Today, on 5th May 2020, on the basis of the Committee on Energy, Housing and Utilities Services of the Verkhovna Rada of Ukraine a Round table on the theme: “Overcoming the crisis in the Ukrainian energy sector” was held chaired by Andriy Gerus, MP, Chairman of the Committee with the participation of Acting Minister of Energy Olga Buslavets; Valeriy Tarasiuk, Chairman of the National Commission for state regulation in the energy and utilities; Janez Kopač, Director of the Energy Community Secretariat; People’s Deputies of Ukraine; representatives of the Guaranteed Buyer, Ukrenergo, Energoatom, Ukrhydroenergo, DTEK, Donbasenergo, Centerenergo, electricity consumers; EUEA and other industry associations.

The broadcast recording is available at the link: https://youtube.com/watch?v=nyIJ53gMc40

The key speakers noted:

Olga Buslavets, acting Minister of Energy and Environmental Protection

Noted that the current energy crisis is the largest in recent years. A plan of priority measures for resolving the crisis with a list of 20 items signed by Prime Minister Shmygal has been sent to the Committee.

The Ministry has established 4 working groups in accordance with the Action Plan in the following areas:

1) improvement of the PSO mechanism and functioning of the electricity market;

2) RES;

3) settlement of debts on the market;

4) cybersecurity in energy.

It is good that draft Law on Measures Aimed at Repaying Debts Formed in the Wholesale Electricity Market was adopted in the first reading 2386; the adoption of draft laws 2390, 2389, 2388 is still necessary on amendments to the Budget and Tax Code to address debt issues.

It is also necessary to adopt draft law #3364 on the certification of TSO and debt resolution; adoption in the second reading of the bill 2372 to increase the safety of nuclear units.

Valeriy Tarasiuk, Chairman of NEURC

Reported on the latest decisions of the Regulator: on the actions of market participants during the coronavirus; restricted imports from countries that are not parties to the Energy Community (he noted that this is not a function of the Regulator); allowed Guaranteed Buyer (GB) to go to DAM with a price equal to the price of nuclear energy production, and on the May holidays it was allowed to go to a price equal to the limit on DAM.

Dmytro Kovalenko, NEURC comissioner

Presented data on the current situation in the electricity market. The total capacity of RES facilities as of the end of April is 7117 MW; the estimated cost of electricity from RES is UAH 41.5 billion.

The NEURC presented its action plan to address the following issues:

To address the situation in the field of RES, two options have been proposed, each of which provides for a ban on continuing the construction of new facilities until the issue of maneuverability units is resolved; limiting the rate of return on investment; free curtailment; reducing the size of the “green” tariff.

The presentation of the NEURC with its action plan can be viewed at the link: https://bit.ly/3c6gl07

Commentary by Olga Buslavets: under current laws, it is obliged to reimburse to renewable energy producers the cost of the generated, but not released, green energy. The absence of an appropriate Methodology does not deprive such responsibility. Over the week, the Anti-Crisis Energy Staff will draft a Memorandum on resolving issues in the field of renewable energy.

Olga Bielkova, MP, Member of the Committee on Finance, Taxation and Customs Policy of the Verkhovna Rada

Noted that the Regulator unilaterally resolves the situation on the electricity market, in particular, in favor of generation, preventing the emergence of low prices in the market, ie acting not in favor of consumers.

Lyudmyla Buimister, MP, member of the Committee on Energy, Housing and Utilities Services

Noted that the deputies submitted proposals to the Cabinet of Ministers on consumer support. She questioned the timeliness of the Regulator’s decision on RAB regulation.

Janez Kopac, Director of the Energy Community Secretariat

State policy in the field of electricity market regulation should be implemented in the direction of reducing subsidies to various market players and reduce the level of manual regulation.

Konstantyn Petrikovets, Director of the State Enterprise “Guaranteed Buyer”

Said that in contrast to 2019, every month in 2020 the company suffers losses and accumulates debts. Before RES producers – UAH 12.1 billion. The level of settlements for March and April is 11% and 7%, respectively.

Ukrenergo’s debt to the Guaranteed Buyer is UAH 11.7 billion. Derived from this is the problem of paying VAT by GB.

Due to debts, Energoatom reduced its sales of electricity to GB by 40% in April and May.

Petro Kotin, Acting President of SE NNEGC “Energoatom”

Two draft laws that are necessary to streamline the activities of the enterprise are 2372 and 2386.

The financial state of the company: the debt of the energy market is 16 billion; UAH 11.7 bln. – GP Energorynok (draft law 2386 will decide this problem), 5 billion UAH – for the last 3 months. Current revenues are sufficient only for the payment of salaries and loan servicing; there is not enough for the implementation of the production program.

– 73,7 billion kWh per year – production of Energoatom according to the Projected Electricity Balance for 2020. This requires the Company to additionally reserve two power units.

Volodymyr Kudrytskyi, Acting Chairman of the Management Board of Ukrenergo

He outlined the main parameters of the energy system in recent days, which are problematic: a sharp decrease in consumption; a surplus of electricity; an increase in the coefficient of unevenness from 4 GV to 5 GV.

Dmytro Sakharuk, CEO of DTEK Energy 

Necessary steps to overcome the crisis: find a compromise in the mediation process, continue to attract investment in energy.

Regarding electricity prices: the price of electricity for industry corresponds to the level of 2015, the price on DAM decreased. The development of the energy sector at such prices is impossible.

About pricing on Burshtyn Energy Island: 65% share of importers (they are pricing here); 20% other manufacturers; 15% stake in DTEK.

Clear rules of the game and refusal to intervene in the market system are the key to a quick way out of the crisis.

Igor Syrota, General Director of PJSC “Ukrhydroenergo”

He stressed the need to support the construction of new hydropower plants and stressed their role in balancing of the power system.

Oleksandra Gumeniuk, Director of EUEA

Noted that proposals from investors to resolve the situation have been developed. The decision should be comprehensive, the issue of reducing the “green” tariff and limiting the construction of new facilities do not solve all issues in the industry, do not restore the solvency of the Guaranteed Buyer.

Highlighted such aspects of the development of the RES industry as the creation of skilled, high-paying jobs, derivative development of a number of enterprises and services. Also, investment in RES is the largest attraction of investments in the state in recent years.

Georgii Geletukha, Heard of the Board of the Bioenergy Association of Ukraine

Noted that the accumulated debt with settlements with RES facilities puts bioenergy units in a difficult position due to the inability to pay for raw materials, which threatens to interrupt their work.

He questioned the need for bioenergy facilities to pay a CO2 tax.

He stressed the need to accelerate the introduction of auctions and the adoption of incentive regulation in the construction of shunting facilities.