At the beginning of June 2022, Continental Europe Transmission System Operators positively addressed the request of Ukrainian Transmission System Operator NPC Ukrenergo to renew electricity export from Ukraine to Europe. Export volumes will increase in line with implementing the countermeasures proposed by ENTSO-E.
The key conditions, once met, will enable a gradual opening of the electricity trade with Ukraine and help Europe to replace russian gas, diversify energy sources and strengthen the region’s energy security.
Continental Europe is interested in Ukrainian carbon-free electricity. At the same time, Ukraine is interested in currency inflows to address the growing liquidity gap in Ukraine’s energy sector caused by the war and rebuilding damaged and modernizing the country’s existing critical infrastructure.
Despite the beginning of russia’s invasion on February 24, which coincided with the start of Ukraine’s power system isolated mode operation testing, the tests were successfully completed three days later. It is worth noting that before the tests, Ukrenergo had completed the preparations outlined by the Catalogue of Measures.
On March 16, the EU and Ukraine synchronized their electrical networks enabling Ukraine to receive emergency technical aid from Europe if needed. However, emergency interconnection did not provide for electricity trade, but it is exactly the emergency synchronization in Continental Europe’s network in test mode that opened the door to cross-border electricity trade. As early as June 7, 2022, the system operators of the synchronous zone of Continental Europe confirmed the possibility of starting electricity trade, given that Ukraine meets the specified technical requirements.
USAID supports Ukraine’s energy integration with Europe and Ukrenergo’s actions to harmonize requirements, norms, and rules. Via its Energy Security Project, USAID continues providing technical support to Ukrenergo through projects dedicated to synchronization, implementing countermeasures, and tuning the control systems of power plants to ensure uninterrupted cross-border power flows at increasing volumes from and to Ukraine and stability of the integrated network.
Furthermore, technical measures taken for synchronization pave the way for full integration of the Ukrainian electricity market with Europe, including the start of joint cross-border capacity allocations and the coupling of organized market segments. The synchronization of electrical networks opens new opportunities for commercial electricity exchange between neighboring countries and strengthens competition in the domestic market.
These days Ukraine has a large reserve of additional power capacity, which is temporarily not in demand within the country due to the plummeted electricity consumption during the war. Starting from June 30, 2022, Ukrenergo offers 100 MW of cross-border capacity on the border with Romania. If the synchronous power system operation remains stable after the launch of the first commercial flows with no major low-frequency oscillations, Ukrenergo expects to increase exports gradually, including on the borders with Hungary and Slovakia.
To make possible and support electricity trades between Ukraine and the ENTSO-E region in line with the safety parameters required by ENTSO-E, USAID ESP, together with the Energy Community Secretariat, has been working with Ukrenergo and the neighboring TSOs towards joint capacity allocations. Since the emergency synchronization in March, Continental Europe TSOs and Ukrenergo and Moldelectrica successfully ensured the security of the two interconnected power systems.
Taking the following steps will allow utilizing the full potential of synchronization and achieving an effective market integration:
- Start joint cross-border capacity allocation with neighboring TSOs, for example, through joining the Joint Allocation Office (JAO) for smooth cross-border trade arrangements.
- Coupling of day-ahead and intra-day markets to be followed by balancing market coupling (including the ancillary services market) in later stages.
- Harmonizing practices and rules in the bilateral contract market – the biggest in bidding volumes with the EU rules through the implementation of standard products, risk management system, etc.
- Implementation of REMIT to ensure effective monitoring and transparency in the market.
The start of exports is essential for both sides, Ukraine and the EU.
Currency funds from export will improve the financial liquidity in the sector and help rebuild damaged electrical networks and the country’s critical infrastructure. At the same time, export opportunities will increase competition and strengthen the security of supply. Ukraine already supplies electricity to Poland and hopes to increase the total capacity allocation on interconnection. Ukraine also offers 600 MW of cross-border capacity per hour to neighboring Moldova, which also was synchronized with ENTSO-E this March. Thus, demonstrating concrete achievements on the energy front, Ukraine continues its successful energy integration into the EU.
Synchronization of the Ukrainian power system with ENTSO-E and the start of exports has already significantly improved the energy security of Ukraine and its Integrated Power System and thus – improved the reliability of electricity supply for Ukrainian consumers. ESP is proud all this is being done with our assistance.