The first year of operation under the new electricity wholesale market
Our 5th issue of the MEMO series now takes stock of the first 12 months of operation under the new wholesale market.
NPP Analysis – May 2020
NPP electricity generation in May was significantly below the economic efficient level. This cannot be explained by Covid-related demand decrease or a high RES generation share.
LCU submitted draft for Integrated National Energy and Climate Plan (NECP)
On July 22, LCU submitted a draft of the “Integrated National Energy and Climate Plan” to the Ministry of Energy. As a Contracting Party of the Energy Community, Ukraine committed to submit a NECP by the end of 2020.
Regulating Curtailment
Curtailing and compensating RES can be cheaper than taking up 100% of RES electricity through investment into conventional plant park or transmission.
Energy Strategy 2035. Implementation progress Mar-May 2020
Anti-crisis measures in electricity sector. Ukrenergo certification. Gas market. RES support scheme. Electricity market opening. Electricity consumption decrease due to Covid-19.
The effects of COVID-19 on electricity consumption in 2020
2020 electricity consumption might decrease by 5% (best case) to 8% (worst-case scenario).
LCU project leader Dr. Zachmann: Launching a new electricity market must be postponed to address important risks
Dr. Zachmann explained that LCU analyses indicate a decoupling of wholesale market prices and marginal costs of production, leading to prices well above those in neighbouring countries.
Seven months of market opening – stocktaking
Frequent changes to the legal framework fail to address the structural problems. Loopholes undermine the market and speed up debts’ accumulation. Extended data transparency is an upside of the reform.
Energy Strategy 2035. Implementation progress Nov 2019 – Feb 2020
Progress of Ukraine’s 2050 Green Energy Transition Concept. Legislative amendments to the electricity market. FIT restructuring issues. Signing of gas transit deal. Regulatory framework on energy storage. Carbon taxation.
Recommendations on energy storage
Ukraine’s electricity market does not need state support for energy storage projects. It needs a properly working electricity market aligned with the EU 4th Energy Package to boost the flexibility of the grid.
Electricity for all
Basic technological & economic features of electricity markets (in EU countries). Challenges in market development: new forms of trading, sector coupling and digitalisation.
LCU Workshop on energy markets held in Kyiv
On December 14th, 2019, LCU experts gave an introduction into aspects of energy and climate policies to a group of experts and parliamentarians, most of them members of the energy committee of the Ukrainian Verkhovna Rada. The aim was to provide newly elected MPs with fundamental expertise on the complex topic of electricity markets, to discuss specific challenges of integrating renewable energy sources into Ukraine‘s energy system, and to look into challenges of coal phase-out in Ukraine.
Renewable Energy in Ukraine
Further RES expansion is needed to replace the ageing power plant fleet and to sustain energy security. To account for a higher variability in the system, different instruments can be utilized.
RES quotas for 2020 – 2024
Different sets of RES quotas are analyzed. In the best-case scenario, 3 GW wind & solar are built and RES quotas set at 1.6 GW, enabling a RES share above 20% in 2025.
CO2 taxation in Ukraine
Tax revenues from a potential upstream carbon tax in Ukraine of 27UAH/t CO2 are estimated between UAH 5.6 and 6.1 bln. Price increases from taxation are strongest for coal (+3.5%-4.3%).
Energy Strategy 2035. Implementation progress Aug-Nov 2019
Progress on gas TSO unbundling and certification, corporatisation and certification of Ukrenergo, licensing in upstream sector. Analysis and recommendations on ESU action plan implementation.
Limiting the cost of feed-in-tariff subsidies
Assessment of feed-in-tariff, related expenditures for RES, current scheme of financing, impact on state budget and electricity prices. Analysis of risks of retroactive change in support scheme.
Energy Strategy 2035: Lessons learnt from implementation
Assessment of the progress on the ESU 2035 action plan implementation, analysis of gaps, barriers and the lessons learned, providing recommendations on further improvement of the process.
Russian Ukrainian Electricity Trade
Increasing electricity imports from Russia can help to improve competition, reduce prices and reduce emissions. But it should be regulated to minimize adverse effects.
Curtailment of renewable electricity as a flexibility option
Curtailment should be considered as a regular flexibility option. It helps to mitigate the green-coal paradox and to reduce system emisions from 94 to 40 Mt CO2.
Developments on the electricity market Sep 2019
Market power remains strong and starts exploiting balancing market. Changes to PSO does not help the competition. Prices in the IPS start to drop as nuclear power ramps up production.
Aspects of RES-support in Ukraine
The Ukrainian electricity system can absorb fluctuations of higher RES shares and support a further expansion with RES auctions.
Limiting the cost of feed-in-tariff subsidies
The rising cost of RE support pushes electricity prices beyond affordable level in Ukraine. Yet the revision of the established FIT scheme should be carefully designed and consider potential risks.
Making Ukraine’s Electricity Market work for Ukrainians
Analysis of (inflated) wholesale prices after electricity market opening. What could be done in the short and long run to fix this?
LCU took part in meeting with Ukrainian President on the electricity market situation
Dr. Georg Zachmann took part in a meeting that President Zelensky held with relevant stakeholders on the situation in the electricity market.
The Benefits of RES Curtailment in Ukraine
Analysis of curtailment as a flexibility option in the short and long run, including mitigation of the ‘green-coal paradox’ and comparison with hardware solutions. Overview of curtailment experiences across the world.
Energy and Climate Policy Priorities for the New Administration
Recommendations on making energy markets competitive, increasing RES share, structural change in coal sector and regions, investments in infrastructure, energy efficiency in residential sector.
Developments on the electricity market Jul-Aug 2019
Prices are stable as the market shows no signs of effective competition. Increase of import to the BEI does not affect prices. Price caps are higher than the estimated marginal costs of coal generators.
Energy Strategy 2035. Implementation progress Apr-Jul 2019
Progress on ensuring of the NEURC’s independance, unbundling and PSO on gas market, and launching the NECP development process. Key priorities in energy policy for the new administration.
The first two weeks of market opening
Ukraine has finally opened its electricity market despite many concerns. Prices are high, some market segments do not work properly, and the smaller BEI trading zone is under the reign of monopoly.
Electricity Market Opening – assessment of latest regulations
Before the deadline for electricity market opening, Ukraine’s official work hard to patch the holes in the upcoming regulatory framework. Does it help or constraints the future market?
Ukraine on the way to a functioning electricity market
Main features of a successful electricity market based on the 20 years’ history in opening the EU electricity market. Lessons learnt and best practises for the Ukrainian context.
Promoting structural change in Ukrainian coal regions
A successful structural change can avoid a negative impact on the labour market and trigger an economic shift towards a more future-oriented industry.
Summary: Risks of opening the Ukrainian Electricity Market
Ukraine is about to liberalise its electricity market. Yet the devil is in the details: the rules are far from perfect and key players are not ready. What are the risks?
Analysis: Risks of opening the Ukrainian Electricity Market
The market opening on July 1st may have negative impact on final prices for industries and economy as a whole. With little time left, at least critical risks should be mitigated.
Challenges of the Electricity Market Reform
Analysis of implementation challenges related to wholesale market reform, in particular preparation, coordination, issues of market design, concentration and liquidity.
Debts in the Ukrainian Electricity System
Accumulated debt poses a major obstacle on the way towards a new electricity market. A solution to this problem needs to be found before the new market design is introduced.
Renewable Energy Auctions Law adopted by Ukrainian parliament
On April 25, the Verkhovna Rada passed the law introducing renewable energy auctions.
Energy Strategy 2035. Implementation progress Feb-Apr 2019
Developments on the law introducing RES-e auctions, launch of daily balancing on gas market and Naftogaz issues. Deep dives into the issue of debts in the Ukrainian electricity system and progress with electricity market reform.
RES auctions in Ukraine Quota Sizing
25% of electricity generation can come from Renewables in 2035 when annually installing around 500MW, what seems realistically as of today.
A Scenario based 2035 Forecast of Electricity Demand in Ukraine
Ukraine’s 2035 electricity demand is estimated based on GDP growth, electricity price and energy efficiency trajectories. Only in a high GDP growth scenario, demand increases substantially.
Local curtailment charges for RES
The concentration of wind and solar plants in high-yield regions increases balancing needs and grid constraints. We recommend introducing a transparent curtailment charge mechanism.
Energy and Climate Targets – An Overview
Key messages: Multitude of energy & climate obligations must be coordinatedRES share surpasses unambitious targetsDiffering indicators in national strategies – risk to cause confusionProgress in energy intensity – but still a long way aheadEmission targets are not ambitious
Developing a National Energy and Climate Plan for Ukraine
The NECP is an opportunity for Ukraine to reflect on its key energy challenges. But its preparation is complex and requires strong political commitment.
Ukraine’s National Energy and Climate Plan
Introduction to the development of National Energy and Climate Plan (NECP) for Ukraine, namely timeline and structure of the document.
The Draft Law on Renewable Energy Sources
Recommendations: Dynamically adjusting FIT based on project duration. Incentives for a smart & grid-friendly location selection. FIT reduction in 2019 to contain costs.
Stabilizing the support for renewables
Ukraine is about to adopt changes to the RE support law and introduce auction-based remuneration scheme. But is it not too late? Will the conservative changes to FIT help to contain the expensive boom?
Energy Strategy 2035. Implementation progress Nov 18 – Jan 19
Changes in the environmental taxes and related challenges, new PSO rules on the gas market and supply billing issues. Deep dive into the draft law on new RES support scheme (auctions) and introduction to Ukraine’s National Energy and Climate Plan.
Energy Strategy 2035. Implementation progress Jun-Oct 2018
Key Developments in Ukraine’s Energy Sector. Balancing Needs due to RES increase. Introducing the Low Carbon Ukraine Project
Exploiting benefits of small solar and biogas
Small renewables projects can have important side benefits. Well targeted feed-in tariffs can support a cost-efficient deployment.
Balancing of fluctuating renewable power sources
Based on a LCU’s Optimised Dispatch Model (ODM), we assess that the current Ukrainian power system can balance fluctuations of up to 15 GW of wind and solar (in-depth analysis).
Location selection and wind solar mix
Wind and solar installations should be distributed over the country. Policy should strive for an optimal mix of wind and solar installations in order to reduce system cost.
Balancing Renewables in Ukraine
Based on a LCU’s Optimised Dispatch Model (ODM), we assess that the current Ukrainian power system can balance fluctuations of up to 15 GW of wind and solar (overview of results).