The Energy Community Secretariat has published on its website the Annual Report 2020 on the Implementation of Reforms by the Energy Community Contracting Parties.


The Report states that the Energy Community Contracting Parties have made progress in implementing market reforms in the energy sectors, despite the Covid-19 crisis. At the same time, Ukraine is one of the leaders in the pace of reforms in 2020, making it second in the overall ranking of countries – members of the Energy Community in terms of implementation of European legislation and an overall score of 61%, second only to Montenegro (69%).



Among the main achievements in the field of electricity is the successful introduction in 2020 of the market of ancillary services, which complemented the previous launch of bilateral, day-ahead, intraday and balancing markets. However, the market still remains largely distorted by a range of regulatory measures, including price caps and public service obligations, which channel nuclear and hydropower electricity from state-owned generators to the universal service suppliers at prices that are detrimental to competition and safe operation of power plants alike.


In terms of environment and climate, Ukraine’s biggest challenge remains the reduction of emissions from its outdated coal plants within the thresholds and timelines set by the Large Combustion Plants Directive. Ukraine has adopted a National Emission Reduction Plan (instead of complying with the emission limit values on an individual basis). It also opted out a total of 80 combustion plants. A modest carbon price is applied, and an emission trading scheme is under preparation. The country paid direct subsides worth some EUR 476 million to support coal-fired power generation in 2019. Energy efficiency suffers from the lack of a legal basis.


Renewable energy production has boomed recently, mainly because of a generous feed-in tariff system which expired at the end of 2019. The boom critically affects the liquidity of the state-owned offtaker (the Guaranteed Buyer). The mediation process between the renewable energy investors and the Ministry in charge of energy under the auspices of the Secretariat resulted in a memorandum and a law restructuring the existing power purchase agreements. Auctions still remain to be launched. Work on the National Energy and Climate Plan is likely to be postponed.


In general, the Secretariat welcomes the results of energy sector reforms in Ukraine, as evidenced by the above assessments of the level of implementation of the European acquis communautaire.

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