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Innovation Towards Innovation Towards EntrepreneurshipEntrepreneurship

Ilir M.Shala, MScIlir M.Shala, MSc

Director of DepartmentDirector of Department

Project Management & Engineering Department, KOSTTProject Management & Engineering Department, KOSTT

KUSA ENTREPRENEURSHIP WORKSHOPKUSA ENTREPRENEURSHIP WORKSHOP17 & 18.11.2014, Prishtina17 & 18.11.2014, Prishtina

““I have more respect for the person who succeeds with I have more respect for the person who succeeds with an idea than for the person who has thousands of an idea than for the person who has thousands of ideas and does nothing about them”ideas and does nothing about them”

Tomas EdisonTomas Edison

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History of EntrepreneurshipHistory of Entrepreneurship

• History of the Entrepreneurship

– Production Level vs. local consumption

– Exchanges of production

– Governmental Agencies engagement, XVII Century (offered the capital for financing the production entrepreneurships)

• The current development of Entrepreneurship began after World War II, 50th years when states are seeking to build their economies from the destruction of war.

– People had new ideas for businesses or work as individuals and started in many ways and with limited capital to established businesses which continued to challenge companies large.

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Entrepreneurship DefinitionEntrepreneurship Definition

• Entrepreneurship is the driving force of economic development and entrepreneurs by introducing new ideas in the market are responsible for economic development of a country

• Entrepreneurs are faced with the dilemma characteristic in their businesses going entrepreneurship across the life cycle of which consists of four phases: inception, growth, maturation and emergence

• Product Innovation has to do with the Final product (or service) that will be sold, the especially with regard to its features

• Innovation process has to do with the way in which the product is produced and distributed, particularly with respect to improvements cost or reliability. 4

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Entrepreneur DefinitionEntrepreneur Definition

• Entrepreneurs should be able to identify new products / services and secure financial capital and new resources to produce and deliver these products.

• Funding and other resources can come from them or from other sources

• They are prone to take risks and associate with economic growth.

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Creativity, innovation and Creativity, innovation and entrepreneurshipentrepreneurship

Creativity is thinking new things, and innovation is doing new things

Creativity is the ability to develop new ideas and to discover new ways of looking at problems and opportunities.

Innovation is the ability to apply creative solutions to those problems and opportunities in order to enhance people’s lives or to enrich society

Entrepreneurship = creativity + innovation

Creating the Value in the MarketplaceCreating the Value in the Marketplace

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From Creativity to EntrepreneurshipFrom Creativity to Entrepreneurship

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Skills Required for an EntrepreneurSkills Required for an Entrepreneur

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Managerial Skills

Managerial Skills

Financial Skills

Financial Skills

Marketing Skills

Marketing Skills

Personal Skills

Personal Skills

Communication Skills

Communication Skills

Public EntrepreneurshipPublic EntrepreneurshipKEK – Transmission & Dispatch KEK – Transmission & Dispatch

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The 2005 state of KEK - T & D DivisionThe 2005 state of KEK - T & D DivisionExternal EnvironmentExternal Environment

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Ownership ID

KEK assets were managed by the Kosovo Trust Agency;

KTA was a UN instrument, established by UNMIK Regulation No. 2002/12;

Ownership transferred to the Government of Kosova (following the approval of the “Ahtisaari” Plan by the United Nations Security Council);

Possibly to the Ministry of Energy and Mines;

KEK was a vertically integrated corporation;

Incorporation was performed by the end of 2005;

KEK was managed by Board of Directors;

KEK BoD was established by the Board of KTA and its members are selected by the same body;

The Executive team was made of local managers;

The Executive Team needs the approval of BoD;

Management ID

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The 2005 state of KEK - T & D DivisionThe 2005 state of KEK - T & D DivisionExternal Environment, Cont…External Environment, Cont…

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Athens Treaty ID

Treaty establishing the European Community for Energy;

Signed on October 25th 2005;

Kosova signatory of the Treaty;

Equal partner in the energy market of the SEE;

Integration into the EU market;

Direct representation in the Energy Community bodies;

ERO regulates the energy market of Kosova and issues:

Conditions and criteria for issuing licenses to carry out energy activities;

Procedures for granting permits for the construction of new generating and transmission capacity;

Criteria for regulating network and public supply prices and approving tariffs;

Conditions of energy supply; Monitoring the effective unbundling

and development of competition in the energy sector;

Costumer protection, etc.

ERO ID

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The 2005 state of KEK - T & D DivisionThe 2005 state of KEK - T & D DivisionExternal Environment, continue…External Environment, continue…

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Stakeholders ID

Government Laws, Rules and Regulations (Kosova’s Assembly, Ministry of Energy and Mining, Ministry of Economy and Finances, Ministry of Environment, Ministry of Labor and Social Welfare;

Donors Rules and Regulations (World Bank, International Monetary Fund, European Bank for Development, USAID, European Agency for Reconstruction (EU), German Bank for Development (KfW), SIDA, etc.);

Others (Customers, UNMIK, Media, KFOR, Police (UN and local), International Liaison Offices, etc.);

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The 2005 state of KEK - T & D DivisionThe 2005 state of KEK - T & D DivisionInternal EnvironmentInternal Environment

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Education ID

Emergence of private universities without a clear needs assessment of the energy sector;

Lack of practice amongst students of the public university;

Lack of direct cooperation between KEK and Universities;

KEK had a good knowledge base, when it comes to the operation and maintenance of the old equipment;

KEK lacks skills and knowledge for operation of the new equipment;

Knowledge ID

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Balanced ScorecardBalanced Scorecard

Adopt in a changing external environmentin order to remain a successful participant

in the upcoming deregulatedenergy market

Costs InternalBusiness

Process (HR)

Learning &Growth

(Education)

Regulations

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New Entrepreneurship New Entrepreneurship ITSMOITSMO

• Innovation – doing new things

– Six Groups were created:

1. Human Resources Group• Interim organization chart, Interim staffing plan, Plan for Human

Resources needs, Identify gaps in capabilities, Identify and select of staff to be split between Transco JSC and KEK JSC, Transfer of staff, Hire missing staff

2. Financial Group• Create an economic model of Transco JSC, Prepare preliminary

budget/cash flow forecast for Transco JSC, Open bank account in name of Transco JSC, Determine start-up working capital requirements, Deposit funds

3. Tariffs Group• Start-up costs, Set provisional tariffs to be paid by KEK J.S.C to

Transco J.S.C, Fund sharing agreement

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New Entrepreneurship New Entrepreneurship ITSMO, cont.ITSMO, cont.

• Innovation – doing new things

– Six Groups were created:

4. Commercial Group• Draft service agreement between KEK JSC and Transco JSC on

IT and other shared services, Draw up contract / agreement between KEK JSC and Transco JSC for the hand over, KEK JSC and Transco JSC shall establish standards and metering devices at power plants and distribution grid level, at the separation between generation, transmission and distribution, Interim Commercial agreements of KEK JSC and Transco JSC on metering, hand over points, ancillary services, maintenance confidentiality.

5. IT Group• Identify Software, Licenses and other property out of List of

Transco JSC Assets, Plan for IT, metering and financial management needs

6. Risk Management Group

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Legal & Regulatory FrameworkLegal & Regulatory Framework

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July 2006July 2006

Establishment ofEstablishment of

ITSMOITSMO

July 2004July 2004

Establishment ofEstablishment of

Energy Regulatory OfficeEnergy Regulatory Office

Dec 2004Dec 2004

Establishment ofEstablishment of

Ministry of Energy & Ministry of Energy & MiningMining

Primary Legislation in Energy Sector in Kosovo (June 2004)Primary Legislation in Energy Sector in Kosovo (June 2004)

- Law on Energy -- Law on Energy -

- Law on Electricity -- Law on Electricity -

- Law on Energy Regulator - - Law on Energy Regulator -

Nomination

Licensing

Economic regulation of the Economic regulation of the

energy sectorenergy sector

Designing sectors’ Designing sectors’

developments strategies developments strategies

and policiesand policies

Operation of the Operation of the

electricity system and electricity system and

electricity marketelectricity market

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KOSTT and its functionsKOSTT and its functions

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• KOSTT JSC is responsible for:

– Transmission of electricity on HV grid (400,

220 and 110 kV) and other ancillary

services (…secondary regulation, etc.)

– Maintenance & development of SSs

– Operation of Kosovo electricity system

– Balancing (demand = supply)

– Operation of electricity market

– Congestion management (allocation of

interconnections)

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License obligationLicense 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

• Connection Charging Methodology

• Transmission Network Development Plan

• Other documents19

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KOSTT IncomesKOSTT Incomes

20 Loss payment

Use of Network Charges

System Operation Charges

Market Operation ChargesGenerator Supplier

Congestion Fee

CCh Methodology

Compensation for transit

TUoS

Connection Charge

CB mechanisms

Regulated & Monitored Incomes

Ancillary Services

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Transmission NetworkTransmission NetworkDevelopment PlanDevelopment Plan

• Investment & development plan is based on:

– market analyses, forecasts, long-term power balance, current state of TN, SO & MO needs, regional development/investments

– numerous studies (national & regional) are consulted

• Five major areas of investment & development

– Reinforcement of the internal TN and its interconnections to neighbouring systems

– IT Systems (hardware and software) to support MO

– Metering and Data Acquisition systems

– Implementation of a modern SCADA/EMS system Telecom-N

– Systems to procure & utilise Ancillary Services 21

Electricity MarketElectricity Market

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• Base Energy is Base Energy is concentrated in Kosovaconcentrated in Kosova

• High demand in South High demand in South BalkansBalkans

• GR, AL, KS, MK & MN – GR, AL, KS, MK & MN – net importersnet importers

• Flows from North → Flows from North → SouthSouth

• KOSTT – important nodeKOSTT – important node

– Valuable Valuable interconnectionsinterconnections

• Most congested Most congested interconnections (capacity interconnections (capacity allocation process)allocation process)

– RO→SR, BG→SR, RO→SR, BG→SR, KS→MK, MK→GR, KS→MK, MK→GR, BG→GR, SR→KSBG→GR, SR→KS

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TRGR

SK

BG

A

I

H

RO

AL

HR

MK

Ser

Mon

BiH

BG

UA

MD

RORO

ALAL

HRHR

SerSer

MonMon

BiHBiH

BGBG

UA

MD

TRTRGR GR

SKSK

AA

II

HH

SLOSLO

Strategic ZoneStrategic Zone

Base Energy

Peak EnergyKosKos

Kosova in the RegionKosova in the Region

Regional Market & MechanismsRegional Market & Mechanisms

• KOSTT is in the process of application for ENTSO-E membership

– TSO organization established under the 3rd package (EU directives and Regulations for Energy – is approved on 2009 and is applicable from 03.2011)

– Currently member of Regional Market Working Group (this group within ENTSO-E)

• Member of SECI (South East Cooperation Initiative) Group

• Active participation in the Energy Community activities

• Integration in all cross-border mechanisms

– Signed the MoU for establishment of regional office for coordinated allocation of transmission capacities (CAO – Coordination Auction Office) – December 2008

• Integration in Regional Electricity Market - initial discussions

– Opportunities for market participants to trade on regional level bilaterally & centralized

– Trade with lower procurement costs & lower congestion costs

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email: ilir.shala@kostt.com Web: www.kostt.com

Tel: +381(0) 38 501 601 115 Fax: +381(0)38 500 201

Thank you for your attentionThank you for your attention