Ukrainian businesses will be capable of fixing the price of electricity in advance for a quarter, half a year or a year ahead, and will not be subject to sharp market fluctuations. The Government has adopted a decision to introduce long-term contracts on the electricity market. Prime Minister of Ukraine, Yulia Svyrydenko has announced.
According to her, non-domestic consumers will be eligible to purchase electricity on fixed terms for a long period through transparent, competitive auctions. The first auctions are due to take place in the near future. For the pilot launch, 4% of the generation capacity of state-owned electricity producers – Energoatom and Ukrhydroenergo – will be offered: 2% through quarterly contracts, 1% through half-yearly contracts and a further 1% through annual contracts.
Yulia Svyrydenko explained what this would mean in practice.
Currently, electricity consumers are dependent on the short-term day-ahead market, where prices can fluctuate significantly. In winter, prices rise due to high demand, whilst in the spring and summer months they fall. The new mechanism makes it possible to fix prices and supply volumes in advance, and to plan expenditure, investment and production. For electricity producers, this also means predictable revenues, clear operating conditions and protection against falling prices during months of surplus supply.
“Such long-term contracts are standard practice in EU countries. They help attract funding for new energy projects, as banks are more willing to lend when there is a guaranteed buyer and a clear price for the future,” the Prime Minister emphasised.
The Head of Government added that nothing would change for domestic consumers: “The decision concerns the commercial segment of the electricity market. It will make the market more predictable and help energy companies attract investment and build new capacity.” (Government portal)