With the physical reconnection of the Western European and the South Eastern European energy zones in Ernestinovo (Croatia), electricity between Western and South Eastern Europe can be traded freely after a split of more than a decade.  Because of the destruction of power lines and transformer stations in the region, a very limited amount of electricity was exchanged since the 1990s' Balkans wars.  A regional energy market will be more likely to attract much needed foreign investment than individual national economies.

Yesterday’s celebration highlights the end of Phase 1 – the reconstruction of infrastructure.  Following the war, the electricity infrastructure in the region had to be rebuilt in order to allow for the second overlapping Phase 2 – the establishment of independent institutions and regulatory bodies, which are key to the creation of a Regional Energy Market.  These physical and institutional preconditions enable – in parallel – the start of Phase 3, namely the creation of the Energy Community of South Eastern Europe (ECSEE), which has been initiated with the start of negotiations on the legally binding ECSEE Treaty in October.  This would create a European Single Regulatory Space and merge SEE and EU regional energy markets.

Key dates:  

®        1991: destruction and disconnection of electricity grids through war damages 

®        November 2002: signing of the Athens Memorandum on the creation of a regional electricity market until mid 2005. 

®        July 2004: opening of the Mostar substation, together with the Ernestinovo station one of the stepping stones for the reconnection of SEE into a Regional Energy Market 

®        October 2004: reconnection of systems and start of negotiations on ECSEE Treaty 

®        1 November 2004: start of increased trade between regional energy market in SEE and the EU  

®        9 November: official ceremony of UCTE Reconnection at the Ernestinovo Substation 

®        End 2004: agreement on the structure of the ECSEE Treaty (full operation from 1 January 2005 onwards) 

®        End 2005: (planned) end of ratification procedure on ECSEE Treaty 

®        Objective after 2007: sustainable and open market for trading gas and electricity in SEE