In the past few days, the media and management of the electricity market regulator have been disseminating a lot of false information about the situation in the energy sector. All this is done to deceive society, cover own incompetence and lack of action by searching for those responsible and discrediting some market players.
The situation in the Ukrainian energy market continues to remain unstable. No solution has been found so far for an issue of compliance with the forecast balance by market players. In particular, in May–June of this year, DTEK ENERGY’s TPPs supplied 24% less electricity to the United Energy System than forecast by the balance. It prevents the planning of generating activities and impedes access to the required resources. The indebtedness for the services provided on the balancing market has been growing for two years in a row and exceeded UAH 13 billion including the debt owed to the generating business of DTEK ENERGY.
The situation in the energy sector has been further exacerbated and became desperate as a result of the recent trends caused by the manipulations of speculative traders on the day-ahead market, as well as the lack of action from the NEURC as a market regulator. In particular, some traders continued to purchase electricity even though they did not have contracts with end consumers. As a result, the huge volumes of electricity were thereafter sold on the day-ahead market at extremely low prices. For instance, in recent times, price bids placed by speculative traders has ranged between UAH 178/MWh and UAH 317/MWh, which was considerably lower than the minimum electricity production cost reported by either of generating companies.
As a result, the price of electricity on the day-ahead market plummeted within the entire Ukrainian United Energy System. For instance, the baseload price, which in May was UAH 930/MWh, climbed to UAH 1,362 MWh in June and then slumped to UAH 765 MWh during the first seven days of July. Moreover, by 3 July, the price collapsed to UAH 378/MWh. At the same time, the cost of electricity generation by thermal power plants is about UAH 1,550–1,600/MWh. As a result, with an average electricity supply of 50 million kWh per day, DTEK ENERGY’s power plants have been suffering losses of about UAH 40 million per day throughout July.
Such imbalances, instability, and manual regulation of pricing in the industry that have been observed recently might lead to the losses from operations suffered by CHPP and TPP reaching UAH 13.6 billion by the end of 2021 if the situation on the market does not change.
As a result of such a situation on the day-ahead market, thermal generation has been driven to the brink of extinction. The use of speculative mechanisms fails to secure sales, yield reasonable market prices, or cover the cost of electricity generation. The crisis situation in the energy sector threatens the operations of DTEK ENERGY’s thermal generation, in particular, considering that the company has to buy fuel, repair equipment, etc. to prepare for the autumn and winter season. For instance, the debt for fuel amounts to UAH 3,856 billion.
As a result, if thermal generation companies fail to produce electricity, the only available option will be its import from Russia and Belarus. The use of Russian and Belarus electricity poses a direct threat to the energy independence of Ukraine.
DTEK ENERGY urges the NEURC, relevant ministry, and other stakeholders to interfere in the situation without any further delay, intervene in the activities of speculative traders, remove artificial price balances on the market and bring it in line with the civilized European market model in accordance with the requirements for the integration of the Ukrainian energy sector with the EU standards, and protect energy independence of Ukraine.