The Secretariat of the Energy Community (EC) fundamentally supports the liberalization of energy markets, specifically advocating for the absence of price caps in the electricity market. However, the critical factor influencing the volume of electricity imports into Ukraine is the resource price in Europe, not the price caps, according to Alexey Orzhel, head of the Kyiv Office of the Secretariat.
"There is a critical factor influencing electricity imports – its price in Europe. Let's wait for the holidays; the price will drop, and we will be able to import because it will be economically viable. Then the discussions about the need for price caps will start again. This improvement (in the import situation with an increase in price caps - ER) has its limits, which are dictated by the consumer, who finds it very difficult to cope with the current level of profitability influenced by the electricity price," he said in a comment to the online portal "Energy Reform" during the Energy Security Dialogue-224 organized by DiXi Group in Kyiv on December 4.
According to him, the low utilization of the import capacity is primarily due to the fact that consumers cannot afford the recent price surges in Europe, which were associated with, among other things, low renewable energy production and increased consumption.
At the same time, Orzhel positively assessed the reduction from 80% to 60% of the share of imported electricity in industrial consumption to avoid power outages.
"Consumers cannot afford a situation where 80% of the balance consists of expensive electricity and only 20% is relatively cheap. This is why the reduction to 60% was made, as the industry refused to buy expensive imports due to rising costs. Everyone is still counting their money," he explained.
Orzhel emphasized that the position of the Energy Community is to have no restrictions in the market, but it could potentially support a temporary solution to compensate for the price difference of electricity between Ukraine and Europe to attract imports.
"The Energy Community is fundamentally against price caps. However, we can consider some elements of temporary restriction or, for example, a public service obligation (PSO) (…) to facilitate this import. As a temporary solution, such an option is potentially possible, given the critical situation in Ukraine, but we do not support restrictions in principle," noted the head of the EC Kyiv office, adding that the presence of price caps, in particular, hinders the development of new generation.
In response to a question about what the Secretariat knows regarding the involvement of the state energy trader JSC "Energy Company of Ukraine" in the "import PSO," he stated: "There is a certain project. This is not a PSO. It is potentially a certain assistance to 'EКU' to cover the costs between market electricity prices and their selling price."
According to him, these costs may be covered by international donors of Ukraine.
As reported, in August of this year, the head of the energy committee of the Verkhovna Rada, Andrey Gerus, noted that the special obligations for purchasing imported electricity to support Ukraine's energy system might be beyond the capacity of the state energy trader NAK "Energy Company of Ukraine." However, large state companies, such as NAEK "Energoatom," NAK "Naftogaz," or PJSC "Ukrnafta," could be involved in this.
According to D.Trading LLC, imports in November decreased by 9% compared to October, totaling 165 million kWh, and dropped by 58% from September to October.
The company's estimates indicate that in November, taking all expenses into account, importing was economically viable only in 20% of the hours from Hungary (145 hours), Romania (142 hours), and Slovakia (136 hours). From Poland, importing was viable in 35% of all hours (254 hours).
Overall, the utilization of the allocated capacity fell to 42% (from 72% in October), but the volume of the allocated capacity was 54% higher than in October.
The market has repeatedly stated that imports are hindered by price caps, the highest of which in the "day-ahead" market is 9,000 UAH/MW*h during the evening peak from 17:00 to 23:00.