The "Invisible Missile": Chronic Debts on Ukraine's Energy Market Threaten EU Integration

Systemic arrears in the electricity market have become one of the key threats to the economic sustainability of Ukraine's energy sector and could prevent the country from fully integrating into the unified European energy market. This was stated by Olga Evstigneeva, head of the Ukrainian Association of Renewable Energy (UARE), during her appearance on the ExProTalks YouTube podcast, the materials of which were published by RBC-Ukraine and Obozrevatel.

The "Invisible Missile" vs. Physical Destruction

According to Evstigneeva, the problem lies not so much in the absolute amount of accumulated debt as in the very mechanics of how it is formed: certain enterprises can go for months or even years without paying for the electricity they consume, while remaining connected to the grid. As a result, the financial burden is redistributed among the other market participants, creating a cumulative effect that, in the expert's assessment, is destroying the market from within. "This is some kind of invisible missile that is destroying the energy market. Because we see that Russian missiles are destroying the market physically, while these debts are destroying the market economically," emphasized the head of UARE, drawing a direct analogy between the military damage to infrastructure and the chronic financial pressure on the industry.

PSO as a Barrier to the European Model

To overcome the accumulated imbalance, Evstigneeva proposed revising the existing mechanisms of the imposition of special obligations (PSO), which, in her view, do not allow Ukraine to objectively merge with the European energy market. "Here we will need to somehow solve this issue, to cancel all these PSOs, because they simply will not let us objectively merge with the European energy market," she stressed. Thus, the reform of PSOs is seen not as a secondary administrative task, but as a condition without which the transition to the European model of settlements and pricing remains impossible.

Payment Discipline as a Systemic Priority

In addition to institutional reforms, the head of UARE pointed to the need for rigorous work on the payment discipline of market participants. In her words, consumed electricity must actually be paid for, and non-payment must not become an established practice. "For this payment to really happen, so that there are no such outrageous situations where certain enterprises can simply not pay for electricity and no one disconnects them for it," noted Evstigneeva. Without the formation of a sustainable mechanism to enforce settlements, in her assessment, any attempts to synchronize with the European market will remain formal.

Context: "Critical" Enterprises and the Balancing Market

The problem of arrears in the balancing market has previously been highlighted by other experts as well. In particular, Alexander Kharchenko, director of the Center for Energy Studies, noted that the main source of debt accumulation is so-called "critical" enterprises, which continue to consume electricity but have been unable to pay for it for years. Their status effectively exempts them from standard disconnection mechanisms for non-payment, which is what gives rise to the chronic growth of arrears in the balancing market. The combination of these factors, according to UARE, makes a full transition of Ukraine to operating under the European energy market model impossible without a prior "cleaning up" of the settlement rules and the introduction of strict payment discipline.

Integration Prospects

Against the backdrop of ongoing efforts to synchronize the Ukrainian power system with the continental European market (ENTSO-E), the issue of debt discipline is coming to the forefront. Without resolving the problem of accumulated arrears and revising the settlement rules, Ukraine risks facing a situation in which a formal connection to the European infrastructure will not be accompanied by real economic compatibility. Experts emphasize: integration requires not only technical and grid standards, but also a transparent, predictable financial environment in which every kilowatt-hour consumed in the market is guaranteed to be paid for.