Ukraine's current state-imposed electricity price caps create severe barriers to commercial imports of the resource from European countries during periods of acute deficit. This was stated by Oleksandr Prylepov, Chief Legal Counsel of the Regulatory Assurance Department at Energy Company of Ukraine JSC, emphasizing the urgent need for deep energy market liberalization.
The essence of the problem and impact on imports
The issue concerns administratively established maximum prices above which electricity cannot be sold on relevant segments of the domestic market. If the actual market price of electricity in neighboring European states exceeds the Ukrainian price cap, it becomes economically unfeasible and difficult for commercial companies to import this resource into Ukraine.
Amid generation deficits, alternatives to commercial purchases may include unpopular measures: rolling blackouts for consumers or expensive emergency assistance from EU power grids, the cost of which significantly exceeds average market indicators. Experts and market participants agree that rigid price limitations on the day-ahead market (DAM), intraday market (IDM), and balancing market require immediate revision.
Contradictory data
While part of the expert community and representatives of specialized associations insist on the complete abolition of price caps to achieve free integration with the European ENTSO-E energy system, other market participants and regulatory bodies point to the risks of a sharp price spike for vulnerable consumer categories. Nevertheless, certain precedents and official statements demonstrate that partial revision or raising of price caps in past periods contributed to a short-term increase in imports even during night hours.
Consequences and prospects for the energy system
According to Oleksandr Prylepov, the complete abolition of price ceilings will allow the domestic market to flexibly attract the necessary volume of electricity from abroad, forming prices solely on the basis of the real balance of supply and demand. The Federation of Employers of the Fuel and Energy Complex of Ukraine has also repeatedly called on the relevant Regulator to raise price caps ahead of the heating season to avoid critical loads on the power system and prevent large-scale blackouts.
