We thank our energy workers once again for having passed the second winter of a big war and shelling of the energy infrastructure. They work in extremely difficult conditions, but despite all the difficulties, they continue to provide electricity to the people. However, that not all difficulties in the energy sector are related with shelling of energy facilities.
I always say that I stand for full liberalization of the energy sector. Transparent and market mechanisms will make operation of the energy system reliable and stable. During the two years of the war, it became obvious that the solution of this issue cannot be laid off any longer.
First of all, we should continue integration of our energy market with the European, and for this, our rules should be the same as in the EU. Full synchronization of energy markets, so-called market coupling, will help enhance the energy security and the economy of Ukraine and Europe. For this, it is necessary, among other things, to bring the price caps in line with the European, in order to synchronise price fluctuations in our markets.
Until that, we will not be able to import electricity normally when it is most needed. And this, in turn, creates obstacles for the stable operation of the power system. Alignment of price caps with the European will significantly improve the stability of energy supply to Ukrainians.
Spring is also an ideal time to export electricity to Europe. The power units of NPPs and TPPs have not yet entered planned repairs, the weather is sunny, which helps to increase solar energy generation, and people do not use heaters or air conditioners. But the export PSO, which obliges exporters to give 80% of their profits to the state, hinders exports. It was introduced when electricity prices in Europe were record high and it was made sense to introduce such a mechanism, which made it possible to improve the financial condition of the energy system operator "Ukrenergo". But now, when prices have levelled off, this mechanism simply hinders exports. It needs to be cancelled for Ukraine to have additional foreign exchange revenue, which will help strengthen the economy, and energy companies will get funds for repairs.
In addition, it is necessary to solve the problem of multibillion-dollar debts in the energy sector, because they do not allow energy companies to prepare for the next winter, and also scare away potential investors. Ukraine has very favourable conditions for the "green" energy development, and Western investors could invest in it, but they see debts owed to clean energy producers. Currently, the renewable energy sector is owed almost UAH 24 billion for the electricity already produced. This situation affects the investment attractiveness and development of renewable energy that made it possible to reduce the number of blackouts last year. Solving this problem will let investors in the construction of new energy facilities, which will raise the stability of the energy system.
I believe that the commercial strategies of "Energoatom" and "Ukrhydroenergo" need serious revision with a greater impact on the timing of repair companies. At the moment, we are observing a large surplus due to warming, floods and increased generation of SPPs. The disconnection of the repair schedule from the commercial strategy leads to large losses for these companies, and reduces revenues to the state budget in the form of dividends.
Also, the problem of debts under the PSO mechanism needs to be solved. Universal service providers are owed more than UAH 20 billion. It is a big sum, and because of this debt, universal service providers begin to accrue debts to other market participants. This affects the entire energy sector and strongly complicates the energy system operation. In addition, over the past year, the debt on the balancing market has increased significantly: by 44%, exceeding UAH 18 billion. The lion's share of these debts falls on state and utility companies. I think we should reduce the number of consumers who get electricity from a supplier of last resort. That will allow shifting part of the load from the balancing market to the "day-ahead" market.
Now it is the right time to address these issues. We have just survived winter, and much time is left before the next one. It is necessary to use this time the most usefully, so that after two extremely difficult winters for the Ukrainian energy industry, we get ready for the next one, which may become easier if the energy markets liberalization goes on, and the sector’s financial problems are resolved.
