- K O S O V A N T R A N S M I S S I O N S Y S T E M & M A R K E T O P E R A T O R - O P E R A T O R I I S I S T E M I T, T R A N S M I S I O N I T & T R E G U T T Ë K O S O V Ë S -

KOSTT JSC Functioning

Developments

Perspective

New York

27 October ‘2010

Fadil Ismajli Chief Executive Officer

USA – Kosovo

Investment Forum -

27 October 2010

Legal & Regulatory Framework in Kosoo

2

July 06

Establishment of

ITSMO

July 04

Establishment of

Energy Regulatory Office

Dec 04

Establishment of

Ministry of Energy & Mining

Primary Legislation in Energy Sector in Kosovo (June 04)

- Law on Energy -

- Law on Electricity -

- Law on Energy Regulator -

Nomination

Licensing

Economic regulation of the

energy sector

Designing sectors’

developments strategies and

policies

Operation of the electricity

system and electricity

market

KOSTT and its functions

3

• KOSTT JSC is responsible for:

– Bulk transmission of electricity on HV

network and other ancillary services

(…secondary regulation, etc.)

– Maintenance & development of TS

– Operation of Kosovo electricity system

– Balancing (demand = supply)

– Operation of electricity market

– Congestion management (allocation of

interconnections)

License obligation

-development of rules, codes, etc.-

• Market Rules – OP for implementation of rules

• Grid Code & Metering Code

• Electrical Standards Code & Technical Equipment Code

• Distribution Code (in cooperation with DSO)

• Technical performance indicators

• Commercial Agreements

• Long-term Power Balance (& PB on annual basis)

• Business Plan of KOSTT (2008-2013)

• Connection Charging Methodology

• Transmission Network Development Plan

• Other documents under preparation/under approval

4

Access to the Transmission Network

• KOSTT will offer its transmission capacities for all users

EC Directive → Law on Electricity → TSO License

– Cost reflective and regulated tariffs & charges

• Transmission Use of System Charges (EROs Tariff Methodology)

• Physical connection to the network (KOSTTs Charging Methodology)

Possibilities

– Connection of consumption site (industry, manufacturing, etc.)

– Connection of generation units

• Cross border related mechanisms (CB principles & rules)

– Parties’ access is granted following the fulfillment of technical &

financial criteria

5

Transmission Network Master Plan 2010-2025

Investments

Based on future developments of Generation, demand, regional electricity

market, significant investments on Transmission System of Kosovo

are needed:

Investments planed for the time period 2010-2015 are:

• 100 Million € (Network reinforcements 400kV,220kV 110kV, System

Support, refurbishments etc.)

Additional Investments needed for the time period 2016-2025

• 50 Million € for 400 kV network expansion

• 70 Million € for 110 kV network expansion

TOTAL INVESTMENTS FOR TIME HORIZON 2010-2025: 220 Million €

Transmission Network 2010

Transmission Network Master Plan 2010-2025

Malisheva

Drenasi 3

TPP N KOSOVA

Shtime

Mitrovica

Gjilan 5

Dragashi

HPP ZHUR

Network investment results

Fully complaint with GRID CODE and ENTSO-E requirements

security and quality of supply

Support for generation developments

Support for Renewable Energy Integration in Transmission System

Support for Internal and Regional Electricity Market

Reduction of technical losses.

Perspective for investments

• Well developed legal framework (all in compliance with EU legal

framework)

• Strong and autonomous agencies (Regulators, Antitrust, etc.)

• Solid infrastructure and connections (roads, airport, 4h→harbor)

• Very well developed electricity transmission infrastructure - regulated

and easy access to the network

• Natural resources (lignite-14 billion tones, hydro potential, etc.)

• Incentive policies for foreign investments (easy entry, tax, etc.)

• Very high offer of labor – different profiles (English language in

general very well spoken)

• The declining political risk

• Investments in Kosovo – target the markets in region as well

10

Historic Electricity Consumption

& Peak Load

11

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

504

537621

693

690

624603

500

525

550

604

692733

656617

653

755

780

808

892914

970

0

100

200

300

400

500

600

700

800

900

1000

GWh

MW

Year

Year

Similar reflections on

the peak load (MW)

In

10 years

=

double

Energy sector developments

• New generation capacities (lignite fired 1000 up to 2000 MWs; one

HPP more than 300 MW and small HPPs)

• Privatization of electricity distribution and supply company

• Market opening for retail customers (2015 full opening)

• Emerging regional market – wider market, more possibilities

– Development of regional bodies for facilitation of electricity market

and trades

– Development of electricity trading mechanism

12

Role of the KOSTT in Kosovo's energy

sector

• KOSTT carried out studies and developed the

transmission grid to enable:

• The Connection of new generation units up to 2000MW in

different locations in Power system

• Promotion of renewable energy resources

• Increase the transmission network availability

• Increase system reliability and security of network

• Promotion of green power and energy efficiency

All these components are a prerequisite for safe operation of

new generating units and a good signal for future investors

Role and importance of KOSTT in SEE

region

Croat i a

2

3

4

Int er connect i ons pl anned or under st udy

Kosovo

Mont enegro

Al bani a

Serbi a

Macedoni a

It al y

Bosna

Greece

Bul gari a

• Electricity hub in the heart of South East Europe

• High cross-border capacities

• Europe calls for integration respectively SEE market

• Comparable regulations

• Non-discriminatory access to the transmission network

Role and importance of KOSTT in SEE

region

• In technical terms, position of Kosovo's transmission system has very important role in the region:

• Strong interconnection lines with neighboring countries underpin importance of the Kosovo Network region.

• Security and stability of Kosovo Network has high impact in the network operation of South East Europe

• High cross-border transit flows through Kosovo Network.

• Stable operation of Transmission system of Kosovo contributes to increased efficiency of the electricity market in this SEE

• Kosovo has the resources that may provide low cost energy in future, as base load energy in the SEE, where there is a deficit of power generation as well for the Italian market

SEE - New generation location? (base case official)

HR

BA

BG

RO

ALMK

ME

RS

Assigned TPP

Assigned GTPP

New NPP

New GTPP

New TPP

Sisak Osijek

Kolubara B

Vlora

Skopje

Bucuresti WestBucuresti Sud

Belene

Cherna

Voda

Maritsa Istok I

Plomin

KS

New

Kosovo

1x 300MW year 2016

1x300MW year 2017

1x400MW year 2018.

Source of information is SECI

Current position

Future flow in SEE network

New Generation

Coal reserve

www.kostt.com

Thank You

USA - Kosovo

Investment Forum

27th October 2010

KOSTT - Transmission, System and Market Operator j.s.c.

Iljaz Kodra nn

10000 Prishtina, Kosova