A new electricity trading mechanism has been launched in Ukraine — long-term auctions. This became possible following amendments made by the Cabinet of Ministers to Resolution No. 499. The first auctions took place on July 13–14 for electricity supply in August and September. The sellers were Energoatom and Ukrenergo (specifically Ukrenergo's hydro division, Ukrenergo Hydro), offering lots of 5 MW each.
Results of the First Auctions
On the very first day, the entire volume was sold — 92,232 MWh. Prices ranged between 5,005 and 5,145 UAH/MWh. Most lots were purchased by traders, while among end consumers, only Ukrzaliznytsia (Ukrainian Railways) and MHP emerged as winners. Experts note that the average price of around 5,000 UAH/MWh aligns with market indicators and does not suggest manipulation.
Controversy Surrounding the Auctions
The auctions immediately sparked controversy. Andriy Herus, a Member of Parliament and head of the Committee on Energy and Utilities, suspected manipulation due to a 39% drop in demand and prices on the adjacent "day-ahead" market. According to him, consolidating lots allowed part of the resource to be sold cheaper, resulting in losses for state-owned companies of approximately 50 million UAH.
Expert Opinions
Hennadiy Ryabtsev, a Doctor of Public Administration and Director of Special Projects at the NTs "Psyche," emphasizes that predictable electricity prices facilitate the planning of production costs. However, he warns against overstating the effect of the new auctions: they cover only 2–4% of the electricity that Energoatom and Ukrenergo Hydro will sell.
Vladimir Omelchenko, Director of Energy Programs at the Razumkov Centre, calls the idea of long-term contracts correct, as this is how European energy markets operate. However, Ukrainian companies are currently hesitant to fix prices for long periods due to high market volatility.
Investments and Risks
One of the main arguments in favor of long-term contracts is their ability to make investments in the energy sector more predictable. However, Hennadiy Ryabtsev points out that the main obstacle for banks remains war risks: if an asset can be destroyed during an attack, no contract can compensate for that.
Omelchenko also does not expect the launch of auctions to automatically trigger an investment boom. While it is a positive signal for the market, without a comprehensive reform of the energy sector, it will not become a decisive factor for investors.
Competition and the Role of Traders
Andriy Herus believes that selling electricity in small lots should ensure greater competition and prevent large players from buying up all the resources. However, Vladimir Omelchenko notes that the effectiveness of this tool can only be evaluated in practice. The first auctions showed that traders still dominated, while real businesses largely remained on the sidelines regarding price levels, noted former Energy Minister Olha Buzlavets.
Impact on Consumers
Despite the fact that electricity costs affect the cost of almost all goods and services, experts do not predict a quick effect for consumers. Omelchenko notes that the volumes of electricity to be sold through the new auctions are currently too small to influence retail prices or tariffs.
Prospects for Reform
Experts agree that the launch of long-term auctions alone will not solve the problem of potential electricity shortages or blackouts. At the same time, they consider this step important for the further development of the market. According to Ryabtsev, the main focus remains on building new distributed generation.
