Razumkov Centre expert Maksym Bielawski says that in the current situation, it is extremely important for Ukraine to enhance its export role as an electricity supplier, for a number of reasons.
Geopolitically, it is extremely important for Ukraine to demonstrate energy solidarity with the EU, which will make it possible to maintain the appropriate temperature of sanctions and, accordingly, pressure on the aggressor.
In addition, electricity exports will bring additional hard currency revenues to the country, which will restrain inflation of the national currency.
"There is also a technical reason to continue electricity exports. It is the need to keep Ukraine’s energy system synchronised with the EU in line with the enlarged quotas for electricity exports/imports. The level of emergency assistance in case of an emergency situation also depends on the cross-border capacities," says Bielawski.
He notes that due to the above factors, electricity will be exported despite the military risks.
However, further integration of Ukraine in the European energy market may be hampered, as the EU energy market operates according to clear regulatory rules: non-discrimination, proportionality, transparency and consistency.
"At this stage, it is extremely important for us to review the regulatory approaches to the Ukrainian energy market and, in case of distortions revealed, to adjust them in line with the EU best practices. That is, energy market participants in Ukraine and in the EU should speak the same language – and not rely on artificial restrictions or face discriminatory terms. This is a very important nuance, primarily in the process of post-war reconstruction. Every day of delay means an unearned hryvnia of investments. That is why it is important that the model of the domestic energy market and the electricity export mechanism in particular be as transparent and undistorted as possible," Bielawski says.
The problems that may prevent further integration of Ukraine in the European energy market are traditional for this country: corruption, regulation of the market and resultant loss of liquidity. As an example of the latter, he notes attempts to adjust financial flows to the energy market through preferences granted to individual traders, cancellation of RAB-regulation approaches, and reduction of green tariffs, still taking place in Ukraine.
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