“Low Carbon Ukraine” focuses on the Ukraine’s electricity market reform and power system development. We provide regular information and analysis on these topics.
Ukraine’s installed RES capacity of PV, wind, bioenergy and small hydro impressively increased by more than 50% in 2018 alone and will triple from 2,1 GW in 2018 to 6,7 GW in 2021, surpassing a 7% share of the country’s electricity generation. However, the further growth will slow down after retrospective FIT cut and delayed introduction of RE auctions. The increasing share of renewables, however, requires more flexibility in the system and smart market design without sacrificing the security of supply and electricity costs.
On the technical side, Ukraine’s power system is dominated by baseload generation and lacks interconnection capacities. The issues of resource adequacy, sufficient reserves and balancing capacities, regional allocation of new capacities and the curtailment of (excess) renewable energy are in the focus of our analysis. We developed a model of Ukraine’s electricity system to evaluate policy options to foster further RES integration.
On the regulatory side, Ukraine has started the electricity market liberalisation in 2019, and the reform goes slowly. The market is characterised by few dominant market players, the prices for households are strictly regulated and do not cover the total cost. Since the opening, the market has been under strong regulatory control, while the legislative framework remains volatile, wholesale prices are under strict control and limited by the price caps, and market power is not effectively addressed. LCU closely monitors the market development and provides advise on short- and long-term policy measures that will enable competition and attract new investments in Ukraine’s electricity sector.
Modelling Ukraine’s Electricity System
LCU developed a model of the Ukrainian electricity system to analyse development scenarios of the electricity system. The model provides the cost-optimal dispatch of the Ukrainian electricity system for every hour of the year and thus determines which plant types and transmission capacities should be used in which region of the country.Read more
LCU Publications on Ukraine’s electricity market
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.
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.
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%).
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.