The document discusses Ukraine's plans to integrate its energy system into ENTSO-E, the European Network of Transmission System Operators for Electricity, by 2020-2025. This would involve synchronizing Ukraine's power grid with continental Europe and separating from interconnected operations with Russia and Belarus. The integration is aimed to strengthen reliability, diversify energy sources, introduce new markets for services, and demonopolize Ukraine's domestic energy market. Benefits would include more stable electricity pricing, increased trading, new investment opportunities, and stronger consumer protections in line with European standards. Key risks to implementation include lack of coordination, funding commitments, and resistance from stakeholders with interests in maintaining the status quo.
Exploring protein-protein interactions by Weak Affinity Chromatography (WAC) ...
Ukrainian Energy Integration with ENTSO-E
1. INTEGRATION OF THE UKRAINIAN ENERGY
SYSTEM INTO ENTSO-E:
PERSPECTIVES FOR UKRAINE
2. 2020 2025
New Energy strategy “Safety, Energy Efficiency, Competitiveness” is a principal document
highlighting strategic horizons of the energy and coal industry of Ukraine until 2035, approved
by the Government on 18 August 2017.
Implementation of the most actions to
integrate the IPS of Ukraine into ENTSO-E
by 2020.
Integration of the Ukrainian power system
and ENTSO-E continental Europe zone in an
operational mode by 2025.
ENERGY STRATEGY OF UKRAINE UNTIL 2035
1
3. WHY DO WE NEED CHANGES?
4% 96%
A complete synchronization of the Ukrainian power system with the ENTSO-E one as well as its separation from the
interconnected operation with the Russian and Belarussian power systems are the only ways to change the current situation.
The Ukrainian energy system is technologically connected to the power systems of Russia, Belarus and Moldova;
they operate in parallel as well.
It means the power systems operate in a common mode and the frequency is similar. An actual control of the
system is carried out by Russia as an owner of the greatest generating facilities.
2
4. AGREEMENT ON INTEGRATION OF THE UKRAINIAN ENERGY
SYSTEM INTO ENTSO-E
New energy market implementation is possible only within integration of the IPS of Ukraine to ENTSO-E
Advantages of synchronization:
• Strengthening of the reliability and resiliency of the IPS of Ukraine by means of facilities modernization according to the EU
standards within Agreement Action Catalogue implementation
• Diversification of the energy sources and transparent terms of the mutual assistance
• Introduction of the auxiliary services market (frequency control, ensuring the energy reliability and quality properties)
• Demonopolization of the domestic energy market by means of a competition right after ENTSO-E membership
• Increase the electricity trading by 4 times- up to 18-20 bln kWh/y
The Agreement on Conditions for Future Interconnections of the IPS of
Ukraine and PS of Moldova with the ENTSO-E energy system of the
Continental Europe was signed on the 28th of June 2017 in Brussels
The Agreement entered into force
on the 7th of July 2017.
3
5. BUSINESS BENEFITS FROM INTEGRATION WITH ENTSO-E
Transparent electricity pricing and stable
price for a long period of time
30 % decrease in the wholesale
electricity price in the long-term
perspective.
New options for electricity
trading
Choice of the energy supplier
Investor in the Ukrainian energy sector
gets an opportunity for free electricity
export
More than 85% of the electricity will be sold
under direct agreements between the energy
producer and supplier/consumer
4
6. This would increase the energy price by about 25-30% (similarly to the
European countries experience). The following process is inevitable.
Integration into ENTSO-E and free electricity trade with the EU
countries are the only ways to decrease the price.
5
The Law “On Electricity Market” was adopted as of 11 June 2017
NEW MARKET MODEL AND IMPACT ON THE ECONOMY
The Law stipulates a sector deregulation, direct agreements (energy producers may sell
the electricity directly to the consumers), market pricing within transportation and
distribution.
The industry of Ukraine consumed up to 41,46
(bln kWh) in 2016. Energy costs amounted to
UAH 71,17 bln
The industry shall additionally pay about UAH 18
bln within new market model.
7. IMPACT OF SYNCHRONIZATION: INDUSTRY
6
Synchronization with ENTSO-E will have a positive impact on the industrial complex of Ukraine
Electricity consumption within industry
(thousand kWh)
Industrial sectors to get the positive impact from the integration:
• Fuel industry
• Ferrous metal industry
• Non-ferrous metal industry
• Machine-building industry
• Chemical industry
• Food and processing industry
It is expected that the industrial enterprises as the electricity consumers will benefit after a general
decrease in the energy prices as the production process will be less costly.
Due to the Ukrenergo estimations the “day ahead” market energy prices will be 30% lower after the
synchronization.
The practical effect of similar processes regarding electricity cheapening due to the synchronization
with new energy markets may be observed in the Baltic states, especially in Latvia.
Total 41,469
Sector:
Coal 2 390 622 6%
Steel 24 063 787 58%
Chemical 1 583 170 4%
Machine-building 2 956 106 7%
Gas 453 056 1%
Others 10 022 900 24%
6%
58%4%
7%
1%
24%
8. Synchronous operation with ENТSO-E allows to increase the electricity trading with the EU-countries using the
production facilities more efficiently (including NPP).
IMPACT OF SYNCHRONIZATION: ELECTRICITY TRADE
7
Scope of electricity trade with the EU countries will increase from
the current 4-5 bln kWh/year ($250 mln) to 18-20 bln kWh/year
($1,5 bln)
4-5
bln kwh/y
18
bln kwh/y
Taking into account the trader`s
operation profitability marginality (5 % on
average), the total income of the
electricity traders amounts to USD 75
mln/year
9. Free trade between Ukraine and the ENTSO-E countries will
strengthen the investment attractiveness of the energy sector of
Ukraine.
IMPACT OF INTEGRATION: NEW INVESTMENTS
8
There are three main producers of the conventional
energy in Ukraine:
• PJSC “Tsentrenergo”
• PJSC “Donbasenergo”
• “DTEK”
1 producer within hydro generation
• PrJSC “Ukrhydroenergo”
1 producer within nuclear generation
• SE “NNEGC “Energoatom”
• 180 producers within “green” generation
• The investments may be attracted not only in the
“green” sector but in the conventional energy
generation as well as it is demonopolized.
• There are new prospects for the energy export and
import.
Before integration into ENTSO-E After integration into ENTSO-E
Up to USD 700 mln of investments in the “green”
energy were attracted for the last three years.
10. Synchronization of Ukraine into ENTSO-E ensures the European norms of
consumer protection as well as service quality.
Ensuring the consumer with the right to choose is a key element of a free
market which is possible only via integration to ENTSO-E.
IMPACT OF SYNCHRONIZATION: CONSUMER PROTECTION
9
Any synchronization with ENTSO-E: new power market model may not come into force given a high probability of the
monopolists influence on the competition to preserve their excess profit.
Market coupling with the other countries allows to reduce the cost of electricity drastically. European power markets liberalization
proves a tendency of lower prices (Baltic countries). Ukrainian business and production in particular will become more competitive
on the foreign and domestic markets owing to the expected lower cost of prices.
11. Technologically the synchronization with ENTSO-E will strengthen the stability
of the Ukrainian energy system and minimize the dependence on the coal
supply to the thermal units in Ukraine.
Ukraine will have the opportunity to get the emergency aid from the ENTSO-E
countries power systems on commercial and competitive terms.
Total technological level of the power system exploitation and the supplying
security level will be higher due to the ENTSO-E strict requirements for the
synchronization preparation.
IMPACT OF SYNCHRONIZATION: SECURITY ASPECT
10
12. KEY RISKS
Lack of proper coordination
Lack of funding
Lack of commitment from key stakeholders
Agreement execution requires a coordinated work of the market players on
the implementation of specific steps to modernization according to the
ENTSO-E rules.
Power units of the generating companies should be dramatically
modernized. Such actions should be funded by the market players.
Key stakeholders may be against the synchronization with ENTSO-E as they
are not interested in the power market demonopolization.
EXTERNAL RISKS
INNER RISKS:
11