“The situation with debt on the renewables market still remains critical”, drew attention Andriy Konechenkov, Chairman of the UWEA Board, speaking at the European Business Association’s Energy Day 2024. As of September 2024, the debt of JSC NNEGC “Energoatom” to the SE “Guaranteed Buyer” (GarPok) amounts to UAH 12.4 billion, and GarPok, in turn, owes universal service suppliers UAH 12.3 billion. The situation with the debt to producers of electricity from renewable energy sources is especially complex, as it still exceeds UAH 35.8 billion.
As UWEA has repeatedly reported, the chain of debts to renewables producers begins with NPC Ukrenergo, which owes GarPok about UAH 29 billion for the service of ensuring an increase in the share of electricity production from alternative energy sources, due to the insufficient level and incomplete payment of the electricity transmission tariff by other market participants (the current level of the tariff is UAH 528.57/MWh). The Acting Chairman of the Board of NPC Ukrenergo, Oleksii Brekht, recently stated that the company strives to achieve a break-even tariff for 2025 through, in particular, its increase to UAH 780.41/MWh, which could become one of the measures to resolve the protracted debt crisis, provided it is paid in a timely and complete manner by market participants.
UWEA supports the intentions of the national TSO to adopt an economically justified transmission tariff in 2025. According to our calculations, to cover the forecast costs of the PSO for renewables, as well as to cover the tariff deficit for 2022–2023 in the amount of UAH 7 billion, the necessary size of the tariff should be at least UAH 710/MWh. Although even at such a size, it will be difficult for NPC Ukrenergo to repay its existing debts to the SE “Guaranteed Buyer” in full.
However, at present it is expected that the transmission tariff for 2024 should also be in deficit. It is forecast that, for the PSO costs for renewables alone, the tariff is short by UAH 6–8 billion. That is, this deficit will be established after verification in 2025 and, accordingly, should also be included in the 2025 tariff or in subsequent periods. “It is now very important to end the trend of the deficit transmission tariff, since this will continue to lead to its even greater growth in order to cover endless debts. UWEA hopes that the NEURC will make a balanced decision and provide NPC Ukrenergo with stable financing”, comments Andriy Konechenkov on the situation.
UWEA also once again calls on the Cabinet of Ministers of Ukraine, the Ministry of Energy of Ukraine, the Ministry of Economy of Ukraine and the NEURC to continue working on finding financial sources and ways to improve the liquidity of the electricity market. One of them could be, in particular, the involvement of Ukrainian banks in providing targeted financing to JSC NNEGC “Energoatom”, which is currently being actively discussed in the information space.
Although various options for restoring payment discipline on Ukraine’s electricity market are being considered at the level of the relevant state market participants, in particular at the level of NPC Ukrenergo, the real results of the adopted measures will be visible only with the active participation of all market participants, including private business. The debt crisis is a common challenge that extends to the entire market – to distribution system operators, the TSO, the SE “Guaranteed Buyer” and renewables producers – and therefore its resolution requires an open and transparent discussion between the government and business.
Moreover, today the debt crisis also leaves a negative imprint on other market instruments that are being introduced to improve the market environment. For example, by creating a situation in which the SE “Guaranteed Buyer” looks financially unreliable, renewables producers are not interested in participating in such long-awaited auctions. This, in turn, threatens the state with the non-fulfilment of the goal of building 6.1 GW of onshore wind energy projects by 2030, which is envisaged by the National Renewables Action Plan, not to mention the start of the implementation of offshore wind projects, which are also declared by this National Plan.
“Supporting the liquidity of the electricity market today is a matter of the country’s energy security and energy independence, as is the further development of “green” decentralised generation, which depends on market conditions and which is regularly declared at the level of the Government. We expect that the Government will move from declarations to actions and create attractive conditions for attracting new investment into the renewables sector”, notes Andriy Konechenkov, Chairman of the UWEA Board.
