The new model for a wholesale electricity market in Ukraine started operating on 1 July 2019. In its analysis published today, the Energy Community Secretariat reflects on the experience gained in the first two months of the functioning of the new wholesale electricity market model.
The results of the analysis show that 53% of electricity generated was traded on the open market in the first two months. However, the old, non-transparent and overregulated “single buyer” model – which should have been replaced by a competitive electricity market structure – was brought back through various Public Service Obligations (PSOs) imposed by a Cabinet of Ministers PSO Act.
Under such overregulated conditions, market participants are discouraged from participating in the new market segments, with even the initial limited interest to trade in the day-ahead, intraday and balancing markets declining. Moreover, problems with historical debts and unpaid bills further complicate the functioning of the market.
High priority should be placed on ensuring that the price caps and other restrictive measures such as disproportionate PSOs are limited in time and phased out, in order to stimulate market participation and allow competition to develop.
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