328 IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO.
3, SEPTEMBER 2000
Eastern and Western European Policy on Electricity
Infrastructure, Interconnections and Electricity
Exchanges
Thomas James Hammons, Fellow, IEEE, Z. Bicki, V. A. Djangirov, S. Goethe, L. Kapolyi, S. Kiciman, M. Klawe,
Y. Kucherov, V. Y. Kurochkin, Z. Reguly, J. Schwarz, A. Tombor, and N. I. Voropai
Abstract—This paper focuses on the present and future state of
the electric power sector, future development of European power
systems interconnections and power exchanges, cooperation, and
direction of reforming the industry. It discusses the deregulation
process and experience in Scandinavia, electricity infrastructure in
Hungary, challenges to the German electricity system as part of the
western European interconnected system of the Union for the Co-
ordination of Protection and Transmission of Energy (UCPTE), ex-
tension of European interconnections to the Black Sea and central
African countries, together with the development of a Trans-Eu-
ropean synchronized power system as seen from the East. It also
examines the current situation and policy of Russia, Ukraine, Be-
larus, and Moldova taking into account the recently created New
Independent States (NIS). It is based on presentations that were
made on European Policy on Electricity Infrastructure, Intercon-
nections and Electricity Exchanges at the IEEE PES 1997 Summer
Meeting in Berlin (and subsequently updated).
First, development of a Trans-European synchronized intercon-
nected power system as seen from the East is reviewed. Examined
is the UCPTE system of Western Europe which interconnects
synchronously 15 states and the IPS system of Eastern Europe
uniting in parallel operation power systems of 11 states. Then,
policy on electricity infrastructure, interconnections and elec-
tricity exchanges is discussed, taking into account the European
Commission Directive on Internal Electricity Market development
and a planned step-by-step process of national market opening;
where the New Energy Law, the Office of Energy Regulation, and
European interconnections with CENTREL (comprised of grid
networks in Poland, Slovakia, Czech Republic, and Hungary)
and UCPTE interconnection is reviewed. Deregulation processes
in Europe and recent experience from Scandinavia is discussed
as is electricity infrastructure in Hungary where ownership and
organizational structure of the companies of the Hungarian power
system have been constantly changing since 1992. Electricity
infrastructure and electric policy of CIS in European energy space
is then reviewed. Finally, extension of European cooperation to
the Black Sea and Central Asian countries where: i) technological
Manuscript received January 27, 1999; revised July 1, 1999.
T. J. Hammons is with Glasgow University, Glasgow G12 8QQ, Scotland UK.
Z. Bicki and M. Klawe are with the Polish Power Grid Company, Warsaw,
Poland.
V. A. Djangirov and V. Y. Kurochkin is with the Electric Power Council of
CIS, Moscow, Russia.
S. Goethe is with Vattenfall, Stockholm, Sweden.
L. Kapolyi is with the Hungarian Academy of Sciences, Budapest, Hungary.
S. Kiciman is with the United Nations, Geneva, Switzerland.
Y. Kucherov is with the International Laboratory, Budapest, Hungary and
UNIPEDE/UCPTE, Russia.
Z. Reguly and A. Tombor are with the Hungarian Power Companies, Bu-
dapest, Hungary.
J. Schwarz is with Deutsche Verbundgesellschaft, Heidelberg, Germany.
N. I. Voropai is with Energy Systems Institute, Irkutsk, Russia.
Publisher Item Identifier S 0885-8969(00)08441-2.
0885–8969/00$10.00 © 2000 IEEE
aspects of interconnections and ii) extension of European inter-
connection is examined. It is shown that interconnection of Black
Sea Economic Cooperation (BSEC) and Central Asian countries
provides important advantages by contributing to sustainable
energy development.
Index Terms—Electricity exchanges, electric energy develop-
ment, European electricity infrastructure, international electricity
interconnections, power generation.
I. INTRODUCTION
T HE PRESENT stage of development of the electric power
industry in Western and Eastern European countries is
characterized by the tendency to integrate national electrical
power systems and their interconnections. In the last decade,
there has been a substantial shift toward energy market liber-
alization in many countries. Taking into account the European
Directive on Internal Electricity Market development and
the planned step-by-step process of national market opening,
governments and power companies in Europe are preparing for
the future single electricity market.
This paper focuses on the present and future state of the elec-
tric power sector, future development of European power sys-
tems, interconnections and power exchanges, cooperation, and
direction of reforming the industry. It examines in a form not
conveniently referenced in the literature heretofore the dereg-
ulation process and experience in Scandinavia, electricity in-
frastructure to Hungary challenges to the German electricity
system as part of the Western European interconnected system
of the Union for the Coordination of Production and Transmis-
sion of Energy (UCPTE), extension of European interconnec-
tions to the Black Sea and Central Asian countries, together
with the development of a trans-European synchronized power
system as seen from the East. It also discusses the current sit-
uation and policy of Russia, Ukraine, Belarus, and Moldova,
taking into account the New Independent States (NIS).
II. DEVELOPMENT OF TRANS-EUROPEAN SYNCHRONIZED
SYSTEM AS SEEN FROM THE EAST
Development of the electric power industry in Western and
Eastern European countries is characterized by the tendency to
integrate national electric power systems and their interconnec-
tions. For Western Europe, this aspiration is dictated by:
i) Easing the degree of energy dependence due to de-
creasing stocks and the efficiency of production of their
HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES
Fig. 1. European power interconnections.
own power resources, increased distance from centers
of consumption in Western Europe of existing and
prospective sources of power resources (for example in
Russia, Algeria, Iran), and allocation in zones of high
economic risk.
ii) Existence of frozen programs of development of nuclear
power engineering in many countries of Europe (Aus-
tria, Germany, Italy, Switzerland, Sweden and others)
and their rigid subjection to public influence.
iii) Maintenance of comparable conditions of operation
of national electrical power systems in Central and
South-East European countries aspiring to the prompt
entry into the European Economic Union, and others.
The largest interconnected power system in Western Europe
is UCPTE. This connects synchronously operation of a power
system of 15 states of continental Europe. It is illustrated in
Fig. 1. In Eastern Europe, there is the interconnected power
system of UPS (former USSR). This unites parallel operation
of power systems of 11 states. Geographical reasons and
nonuniform distribution of power resources have given rise to
a star-chain structure of the interconnected system. The system
has powerful electrical ties with the national electrical power
systems of the Baltic states, Belarus, Ukraine, Trans-Cau-
casus, Kazakhstan, with connections to the power systems
of Finland, Norway, Mongolia and China, and the region of
the Caspian—Black See Basin. The structure of the European
power interconnections is illustrated in Fig. 2.
During the past 7–8 years, the problem of development of an
East- West power interconnection has undergone a number of
changes. At the beginning of the 1990s, this problem was con-
sidered by an UNIPEDE/UCPTE expert group (SYSTINT) as
a problem of organization of joint operation of two equal part-
ners—UCPTE and IPS/UPS [1]. Subsequently, owing to a deep
economic and energy crisis in Eastern Europe and deteriora-
tion of the functioning of IPS/UPS, the problem was referred
to European institutes with the objective of creating a Trans-
329
Fig. 2. Structure of European power interconnections.
European synchronous interconnected system (TESIS) [2], [3],
first in Western Europe, then in Central and South-Eastern Eu-
rope. Borders of this system can come to the western borders of
UPS (former USSR) in the nearest prospect, 1999.
The parallel operation of IPS/UPS has been broken since the
autumn 1993. New unions were created: IPS Baltic (Latvia,
Lithuania, Estonia), and CENTREL (Hungary, Poland, Slovak
Republic, Czech Republic). The power systems of Eastern Ger-
many (VEAG) and CENTREL have operated in parallel since
the autumn, 1995. Thus, the experimental connection of CEN-
TREL to UCPTE in the autumn 1995 completed the first stage
of development of European East/West power interconnections.
Considering preparatory work discussed in Reference [1], it is
possible to expect restoration of parallel operation of electrical
power systems of UCPTE with those of Greece and former Yu-
goslavia (plus Albania), and also parallel connection of UCPTE
to the electrical power systems of Bulgaria and Romania as well
as to the Ukrainian Island. It is expected that the given connec-
tions for parallel operation will take place by the year 2000.
It is necessary to develop and carry out complex technical and
organizational actions to restore reliable and qualitative parallel
operation of IPS in the East (UPS of former USSR) with part-
ners in the western direction. This will allow restoration and
development of trade relations and export deliveries; will raise
quality, reliability and safety of a functioning power complex
as a whole; will ensure an equality of conditions and competi-
tiveness of the power complex of the East European countries
in new conditions; and will appeal to investors of transnational
corporations [3], [4].
A. European Energy Policy
The political changes of the last decade play a determining
role in a European energy policy. In a strategic long-term as-
pect, the development of energy cooperation between West and
East will be the main influence to policy and competitiveness
of Western industry, and preservation of energy safety of the
Western and Central European countries in the first half of the
next millennium. It is possible to briefly formulate the following
basic rules of a new European energy policy [4]–[6].
330 IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO. 3, SEPTEMBER 2000

i) Increasing reliability of deliveries of power sold by an

investment of capital in the manufacturers and creation
of conditions in development of objects of the joint
property.
ii) Creation of the transnational transport communications
ensuring connection of the identified manufacturer with
identified object of the energy market [7].
iii) Decreasing degree of monopoly of the producers of en-
ergy, which is realized through liberalization and priva-
tization in power engineering.
iv) Decreasing energy dependence (owing to the frozen
programs of development of nuclear power engineering,
major means of decrease or easing of energy depen-
dence of the majority of Western and Central European
countries is a diversification of energy ties).
v) Realization of resource- and power-saving policy. Fig. 3. HVDC Sea Cables between UCPTE and NORDEL (Source:
vi) Creation of emergency supplies of fuel with increase of Eichholtz, A., Focken, B., “Perspektiven der Verbunderwaiterung nach
Norden,” Energiewirtschaftliche Tagesfragen, Vol. 46, (10), 1996, pp.
storehouses (petroleum, gas) in own territories. 630–636).
vii) Formation and realization of uniform rules of interna-
tional cooperation law, with the Eastern European coun-
tries promoting establishment of partnerships and mu-
tual relations between governments and investors.
viii) Standardization of technical requirements.
ix) Regulation of ecological requirements.
x) Preventive anti-crisis policy sold by means of invest-
ment activity, acceleration of information provision,
control of price setting, increase in competition, and
others.
xi) The realization of gas strategy (electric power from the
East cannot be considered as energy replacing gas).
xii) Use of a regional principle, where countries (for ex-
ample in Central Europe), are made out in regional eco-
nomic unions.
xiii) Further interconnection of power systems, aimed at in-
creasing competition, guaranteeing deliveries, and de- Fig. 4. Baltic Ring (Source as for Fig. 3).
creasing risk of long-term obligations (investments).
xiv) Step-by-step strategy for the development of power in- In this aspect, it is necessary to note that in a substantiation
terconnections. of electrical ties between UCPTE and NORDEL, the effect of
optimization of joint operation of thermal stations in UCPTE
B. Analysis of Conditions of Development of Power and hydro stations in NORDEL (see Fig. 3) is pawned. It is a
Interconnections in Europe similar situation for the Baltic Ring (see Fig. 4). There are no
There is a significant distinction in positions of the East and large-scale deliveries of electric power from East or North for
West concerning development of power system interconnec- the West. Interconnection is justified by optimizing joint opera-
tions and their applicability. UCPTE considers creation of a tion of power stations, reduction of power reserve, and evening
power system interconnection, first of all, far an increase in re- out demand. Joint operation of the power system is achieved by
liability and quality of maintenance of supply for its consumers. interconnection of UCPTE - CENTREL - NORDEL - UPS.
In Eastern Europe, the main aspiration for interconnection is an
opportunity for realization of an export potential. C. Further Strategy for Power Interconnection Development
In Western Europe, strong subjection of development of the The European energy policy that was developed at the end of
electric power industry to public influence and high require- the 1980s and beginning of the 1990s and grounded on the prin-
ments for reliability and quality of electricity supply dominate. ciple “step by step” should be subject to updating and careful co-
Rigid conjuncture of the energy market, strategy of development ordination concerning organization of interaction with a power
self-balanced on the electric power of national systems, with ac- interconnection of Eastern Europe. In setting up new structures,
commodation of means of production of electric power close to the principle of nonviolation of the boundaries of existing power
centers of consumption also dominate. systems must be preserved.
For Western Europe, trade of electric power with its delivery The principle of inviolability of energy communication as a
over a distance of more than 600 Km and via more than two whole and electrical in particular must be taken on a basis of
intermediate partners is not favored. East–West interaction, that is, a pledge of social and political
HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES
Fig. 5. Structure and transfer capacity of UPS inter-system transmission lines.
stability on Eastern Europe and a guarantee of energy security
of Western Europe in the long run. This is necessary for the fast
inclusion of the Eastern European electrical sector in the global
investment process.
In summary, European institutes are working to create an in-
tegrated system for Western, Central, and Southeastern Europe,
with borders extending to western borders of UPS by the turn
of the century.
On the basis of international experience and investigations, a
further strategic prospect opens with creation of a synchronous
working system of Western, Central, and Eastern European
countries. The major role at the first stage, on the part of
Eastern Europe, is cooperation of the power companies of
Russia, Ukraine, Belarus, and Moldova, the power systems of
which border on the extending system of European countries
working on UCPTE standards (see Fig. 5).
It is necessary to develop the all-European program of transi-
tion to East-West parallel operated power systems with the basic
technical questions concerned with the maintenance of qualita-
tive regulation of frequency and power, and also reliable opera-
tion of interstate sections.
III. POLISH POLICY ON ELECTRICITY INTERCONNECTIONS AND
ELECTRICITY EXCHANGES
The Polish power sector has undergone a process of profound
transformations to increase economic efficiency and interna-
tional competitiveness.
331
The Polish government accepted in 1996 the scope of power
sector reform presented in the document De-monopolization
and Privatization of the Polish Power Sector, and in April
1997 the Polish Parliament adopted a new Energy Law. The
anticipated changes are to ensure:
i) Further reduction of monopolized areas and their effec-
tive regulation.
ii) A considerable influence of customers on decisions taken
in the power sector.
iii) Development of competition in order to optimize prizes
and maintain investor risk at an acceptable level.
Since 1990 there are more than 30 independent generating
companies, one transmission company (Polish Power Grid), and
33 distribution companies.
The first years of reform focused on decentralization of the
power sector, bringing the level of electricity prices consider-
ably closer to an economic one and introduced a number of
market-oriented elements into the wholesale trade in electricity.
A. New Energy Law
The new energy law, published in June 1997, pertains to all
kinds of energy except nuclear. Of particular importance is the
separation of three functions in terms of policy making, i.e.,
energy policy, regulation and ownership activity (supervision).
The Polish Minister of State Treasury supervises ownership
changes in the sector. The regulation of the electricity and gas
sector is vested in an independent Office of Energy Regulation
332 IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO. 3, SEPTEMBER 2000
reporting to the Prime Minister. The law does not contain
provisions concerning ownership of the companies. As a result
of abandonment of existing regulations, the energy law pro-
vides conditions for expanding activities of power companies
beyond their traditional areas of operation. In order to eliminate
the subsidizing of activities by power sector companies other
than their basic activities, the later is subject to licensing. Full
deregulation of the electricity and gas market is safe-guarded
by the principle of third party access (TPA) to the grid network.
According to the law, open access to the grid network for the
time being is limited to fuels and energy in Poland. The Euro-
pean Directive states that electricity markets in member states
will be gradually opened for international competition.
Third party access is being implemented step-by-step. At
first, competition will be developed in the wholesale electricity
market established in the transmission system (system market).
In the final stage, competition will be developed in the retail
segment. The time necessary to implement fully competitive
regulations depends on economic, social, and technical aspects
of the electricity market operation.
The wholesale electricity market, which has the strongest in-
fluence on price levels, will be first subjected to market mech-
anisms. The principles regulating this market have to stimulate
the development of competition simultaneously providing ef-
fective generating companies with the possibility to achieve rea-
sonable profits. The wholesale system market will be the main
area of shaping electricity prices and will consist of two parallel
functioning segments, a spot (bid) market and a contract market.
B. Office of Energy Regulation
The Office of Energy Regulation is mainly responsible for:
i) protecting the interests of final customers ensuring at the
same time profit making opportunities to effective companies,
ii) maintaining appropriate levels of power supply security over
a long-term perspective, and iii) simulating the development of
competition.
The final customers to whom electricity is supplied will be
free to determine the level of supply quality within the limits
permitted by the general conditions. Changes in the quality of
electricity supply to tariff customers (continuity of supply, other
parameters within the limits allowed by general regulations) can
be subject to negotiations between customer representatives, the
Office of Energy Regulation, and electric companies.
During the initial period, the Office of Energy Regulation will
supervise thoroughly the wholesale tariff, charges for transmis-
sion and transit, and tariffs set by individual distribution com-
panies for final customers.
In a later period, the grid activities of the Polish Power Grid
Company and wire business of distributing companies will be
subject to scrutinized control according to the transmission
tariffs.
Liberalization of electricity prices will be implemented
within a short period.
C. System Operator
As foreseen by the new Polish energy law and in the Direc-
tive of the European Parliament and the Council concerning
common rules for the internal market in electricity to run the
electricity market effectively, both transmission and distribution
system operators is being established in Poland and member
states of the European Union for: i) promotion of competition
(both in the system and local markets) and ii) creation of an ef-
fective marketplace for electricity.
The Polish Power Grid Company is preparing itself to meet
these requirements for its future role as the transmission system
operator with the following functions: transmission provider,
generation dispatcher, operator of the system electricity market,
and supplier of ancillary services to the pool.
According to the European Directive, the operator must be
authorized to control international electricity trades. The system
operator will undertake cooperation in the power sector sta-
tistics, maintaining necessary databases and exchanging infor-
mation with other power companies, operators, and regulator
bodies.
D. European Interconnections
Since the early 1990s, Poland has been very active in the
Vysehrad region of Central Europe, and the Polish Power Grid
Company is one of the founding members of the CENTREL
regional group. Together with CEZ, a. s. of the Czech Republic,
MVM Rt of Hungary, and SE, a. s. of the Slovak Republic, PSE
SA, a. s. of Poland actively cooperates in the field of power
system operational conditions improvement assuming high
quality of power system electricity supply, most efficient uti-
lization of power generating facilities and transmission systems
and promotion of the international electricity exchanges.
An impressive and substantial result of this cooperation was
the interconnection of CENTREL power systems with UCPTE
power systems in October 1995, 2 years ahead of schedule.
The synchronous interconnection of CENTREL with UCPTE
was implemented by a successful five-step strategy.
Step 1 was the official announcement of the wish for par-
allel operation. In December 1991, the leading Czech, Hun-
garian, Polish, and Slovak power companies decided to join ef-
forts in the process of interconnecting their power systems to
the UCPTE system, and announced their wish for parallel op-
eration. In October 1992, they established the regional group
under the name of CENTREL, by signing a foundation charter.
Step 2 was signing the formal agreement with UCPTE. To
prepare for the formal agreement, a UCPTE-CENTREL exec-
utive committee, which is composed of 4 CENTREL members
and 7 UCPTE members neighboring to CENTREL power sys-
tems, was created. This body formulated the Catalogue of Mea-
sures, which defines technical, economical, and organizational
requirements to be fulfilled before interconnection. The Cata-
logue of Measures was signed in October 1992.
Step 3 was the fulfillment of the required conditions. The load
flow, static and dynamic stability system studies, and analyzes
were performed. Continuous improvement in quality of CEN-
TREL system operation was reached in terms of primary and
secondary control.
Step 4 involved carrying out tests and autonomous trial oper-
ation. In September 1993, CENTREL performed successful au-
tonomous system tests together with VEAG of former East Ger-
many. In September 1995, CENTREL performed autonomous
HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES
trial operation tests with very positive evaluation by the UCPTE
technical committee.
Step 5 was to perform the trial parallel operation. In October
1995, the CENTREL power system started trial synchronous
operation with the UCPTE and got from UCPTE the require-
ment to prepare its own Energy Accounting and Control Center
(EA&CC) by October 1996. The trial parallel operation was to
last 1 year from the date of EA&CC commissioning. EA&CC,
located in Warsaw at the Polish Power Grid Company, was suc-
cessfully commissioned in October 1996.
The main tasks of CENTREL, EA&CC are: i) controlling
CENTREL Block balance with respect to the UCPTE and ii) off-
setting and accounting of unintentional deviations within CEN-
TREL Block and with respect to the UCPTE North Center in
Brauweiler.
CENTREL Block balance control is performed by the load
frequency controller in the national control center at the Polish
power Grid Company.
After 7 years of cooperation between CENTREL and
UCPTE, cooperation has proven to be very effective and
successful. In 1997, the Polish Power Grid Company together
with CENTREL partners formally applied for membership in
UCPTE.
A number of EU projects aimed at East/West electricity
trading are underway/under consideration. They include:
HVDC cable Sweden/Poland (underway); 400 kV line between
Slovak Republic and Poland (underway); Lithuania/Poland
HVDC back-to-back connection; Belarus island connection;
Baltic Ring (Trans-European Energy Project); Russia/Germany
HVDC link; and a study on extension of the UCPTE an
CENTREL area.
In summary, Polish reform of the power sector is contributing
to sustaining development and competitiveness of the whole
country economy, harmonizing the integration process with
the European Union, setting solid bases for effective operation
of the power industry, offering new rights for customers, and
creating business opportunities between Eastern and Western
power systems.
IV. DEREGULATION IN SWEDEN
The European electricity market is facing deregulation and
open competition. This is taking place in a situation in which
increase in demand is relatively weak and availability of gen-
eration capacity is good. According to the law of supply and
demand, this entails the risk of squeezed prices.
Since the meeting of the EU Council of Ministers in 1996,
the EU has been working to bring about a competitive and ef-
ficient electricity market in Europe. This has been taking place
in all EU countries. Some countries, including the Scandinavian
countries, have been driving forces and have come a long way.
A. Deregulation and Structural Changes
Deregulation means different things for different countries.
Deregulation does not indicate where one stands, only in what
direction to move.
333
The deregulation process has in only a few years entailed
major structural changes in Northern Europe. Cross-ownership,
acquisitions, and part-ownership have redrawn the map. The
free electricity market is laying the foundation for structural
development and new commercial solutions. The electricity in-
dustry is clearly becoming international.
Network operations are still a monopoly. The pricing of net-
work operations is irrespective of distance and is also supervised
by a special authority in order to guarantee that no unreasonable
prices are charged to the customers. The grid network has been
separated and has been placed in a special publicly-owned grid
company Svenska Kraftnat.
A major change of thinking is involved as one moves from an
old system into a new, more open, system. Companies in former
Eastern Europe have the toughest changes to make. But Western
electricity companies also have to make big changes. Previously,
the customer had to accept the tariff which was entirely based
on internal costs and profit demands. Now the price is set on
a free market. There are still profit demands that set limits for
what costs a company can permit itself to have. The pressure to
improve efficiency increases considerably.
B. Emission Control
EU environmental ministers have arrived at a total reduction
in emissions of greenhouse gases by 15 per cent by the year
2010 in comparison with the 1990 level. The preconditions for
living up to the commitments of the various countries also differ
because the costs of different measures for reducing emissions
of carbon dioxide vary.
Nordic power generation is characterized by extremely low
environmental emissions compared with Western European
emissions. Sweden has low emissions in relation to the other
Nordic countries. Vattenfall’s emissions are moreover very
low in a Swedish perspective because its generation is based
exclusively on hydro and nuclear power. However, electricity
generation capacity in the Nordic power system can vary
sharply from year to year. The reason for this is significant
variations in the amount of precipitation.
Emissions of carbon dioxide 1991 and 2010 in tonnes per
capita/year for EU countries is illustrated in Fig. 6.
C. Links and Exchanges
Transmission links between the countries are well devel-
oped. There is the possibility to coordinate operation of the
Scandinavian system with a large proportion of hydro power in
Sweden and Norway with neighboring systems which are more
dominated by thermal power. This is further developed through
the Baltic Ring Study, which is an EU-sponsored development
study of the future transmission systems in the Baltic region.
The project involves all relevant countries.
So far, the three Nordic countries, through national deci-
sions on deregulation of the electricity market, have created
a common cross border electricity market. Consumers have
free access to any supplier. This means that not only producers
operate across borders but also consumers. This is a strong
extra driving force for changes and restructuring of the market.
334
Fig. 6. Emissions of carbon dioxide 1991 and 2010, tonnes/capita, year.
D. Scandinavian Market
The largest power company in Scandinavia is Vattenfall. It
has a market share of 20%, which is equivalent to 340 kWh/year
in the four Nordic countries of Sweden Norway, Finland, and
Denmark.
The first year for a free Swedish electricity market was 1996.
Experience has been varied and interesting. New players ap-
peared, and there were large price differences during the year.
In a market that is completely open for all consumers to buy
from any supplier and with an open exchange for power trading,
many of the new players have the chance to enter at fairly low
cost. Such a market requires the development of new skills. A
number of different products are being developed in order to
meet the new market’s demands for more customized solutions.
One problem that is accentuated on the free Nordic electricity
market is the impact that national energy and environmental
taxes have on competitiveness in different electricity generating
plants. When taxes and charges are imposed on the production
stage and vary between the countries, competition is distorted.
V. ELECTRICITY INFRASTRUCTURE IN HUNGARY
Ownership and organizational structure of companies of the
Hungarian power system have been changing constantly since
January 1992, the time of transformation to joint stock compa-
nies. At first, there was a holding system controlled by MVM Rt.
By 1995, privatization of the power supply companies began.
The complete separation of the fields of electricity production-
transport-distribution and supply is now underway.
By acceptance of the new Electricity Act of 1994 by estab-
lishment of the Hungarian Energy Office, by elaboration of the
Operational Licenses, and by approval of the power system Op-
erational Regulations, a new regulatory environment has been
created.
IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO. 3, SEPTEMBER 2000
A. Setting Up the Connection to UCPTE
The changed political and economic environment, cessation
of COMECON, and the tendency of the Hungarian economy to-
ward the European Commission required revisions of the former
cooperation. By parallel operation with UCPTE, the Hungarian
power system could solve its unfavorable heritage which re-
sulted from its former operation with the CDO system. Similar
problems have emerged in the neighboring Slovakian, Czech,
and Polish power systems. Thus, the CENTREL cooperation
was established in October 1992.
Concerning parallel operation with UCPTE, there are three
400 kV lines and two 220 kV lines (toward Austria and Slo-
vakia), a new 400 kV line is under construction (toward Croatia),
and preparatory planning of a new 400 kV line is under discus-
sion (toward Slovakia).
The question of re-synchronization of the Greek and former
Yugoslav systems, and the UCPTE interconnection of the Bul-
garian and Romanian systems are of high interest. There is a
400 kV line toward Yugoslavia; and 400 kV upgrading on the
220 kV line toward Romania is underway.
For cooperation with the Ukrainian system, there are one
750 kV line, one 400 kV line, and two 220 kV lines. At present,
radial operation of the Burshtin power plant on the CENTREL
system is realized at 400 kV. This form of operation is planned
to be maintained until upgrading of the West-Ukrainian island
system is completed, and UCPTE approval for connection
of the West-Ukrainian island system to CENTREL-UCPTE
is obtained. The island system will operate later in parallel
with CENTREL-UCPTE. The connection will facilitate the
interconnection of Romania as well.
B. Hungarian and International Cooperation
1) Re-Synchronization of Greek and Former Yugoslav Sys-
tems: Before the beginning of the Yugoslav war, the Yugoslav,
Greek and Albanian power systems operated parallel with
UCPTE (the first two were members of UCPTE). At present
(as a result of the war and Yugoslavia being broken down into
independent states), only Slovenia and Croatia work in parallel
with UCPTE. Serbia, Montenegro, Macedonia, Bosnia-Herze-
govina, Greece, and Albania operate together autonomously;
that was joined also by Romania and Bulgaria in trial operation.
During the war, both East–West interconnection lines for
parallel connection with UCPTE have been seriously damaged.
One other, the Adriatic line (southern interconnection) is
expected to be reconstructed in the near future; reconstruction
of the other line (northern interconnection) does not seem
realistic for the time being.
Both SUDEL mid MVM Rt. perform network analyzes for
technical questions of re-synchronization. According to ana-
lyzes made so far, operation of the Adriatic line at 400 kV seems
to be the precondition of re-synchronization, and installation of
additional power system stabilizers will be prepared for in case
they are necessary according to measurements which are to be
made using Powerlog devices (which are being installed). In this
way, two 400 kV lines (Szeged-Subotica line and the Adriatic
line), will be available for the interconnection.
HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES
2) UCPTE Interconnection with the West-Ukrainian Sub-
system (Ukrainian Island): In November 1993, due to fuel
problems in the Ukrainian system, the CDO system separated
into three autonomous operating subsystems. One of these
three subsystems; the Polish, Czech, Slovak and Hungarian
systems with the East German system (VEAG) and the Western
part of the Ukrainian power system (the “small Ukrainian
island,” peak load of about 1000 MW) operated in parallel.
This kind of operation existed until September 1995 until the
time of UCPTE interconnection with VEAG and the beginning
of CENTREL autonomous trial parallel operation.
3) UCPTE Interconnection of the Romanian and Bulgarian
Power Systems: Romania and Bulgaria have expressed their in-
tention to begin parallel operation with UCPTE. This can be re-
alized through fulfillment of UCPTE requirements. Concerning
the interconnection, detailed network analyzes are underway in
the framework of SUDEL, in which Hungarian experts partici-
pate as well. CENTREL networks have to be taken into consid-
eration in these analyzes for the interconnections to the direction
to UCPTE. Stability assessments have special importance.
UCPTE re-synchronization of the Balkan area (operating as
an island at present), is necessary for UCPTE interconnection
of the Romanian and Bulgarian systems. Furthermore, parallel
operation of the Ukrainian island with UCPTE would be favor-
able from the point of view of the interconnection.
As far as internal Hungarian transmission lines are concerned,
establishment of a 400 kV line Bekescsaba-Sandorfalva is im-
portant both from the point of view of interconnection of the
Bulgarian and Romanian systems and from the point of view of
re-synchronization of the Balkan system.
By re-synchronization of the Balkan system and the inter-
connection of the Bulgarian and Romanian systems, MVM Rt.
would be in a central position within the interconnected power
systems, and would play a central role in the electric energy
business.
4) Cooperation with Eastern Europe: The European Com-
munity and the CENTREL countries, as well as Romania and
Bulgaria, are equally interested in maintaining cooperation with
the successor states of former USSR also in the field of elec-
tricity. Within the framework of a TACIS-PHARE project [8],
the European Community has made a study for cooperation. Ex-
aminations were carried out by collaboration of the countries
concerned; in this way, CENTREL companies and power com-
panies of Estonia, Latvia, Lithuania (the Baltic states), Belarus,
Moldova, Romania, and Bulgaria also joined the work.
C. Ownership and Organizational Structure
The Hungarian power system is comprised of ten power
plant companies (with roughly 7300 MW installed capacity),
and six distribution companies. Generation is based on nuclear
(40 percent), lignite (14 percent), domestic coal (10 percent),
and oil-gas (26 percent) as primary energy resources. Peak load
in January 1997 was 5794 MW. Demand is increasing slowly
(approximately 1.4 percent/annum). The Hungarian power
system has strong network interconnections to neighboring
countries.
1) Joint Stock Companies and Privatization: The first part
of privatization of the Hungarian power industry was completed
335
in 1995. A new ownership structure was formed. The owners
of the distribution companies are: State Privatization Company
(APV Rt.); foreign investors, local municipalities; and MVM
Rt.
2) New Regulatory Environment: The Electricity Act has
formed the basis of electricity regulation since 1994. The Act
defines three levels for the undertakings in the power industry:
licensed and some small unlicensed power stations that gen-
erate electricity for sale mainly to transmission license holders;
licensed transmission company (MVM Rt.); and licensed dis-
tribution (and supply) companies that purchase electricity from
transmission companies and distribute and supply electricity to
their consumers in their licensed service areas.
The Act defines the rights and tasks of the state and authorities
as well: Parliament, Government; Ministry of Industry, and the
Hungarian Energy Office.
VI. CHALLENGES TO THE GERMAN ELECTRICITY
SUPPLY SYSTEM AS PART OF THE WESTERN EUROPEAN
INTERCONNECTED SYSTEM OF UCPTE
The German interconnected power system (peak load
70 000 MW) is made up of the EHV networks of the nine
German interconnected power utilities. These companies
supply approximately 80% of the public demand of electric
energy in Germany. Technical rules for planning and operation
of the interconnected systems are set up jointly by cooperation
within the Deutsche Verbundgesellschaft (DVG) [9]. The
German system forms an integral part of the Western European
power system of UCPTE. Interconnected power systems in
Central Europe are illustrated in Fig. 7.
After the political changes that occurred in 1989/90, the re-in-
terconnection of the German partial electric systems in East and
West was realized in 1995 [10]. Immediately thereafter, syn-
chronous parallel operation, first by way of trial, was started
with the networks of the neighboring countries Poland, Hun-
gary, the Czech Republic, and the Slovak Republic. The power
companies of these four countries are cooperating within CEN-
TREL. Connections to the Scandinavian countries where coop-
eration is coordinated within NORDEL have existed for many
years. Further HVDC submarine cables are under construction
or scheduled.
The German power system situated in the center of Europe
is thus connected through powerful links to the networks of
its numerous neighboring countries. This geographical situa-
tion opens up great economic opportunities to German com-
panies, France, Austria, Switzerland and the Netherlands being
the most important partners. However, the system is confronted
with varying load flows and network strains originating in the
interconnected operation with a large number of adjacent power
companies. Energy exchanges with countries neighboring Ger-
many in 1996 is shown in Fig. 8.
A. Western European System
As an essential part of the UCPTE system, the German
interconnected power system is closely linked with the Eu-
ropean interconnection. Apart from 45 power utilities in 16
European countries, the synchronous area of UCPTE comprises
336
Fig. 7. Interconnected power systems in central Europe.
Fig. 8. Energy exchanges with Germany in 1996.
the mainland part of Denmark (belonging to NORDEL) as
well as the power utilities of the four CENTREL countries. In
1996, the synchronous peak load amounted to 254 000 MW
electricity exchanges between the UCPTE countries totaled
144 TWh and 40 TWh with third countries. The disintegration
IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO. 3, SEPTEMBER 2000
of interconnection in the Balkan region resulting from the war
in former Yugoslavia continues to exist [11]. The UK-System
(GB) comprising England/Wales and Scotland has also been
part of the European system for a long time via HVDC cable
connection to France.
This synchronously operated power system ranks today
among the largest power systems of the world. Its size gives
rise to organizational problems that have to be solved. In addi-
tion technical problems such as inter-area oscillations that have
been observed for some time require careful consideration.
B. TESIS
Further extensions of the European synchronous area have
already emerged. During 1997, the North African Maghreb
countries Morocco, Algeria and Tunisia were interconnected
with Spain via an AC cable across the Straits of Gibraltar.
Requests from Bulgaria and Romania for parallel operation
with UCPTE/CENTREL are currently being considered by a
Technical Committee with regard to their feasibility. A large
one-frequency-area will be emerging soon, much larger than
that just covered by the members of UCPTE and CENTREL.
This Trans-European Synchronously Interconnected System
(TESIS) must nevertheless follow the same basic frequency
control rules set up by UCPTE.
More projects aiming at the interconnection with further
Central/Eastern European countries are being investigated in
the framework of studies that receive partially financial support
from European Union funding programs. A comprehensive
study was to create a strategy for the development of the power
exchange facilities between the extended Western European
and the Eastern European power systems. It has not defined
any final synchronous or asynchronous interconnection but
many different variants have been analyzed both technically
and economically [8]. Projects like the “Baltic Ring,” as well
as ring systems around the Mediterranean and around the Black
Sea are also under investigation and seem to be no longer
utopian.
C. Future Challenges
All these developments have not only to be considered in the
light of their technical feasibility; the economic efficiency of
projects has also to be guaranteed, and account has to be taken
of the fact that the total system must not suffer any disadvan-
tages. Interconnection must maintain its important function to
be the backbone of a reliable supply of electricity to all cus-
tomers. Environmental constraints already lead to restrictions
in the construction of new tie lines and will require a heavier
loading of the existing system components.
Another aspect that gains increasingly in importance is the
question of an appropriate nonbureaucratic form of organiza-
tion to ensure a high degree of security and quality of intercon-
nected operation by flexible reactions. There is no question that
the number of players in interconnected systems operation will
increase and that there will be a growing interest of third par-
ties in participating in the use of transmission capacities. The
technical and economic questions of network access and system
services need to be balanced with respect to the interests of
all system participants, without neglecting the requirements for
HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES
sufficient reserve capacities for both generation and transmis-
sion. The Western European System of UCPTE should not lose
its high quality standard that has been taken for granted by some
300 million people for some decades.
The necessity of appropriate rules to be followed by all
players is apparent. In its new statutes, the UCPTE already
differentiates between technical rules required for the proper
functioning of interconnected operation and additional recom-
mendations. Moreover, the new statutes provide for control
mechanisms and even sanctions in case of need.
Besides, challenges from technical, environmental, and eco-
nomic requirements, the measures implemented or initiated in
many countries with a view to the liberalization of the existing
electricity laws will also have a decisive influence on the future
development of interconnected operation in and beyond Europe.
VII. ELECTRICITY INFRASTRUCTURE AND ELECTRIC POLICY
OF CIS IN EUROPEAN ENERGY SPACE
The large scale and dynamics of integration processes in the
area of the electric power industry of the Commonwealth of In-
dependent States (CIS) countries, (primarily Russia, Ukraine,
Belarus and Moldova) with other European countries are deter-
mined by different factors. The main factors are:
• Policy in the sphere of fuel and energy complex for CIS
as a whole;
• Economic expediency of electricity and power exchanges
in Europe;
• Tendencies of change in the electric power industry in-
frastructure of the countries of Western and Central Eu-
rope and also CIS (energy saving, environmental protec-
tion, new energy technologies, the all European electricity
market, etc.);
• Location of fuel and energy resources, power plants, and
consumers of electric power on the European continent;
• Tendencies and principles of the technical and technolog-
ical policy in the electric power sector of the European and
CIS countries;
• Technical and technological aspects of creation and oper-
ation of the interconnections in Europe and CIS (genera-
tion, networks, role of direct current, reliability of energy
supply and energy security, management, etc.);
• Technical, social, environmental and other benefits owing
to operation of electric power systems in bulk intercon-
nections.
Taking these and some other principles as a basis, the elec-
tric policy of Russia, Ukraine, Belarus and Moldova is being
developed, considering the interests of other CIS countries such
as Azerbaijan, Armenia, Georgia, and Kazakhstan. The basic
principles of such a policy take into account economic and other
benefits for all the partners and the open equal partnership of the
countries and interconnections in European energy space [12],
[13].
A. State of the Art and Prospects of Development of the
Electric Power Industry in CIS
A distinctive feature of the CIS electric power industry is its
operation on own fuel and energy resources. The assessments
337
show that existing reserves of fossil fuel can meet the demands
of the electric power industry of the CIS countries in the fore-
seeable future.
In view of historical peculiarities in formation of the electric
power industry and its key role in the functioning and develop-
ment of the economy, governmental leaders of the CIS countries
have signed a special agreement in accordance with which the
industry is considered as the single technological complex.
The heads of governments of the CIS countries make the
Electric Power Council of CIS responsible for coordination of
operation and development of the electric power industries in
the CIS countries, including elaboration of the normative and
technical documentation and study of the problems of coopera-
tion with foreign energy organizations.
The efforts of the CIS countries in the sphere of the electric
power industry are first of all focused on the following important
problems:
—creation of an interstate market of electricity and power;
—provision of joint parallel operation of power systems on
mutually beneficial terms;
— coordination of the programs for agreed future develop-
ment of the electric power industry;
— putting new capacities into operation and introduction of
advanced energy technologies;
— updating and replacement of equipment which has worked
out its resource;
— coordination in the problems of reformation of the electric
power sector;
— creation of the single information space;
— coordination of the price policy for fuel and energy re-
sources and electricity tariffs at the interstate level;
coordination of integration processes of electrical power sys-
tems in CIS with those of other countries and international
interconnections.
Assessments of the prospects for electricity generation and
consumption in the CIS countries are presented in Table I [14].
B. Reformation of the Electric Power Sector in CIS Countries
At present, a reformation of the electric power sector in CIS
countries is taking place. The most essential changes are taking
place in Russia, where the structure of regional energy joint-
stock companies and the Russian joint-stock company “Unified
Power System of Russia” were formed by 1993. According to
the Decree of President of Russian Federation of April 28, 1997,
the reformation of the industry will go on to decrease monopo-
lism and increase efficiency of the competition principles.
In May 1994, the Decree of the President of Ukraine was
signed for reformation of the electric power sector, and in the
beginning of 1995 the National Commission for Regulation of
Relations between Owners and State Bodies in the Sphere of
Electric Power was created. It is aimed at restructuring the in-
dustry on a competitive basis and creation of joint-stock energy
companies.
The work on restructuring the electric power industry is
performed in Kazakhstan, Kyrgyzstan, Moldova and Belarus.
Structural reorganizations in the electric power sector were
carried out in Armenia and Georgia.
338
TABLE I
EXPANSION OF ELECTRICITY GENERATION AND CONSUMPTION IN CIS
COUNTRIES (BILLION kWh)
Joint-stock companies with different types of property are
created in accordance with the operating laws of their partici-
pants. This fact will make it possible in the near future to supply
product without licenses and payment of customs duties on the
basis of intergovernmental protocols. Preparation of the sugges-
tions on creation of joint enterprises for production of fuel and
energy resources and their transportation on the basis of bilat-
eral agreements on cooperation in development of the fuel and
energy complexes is going on.
On the whole, despite certain difficulties, the work on forma-
tion of a favorable legal environment and a normative base for
attraction of investments, access of new independent electricity
producers to the market, and hence, creation of the wholesale
electricity market has been started in the CIS countries.
In the formed economic conditions, one of the problems in
electric power industry development in CIS countries is to at-
tract foreign investments in rational scales and on mutually ben-
eficial terms. This goal can be achieved by:
— Development of an effective order of financing price and
tariff policies;
— More extensive development of electric power export;
— Improvement of the contract base of interstate relations,
including the system of guaranteed payments, which is ac-
cepted in international practice;
— Creation of a stable legislative environment, which would
be attractive for economic interests of foreign investors on
reasonable terms for the CIS countries;
— Settlement of currency and financial problems between
creditors and debtors in the long-term perspective;
— Provision of effective protection of external economic in-
terests of CIS countries by creation of coordinated currency
regulations and custom inspection and by a reasonable tax
policy.
C. Potential Electric Power Exchanges between CIS and
European Countries
The overall potential of electric power export from the CIS
countries up to 2010 is estimated at no less than 30 billion
kWh per year. Possibilities for realization of the surplus elec-
tric power on the European continent will be considered.
IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO. 3, SEPTEMBER 2000
Baltic countries (Lithuania, Latvia, Estonia) had surplus elec-
tric power in the past [15]. Today, they are practically self-bal-
anced in electric power. Taking into account a relatively low
level of energy consumption in these countries and their orienta-
tion at economic independence, any significant export from the
CIS countries to the Baltic countries can hardly be expected.
The demand of the electricity market of the countries of Cen-
tral Europe that received more than 30 billion kWh annually
from former USSR has decreased at present by an order of mag-
nitude. In 1995, it will be recalled, the CENTREL countries
(Poland, Czech Republic, Slovakia, Hungary) were connected
to UCPTE. The electrical power systems of East Germany was
connected to UCPTE even earlier. Romania and Bulgaria are
planning to connect to UCPTE in the near future.
UCPTE now has a positive electricity balance that can be
maintained in the future, even taking into account the connec-
tion of electrical power systems of the Central European coun-
tries. Extensive introduction of energy-saving technologies in
the economy is and will be favorable for the positive balance.
At the same time electric power from the CIS countries
may appear competitive for the electricity market of Western,
Northern and Central Europe due to its low cost. This is
one of the circumstances that explains a great interest of
Russia, Belarus and also Poland and Germany to the presently
considered project of the Russia–Belarus–Poland–Germany
DC transmission line with a transmission capacity of 4 GW.
Growth of electric power export from Russia to Finland is also
planned with almost twice as much transmission capacity of
the Vyborg DC link and its increase to 3 GW.
An essential share of transmission capacity of both existing
and future ties including the mentioned DC transmission should
be considered as intersystem exchanges of power and electricity,
whose portion in accordance with the UCPTE experience is up
to 10–15% of the electricity consumption level in each elec-
trical-power system to be interconnected.
For the period of up to 2010–2020, taking into account
existing conditions and peculiarities, the expected volume
of electric power export from the CIS countries to Western,
Northern and Central Europe can be 20–25 billion kWh annu-
ally, of which 15–20 billion kWh will be exported from Russia.
Under very favorable conditions of the European electricity
markets the total volume of its export from the CIS countries
can increase to 30–35 billion kWh.
The most probable directions of power flows on the European
continent for a long-term period are presented in Reference [16].
D. Technical and Technological Aspects of Formation and
Operation of Interconnections in Europe
From the technical and technological view points at present,
the interconnections of Europe and CIS have been formed, and
this determines a number of specific conditions influencing
principles of their joint operation and development. Taking into
consideration prospects of the electric power industry develop-
ment on the European continent, three bulk interconnections:
UCPTE, NORDEL, and the interconnection of CIS should be
considered.
Each interconnection is practically self balanced in electricity
and power. The structure of generating capacities by equipment
HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES
type in each of them has been formed on the basis of internal
requirements and is rational and sufficient.
The system requirements to the structure and location of
differenttypes of generating equipment, operating in different
zones of the daily load curve, were more fully realized in the
interconnection of CIS that was formed in conditions of cen-
tralized economy of former USSR. Today, this aspect manifests
itself incompletely due to drop in energy consumption in all
the CIS countries. However, in the future, after restoration of
economic activity, it will considerably influence the necessity
to jointly coordinate electrical power system operation in the
interconnection.
Between the interconnection of CIS and UCPTE (taking
into consideration electrical power systems of the countries
of Central Europe) there are quite strong AC ties at 400 kV
and 750 kV, the transmission capacities of which are now
utilized insufficiently. With regard to the planned Russia–Be-
larus–Poland–Germany DC transmission line, it is necessary to
consider in the future the ties between these interconnections
with joint usage of DC and AC lines. In view of a wider
utilization of direct current in the “Baltic Ring” (see Fig. 4),
i.e., in the ties with NORDEL as well, a rather rigid network
structure, resistant to disturbances at the expense of system
control capabilities with the help of DC transmission lines and
FACTS devices in the main AC grid network will be formed.
Taking into consideration possible parallel operation of CIS
with UCPTE and AC interconnection of CIS, it seems expedient
to elaborate common specifications, first of all, with respect to
frequency control. At present these specifications are most strict
in UCPTE. At the same time, experience of the CENTREL con-
nection to UCPTE shows there are no technical constraints—on
meeting these specifications. There are apparently no such con-
straints for the interconnection of CIS as well consisting of in-
terconnection of electrical power systems of each CIS country
operating in parallel.
E. All European Electricity Market
At present, there are three large independent interconnections
on the European continent: UCPTE NORDEL and the intercon-
nection of CIS. The ties between them will become stronger
and will be formed on the basis of direct current or joint uti-
lization of DC and AC transmission lines in combination with
other advanced FACTS devices. This will provide stability of
the main structure of the all-European interconnection to dis-
turbances and its controllability.
The technical and technological peculiarities of the CIS inter-
connection predetermine the necessity of its consideration as the
single technological system whose joint operation with UCPTE
and NORDEL is expedient and possible while meeting system
specifications.
The electric power structure that has been formed and is de-
veloping on the European continent is a technical and techno-
logical basis of the all-European electricity market.
The electric power industry of the CIS countries can con-
tribute greatly to the market formation taking into account favor-
able economic indices of the produced surplus electric power.
The basic principle of functioning of the all-European
electricity market is the equal partnership of its participants,
339
supported by the necessary international legal system which is
based on the statements of European Energy Charter and the
Agreement to Energy Charter.
VIII. EXTENSION OF EUROPEAN INTERCONNECTION TO BLACK
SEA AND CENTRAL ASIAN COUNTRIES
The aim of a power industry is to meet electricity demand at
the lowest cost compatible with an appropriate quality of supply.
The achievement of this objective requires a certain degree of re-
serve capacity to be limited to an optimum level differing from
one power system to another depending on the characteristics
of the main system and contingency assumptions. In an equally
balanced mix of hydro-thermal power generation systems, re-
serve capacity might be 25–30% of the installed capacity.
A. International Interconnections
Interconnection of power systems offers a number of ad-
vantages compared to the situation of independently operated
sub-systems through: taking advantage of demand diversity;
sharing of common generation reserves and optimized expan-
sion of generation; operating at less reserve capacity; optimized
generation unit size; optimized capital investment and reduced
operational cost; improved system reliability; increased quality
of supply; efficient utilization of hydro power and better
management of hydro-thermal ratio in power generation; and
improved environmental effect and contribution to sustainable
development in the context of new energy strategies aiming at
energy security; supply diversity; and environmental protection.
Mutual cooperation, which is the basis for interconnections,
also improves social and political relations among the countries.
The purpose is to harmonize systems of different characteris-
tics in the light of technical, economic and political aspects. The
changing of the world of electricity from liberalization, privati-
zation, deregulation, competition, operation and public opinion
point of view makes interconnections more complex than be-
fore. There are also regional distortions, such as access to pri-
mary fuels, differences in subsidies, taxes, environmental laws
and constraints, legal questions, and investment financing rules
which should be harmonized properly to give benefits of the
interconnections.
B. Power Exchanges in Europe
The total electricity exchanged in Europe has increased con-
siderably to a value of 400 TWh/year. This represents 9% of
total gross electricity production and 10% of the final consump-
tion in Europe.
The progress and operation of system interconnections in Eu-
rope are coordinated by several governmental or international
organizations, namely UCPTE, NORDEL, CENTREL, IPS, and
UPS.
C. Extension of European Interconnection
Under the impact of growing environmental constraints, new
concepts and criteria are applied to assess plans and projects for
meeting future electricity demand. These new concepts induce
decision-makers to develop electricity demand/supply strategies
340
which differ from those that had prevailed in the past. The devel-
opment of such strategies involves not only utilities and govern-
ments but also users, the public, and, in case of actual or poten-
tial trans-boundary implications, the international community.
The economic and energy reforms in Central and Eastern Eu-
rope have renewed interest in the interconnection of the Eastern-
and Western-European electricity networks, more specifically.
in extension of the European system as follows:
• Synchronous Balkan interconnection;
• Interconnection of Balkan grid to UCPTE system;
• Interconnection of Middle East (Syria Egypt, Jordan)
with UCPTE system through Turkey and Balkan
interconnection;
• Interconnection of Black Sea countries and Central
Asian republics with UCPTE system through Balkan
interconnection.
In this regard, some extension possibilities are under study
such as strengthening the UCPTE network, parallel operation of
Albania, Bulgaria and Romania with the UCPTE system, as well
as possibility of an interconnection link between Turkey and
Greece. Studies for the interconnection between Middle East
countries and Turkey have already started.
The Black Sea Economic Cooperation JBSEC), which is
composed of eleven countries (Albania, Armenia, Azerbaijan,
Bulgaria, Georgia, Greece, Moldova, Romania, Russian
Federation, Turkey, and Ukraine) aims at a synchronous
interconnection among its members countries, as well as
interconnections with other neighboring European countries on
the basis of operating criteria of UCPTE, NORDEL, and CIS.
Due to transitional issues, some BSEC countries have been
experiencing electricity shortages, while some others have sur-
plus energy. The installed power capacity of the BSEC region
is around 240 GW, which is composed of hydro, thermal, and
nuclear components with the share of 19, 65, and 16 percent,
respectively.
The extension of the European interconnection to the Cen-
tral Asian countries also concerns the CIS countries, which are
energy rich, but in different resources. In this regard, energy
trade is very important, including electricity exchange and gas
pipelines within this region as well as with other neighboring
countries.
In this context, it is advisable to study the following syn-
chronous interconnection systems and interconnecting tines:
i) Interconnection among Armenia, Azerbaijan, Georgia,
Russian Federation and Turkey;
ii) Russian Federation–Ukraine interconnection;
iii) Turkey–Bulgaria interconnection;
iv) Turkey–Greece interconnection;
v) Bulgaria–Greece interconnection.
The development of the above strategic infrastructure re-
quires a careful step-by-step approach at international level.
The purpose is to harmonize the systems of different character-
istics in light of technical, economic, legal and political aspects.
The related discussion currently focuses on the technical
conditions that need to be fulfilled before system inter-lima can
be generalized. At a later stage, the financial, environmental
and organizational issues will come to the forefront of interest.
IEEE TRANSACTIONS ON ENERGY CONVERSION, VOL. 15, NO. 3, SEPTEMBER 2000
ACKNOWLEDGMENT
The material presented in this paper is based on reports and
documents which contained information presented in a Panel
Session at the IEEE PES 1997 Summer Meeting in Berlin, Ger-
many [18]. The Panel Session was organized and chaired by T.
J. Hammons.
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[3] J. Remondeuluz, “East/West interconnection: The new dimension,” in
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HAMMONS et al.: EUROPEAN POLICY ON ELECTRICITY INFRASTRUCTURE, INTERCONNECTIONS AND ELECTRICITY EXCHANGES 341

Thomas J. Hammons received the degree of ACGI from City and Guides Col-
lege, London, and the B.Sc. Engineering (1st Class Honors, DIC, and Ph.D.
degrees from Imperial College, London University. He also received two higher
honorary Doctorates in Engineering. He is a Member of the Teaching Faculty
of the Faculty of Engineering, University of Glasgow, Scotland, U.K. Prior to
this he was employed as an Engineer in the Systems Engineering Department
of Associated Electrical Industries, Manchester, U.K. In 1978, he was Visiting
Professor at the Silesian Polytechnical University, Poland, Professor of Elec-
trical and Computer Engineering at McMaster University, Hamilton, Ontario,
Canada in 1978–1979, Visiting Professor at the Czechoslovakian Academy of
Sciences, Prague in 1982, 1985 and 1988, and Visiting Professor at the Poly-
technical University of Grenoble, France in 1984.