The new price caps on the electricity market will make it profitable to import electricity in the winter, but to unify the energy grid with the European one, they must be canceled and prices equalized
Source：Ukraine Business News
From：Taiwan Trade Center, Kyiv
Update Time：2023/12/25
The National Commission for Regulation in the Energy and Utilities Sectors in Ukraine has announced a significant policy shift for the electricity market. The commission plans to remove price restrictions, commonly known as price caps, in 2024. This move is seen as a crucial step towards aligning Ukraine's energy market with European standards.
Forbes reports that the State Regulator is currently working on setting new price caps that will remain effective until April 1. The primary objective of these temporary measures is to ensure a stable and sufficient electricity supply throughout the winter season. A member of the National Commission explained that the rationale behind these changes is to make the import of electricity financially viable during the winter months, thereby preventing potential shortages.
However, if the new price limits fail to incentivize electricity imports into Ukraine, the country's power system operator, UKRENERGO, may need to seek emergency assistance from neighboring countries. This emergency power supply is estimated to be 1.5 to 2 times more costly than regular commercial prices.
The decision to abolish price caps in 2024 is a strategic move towards integrating Ukraine's energy grid with the European network. Once the price restrictions are lifted, electricity prices in Ukraine are expected to align with those in neighboring countries. This alignment is a critical component of Ukraine's broader strategy to integrate its energy sector with European markets, which is expected to bring several benefits. It will enhance the stability and reliability of Ukraine's energy supply, promote competition in the energy market, and potentially lead to more favorable electricity prices in the long term.
This policy shift is part of Ukraine's ongoing efforts to reform its energy sector and align its practices with European standards. The move is expected to bring Ukraine closer to its goal of energy independence and resilience, a crucial aspect of its national security and economic development strategy.
Source: https://ubn.news/the-new-price-caps-on-the-electricity-market-will-make-it-profitable-to-import-electricity-in-the-winter-but-to-unify-the-energy-grid-with-the-european-one-they-must-be-canceled-and-prices-equalized/