Launch of the New Electricity Market in Ukraine on the 1st of July. Discussions and Opinions

The groundwork for the electricity market reform in Ukraine was laid in 2017, when the Law “On Electricity Market” was adopted. The document provided for the transition from state regulation for commercial consumers and certain market liberalization for household consumers.

Currently, there are many discussions about partial or total delay in the introduction of the new  electricity market model from July 1, 2019.

On the 13th of May, Prime Minister of Ukraine Volodymyr Groisman confirmed that the new market’s launch is planned on July 1. On the 14th of May, Vsevolod Kovalchuk, Head of Ukrenergo national energy company, and President of Enerhoatom Yuriy Nedashkovsky stated  the necessity of starting the new market from that date.

Vsevolod Kovalchuk represented Ukrenergo’s main propositions on the implementation of the new electricity market in the form of three possible scenarios. Scenario 1 (launch of the new energy market from July 1, 2019) does not presuppose any legislation amendments, but offers a number of measures to reduce the negative consequences of this launch. Scenario 2 offers making some legislative changes and launching the new market from October 1, taking 2-3 months as a test period. Scenario 3 offers to defer the launch to 2020. During this time, it is offered to finalize and complete transition to the new market model under control of the relevant regulatory authorities.

However, “it’s not just the timeframe”, People’s Deputy Viktoriya Voitsitska wrote in her article titled “The President Trap, or the Electricity Market Reform in sheep’s clothing”.

“Today, the electricity market reform is definitely unfinished; first of all, it is necessary to change the working principles of regulatory institutions (Antimonopoly Committee of Ukraine and NEURC) – and perhaps their personnel composition too. At the same time, a number of statutory acts should be adopted,” the Viktoriya Voitsitska wrote.

On the 22nd of May, People’s Deputies Oleksandr Dombrovsky and Lev Pidlisetskyi registered a bill number 10318 on postponing the launch of the new electricity market (planned for July, 1) for 3 months.

The draft law’s text has not been published yet, however, it is known that it proposes amendments to the Law of Ukraine “On Electricity Market” and to Article 9-1 of the Law “On Alternative Energy Sources”.

Oleksandr Dombrovskyi, Deputy Chairman of the Verkhovna Rada Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, said that, according to the deputies of the specialist committee, three months’ period will be enough to test the readiness of all market participants for working in the new electricity market and to analyze the financial consequences of its launch. In addition, the adoption of this draft law will allow holding price increases to a minimum at the stage of competitive mechanisms’ launch.

The document also provides the “green” tariff for small on-ground solar power plants with a capacity of up to 30 kW. The draft law has to resolve the significant controversy that has recently occurred with regard to amendment number 24 to draft law 8449-d, which restricted the “green” tariff for newly built small home solar power on-ground plants.

By the way, IB Centre asked for opinion of the solar energy market insiders.

Thus, Dmitry Lukomsky, CEO of Avenston Company, believes that distributed generation will be the most useful for the country’s energy system, so the government should simplify the procedures for installing any solar power plants with low capacity. “It is up to each person, whether to install on-ground solar panels or lay out a flower-bed on his or her land plot. On the other hand, increasing the threshold of power capacity from 30 to 50 kW is a good initiative, and we welcome it,” the expert said.

However, Marketing Director at Atmosfera Company, Olexander Omelchenko, considers that power capacity of an average home solar power plant may drop 23 kW to 15 kW. “Still there is no transparency: it is not clear what the capital facility is,what documents we need to confirm this type of facility, etc.” Mr. Omelchenko added.

It is worth reminding that the Ministry of Energy and Coal Industry of Ukraine, in turn, insists on the new electricity market’s launch from the 1st of July.

“The Ministry will insist on launching the new market in time, on July 1, 2019. And there is every reason to do that,” Ihor Nasalyk, Head of the Ministry stressed.

Ihor Nasalyk, Head of Ministry of Energy and Coal Industry of Ukraine 

The launch of a new competitive electricity market is one of Ukraine’s commitments to the European Union. Energy reform is one of the conditions for providing Ukraine with macrofinancial assistance in amount of EUR 500 mln as a second tranche.

On the 23rd of April, representatives of the EU, the EBRD, the European Energy Community, the European Investment Bank and USAID in Ukraine stated that they were concerned about the slowdown of the new electricity market’s launch in Ukraine.

As you can see, everyone agrees that the new Ukrainian electricity market’s launch is necessary. But the question “when?” remains open.

Sources:
http://oilreview.kiev.ua/2019/05/22/v-rade-zaregistrirovan-zakonoproekt-o-perenose-zapuska-novogo-energorynka-na-3-mes-i-garantii-zelenogo-tarifa-domashnim-nazemnym-ses/

https://gordonua.com/news/politics/nasalik-minenergo-budet-nastaivat-chtoby-novyy-energorynok-vveli-vovremya-1-iyulya-2019-goda-964605.html

https://dt.ua/energy_market/pastka-dlya-prezidenta-abo-reforma-rinku-elektroenergiyi-v-ovechiy-shkuri-311651_.html

https://www.facebook.com/aleksandr.dombrovskyy/posts/2235848856503588

Exclusive comments of solar industry experts for IB Centre

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