Price caps proposed to be raised to 18 thousand hryvnias: reasons explained by WEA

Maximum price caps on the electricity market should be set at 18 000 UAH/MWh so that price limits do not prevent attracting flexible generation and imports during deficit hours.

Why price caps are proposed to be raised. The WEA emphasizes that the current price "ceiling" is already affecting the operation of the balancing market. In the first ten days of September, the balancing electricity price in a significant number of hours reached the maximum allowed 17 000 UAH/MWh. "In deficit hours it is necessary to be able to bring in thermal, gas, hydro generation, storage systems and other flexible capacities without a situation where a regulatory price limit makes their operation economically unviable," the appeal says. The Assembly separately points to gas-piston, gas-turbine and cogeneration units. Their cost base largely depends on the price of gas, so too-low price caps can simultaneously limit the operation of such generation and deter the emergence of new distributed capacities. "Considering the above, the WEA proposes that the NERC set the maximum level of cap prices on the organized segments of the electricity market at 18 000 UAH/MWh," the letter says. Read also: Business urges a review of electricity price caps: why this is important before winter. The WEA believes that this level will provide more opportunities for gas and other flexible generation to operate, attract additional capacities and reduce the risk that the price cap becomes an artificial barrier to a resource available to the power system. As is known, the NERC 24 September approved a draft resolution proposing to set the maximum cap price on the day-ahead and intraday markets at 15 000 UAH/MWh, and on the balancing market at 17 000 UAH/MWh.

Recall that former CEO of Ukrenergo Volodymyr Kudrytskyi said that because of low cap prices Ukraine may be underreceiving electricity imports from Europe even if there is a technical possibility to bring them in. According to him, last winter there was already a situation when the European price was higher than the artificially suppressed Ukrainian price, which is why imports did not arrive in the needed volume.