Ukraine’s energy sector “on the road” to electricity market coupling

October 27, 2023

On October 25th, the USAID Energy Security Project (ESP) and EPEX SPOT presented to Ukraine’s energy sector and international partners a detailed Roadmap for electricity market coupling with the European Union (EU) markets and Moldova, as part of Ukraine’s electricity market reform.

The Roadmap is the continuation of the Capacity Building on Electricity Market Coupling Activity aimed at helping the National Energy and Utilities Regulatory Commission (NEURC), NPC Ukrenergo (Electricity Transmission System Operator), Market Operator, and the Ukrainian Energy Exchange to implement the market coupling process.

Kathleen Kirsch, Energy Team Lead of the Office of Economic Growth, USAID/Ukraine. Screenshot by USAID ESP.

In her welcoming remarks, Kathleen Kirsch, Energy Team Lead of the Office of Economic Growth, USAID/Ukraine, underlined that the connection of Ukraine’s electricity market with the European Union and Moldova is USAID’s key goal after facilitating the market launch in 2019. “We assist with further development of different segments ranging from bilateral contracts to ancillary services market and the ENTSO-E synchronization to foster the electricity market reform in Ukraine. This Roadmap comes at the right time, as Ukraine is on the way to joining the Joint Allocation Office for coordinated cross-border capacity auctions. We at USAID are very pleased to have provided comprehensive technical assistance to Ukraine’s energy sector partners to achieve this important milestone in European integration,” said Kathleen Kirsch.

“We are grateful to the USAID Energy Security Project for supporting the Regulator with this initiative. Developing a Roadmap is already the first step that will allow us to structure our work on the market coupling, particularly legal and regulatory aspects. We look forward to the presentation and fruitful discussion,” noted Volodymyr Buchyk, Head of the Unit of Strategic Development of Energy Markets and the Communal Services of the Office of Strategic Development and International Coordination from NEURC.

Pierre Milon, Head of Market Coupling Projects Algorithms at the EPEX SPOT. Screenshot by USAID ESP.

After the opening part, Pierre Milon, Head of Market Coupling Projects Algorithms at the EPEX SPOT, provided detailed guidance on the Roadmap, which includes five phases. “Today’s presentation is an important milestone. We move from the theory you received during a series of workshops into practice. This document includes everything you learned at the workshops and is in a real project mode, listing the deliverables and expected implementation timeline,” explained Pierre Milon.

The first phase is regulatory, a prerequisite to start the project, and indicates who is doing what, including the level of obligations. It covers Nominated Electricity Market Operator designation, the definition of the principles governing balancing responsible parties, and access rules of cross-border capacity.

Legal – the second phase combines project definition and definition of the operational phase on three levels: regional, bilateral, and central.

The Technical phase is a core of the project focusing on IT since we combine two bidding zones, for example, Ukraine and Moldova. The technical landscape is very complex and needs daily interaction between many parties.

The next one, the go-live phase, is also vital since several weeks after the launch, all implementors have to track the benefit and the added value of the market coupling and compare the before and after status.

The Organization phase, on the other hand, concludes the Roadmap because clean planning and well-set targets for all stakeholders pave the way for an efficient project.

The Roadmap is a living document. Its primary goal is to give all engaged parties an overview of what needs to be done, in which sequence, and by whom.

The next stage of the Roadmap and Capacity Building on Electricity Market Coupling Activity is the questions and answers process between NEURC, Market Operator, and Ukrenergo on one hand and USAID ESP and EPEX SPOT on the other. These parties will finalize the Roadmap and include all necessary tools and explanations in the final report for Ukraine’s energy sector partners, which will help them to realize the electricity market coupling with the EU markets and Moldova.