Market Operator considers Ukraine spot market competitive model inadvisable for coupling with European energy market

MOSCOW. June 15 (Interfax) - JSC Market Operator considers it advisable to designate a sole nominated electricity market operator or NEMO in Ukraine for electricity trading coupled with the single European spot market and does not back the introduction of a competitive model.

"Since there is a small amount of liquidity in the spot market in Ukraine, the introduction of a competitive model will increase the cost of NEMO services and could lead to the emergence of debts on the balancing market, as electricity is legally bought and sold through the NEMO in operartion," Ukrainian media quoted Danil Petrenko, deputy general director of JSC Market Operator, as saying at a discussion of the optimal model for NEMO designation at the Energy Club on Wednesday.

He said that in this case it would be possible to buy electricity at the platform of a single NEMO and not pay for it. As a result, the NEMO with which settlement has not been made will not be able to settle the NEMO to which electricity has been sold, giving rise to debts in the day-ahead market.

"Similar cases, when electricity was bought without intending to pay for it, have already been seen on the balancing market," Petrenko said.

He referred to European practice, which shows that in countries that have chosen the competitive NEMO model, the volume of trading at the initial stage was significantly higher than in Ukraine.

Market Operator believes that, when implementing an decision regarding the monopoly or competitive NEMO model, it is necessary to take into account the general electricity market situation, day-ahead and intraday market volumes in Ukraine and the corresponding indicators in neighboring countries.

But Petrenko said the company was in favor of accelerating the coupling of electricity trading on the single European spot market, which will enable the timely implementation of EU CACM Regulation 2015/1222 and honor Ukraine's obligations as a candidate for EU membership.

The Energy Club said Ukraine had until December 31, 2023, to implement EU Regulation 2015/1222 of July 24, 2015 on Capacity Allocation and Congestion Management (CACM) in national legislation and designate one or more NEMOs, which, together with the transmission system operator, would have to ensure the integration of day-ahead and intraday trading based on the concept of market coupling.

The regulation provides for competition between existing and new NEMOs within the single European market, which opens up new opportunities for market participants and benefits end users.