southeastern Europe will provide only niche opportunities as reluctance to integrate pushes out financial players needed to fuel liquidity, Reuters wrote Thursday citing experts. Because of the small size of the region’s roughly dozen individual markets, stretching from Poland to the Balkans, traders say it makes sense to trade Central and Southeastern Europe as a whole. But market dominance by state-owned generators and legal obstacles such as export fees in Bulgaria and a value-added tax in Romania have dented such hopes. With the thin trading volumes in their electricity markets and their lack of appeal for large foreign traders, countries will find it more difficult to attract investors willing to modernize ageing power plants and grids. An executive at a leading bank in London said the financial barriers of entry were too high to make the risk worthwhile. Falling electricity demand due to slow economic growth has been another reason that financial players have pulled out or reassessed plans in emerging Europe, market participants say. The merging of the Czech, Slovak and Hungarian spot markets in September 2012 has provided a deeper, more reliable day-ahead price, traders say. Poland is the next country likely to join. But the bloc may not grow much further unless countries remove barriers to their markets, according to the article.