On January 17, 2024, the USAID Energy Security Project (ESP) launched a project to improve risk management and financial guarantees in the energy sector of Ukraine. The project aims to address non-payment and debt accumulation issues in the balancing electricity market.
“Due to Russia’s full-scale invasion, Ukraine’s electricity market is in a very difficult situation due to financial debt, in particular in the balancing market. Obviously, to overcome these challenges, it is necessary to review and improve the processes related to the financial security of market participants and key entities in this market segment. To help Ukraine address these challenges and strengthen its energy markets, USAID ESP, together with key beneficiaries and stakeholders, in cooperation with Ernst & Young, started implementation of a project to improve the risk management system and financial guarantee mechanism in the balancing market,” said Kathleen Kirsch, Energy Team Lead of the Office of Critical Infrastructure at the USAID/Ukraine Office of Economic Growth.
The new project will help:
- find out the key reasons for the accumulation of debt;
- assess the risks to financial settlements for transactions in the balancing market;
- improve financial guarantee mechanisms to ensure market sustainability; and
- facilitate the gradual implementation of the clearing mechanism and integration of Ukrainian energy markets into European ones.
“We are confident that this project will result in a significant improvement in the financial situation of Ukrenergo as the Transmission System Operator, and all market participants, as well as will pave the way for the introduction of secure clearing in the electricity sector, and successful market integration with the EU,” said Dr. Fatih Kolmek, USAID ESP Electricity Sector Lead.
USAID ESP will implement the project to improve the risk management system and financial guarantee mechanism in the balancing market jointly with the Ministry of Energy of Ukraine, NPC Ukrenergo, and the Energy Community Secretariat.