Monitoring Report 04/2019

Monitoring Report 04/2019
August 19, 2019 Monitoring Reports

Executive summary

The most important development relevant to the implementation of the Energy Strategy in the last month was the election of a new President and a new Parliament. Correspondingly, we exceptionally dedicate two pages of this report on providing our view what we see as priorities for the new administration. Our five priorities are (1) Make gas and electricity markets competitive; (2) Increase the share of renewables, (3) Facilitating structural change in the coal sector and coal regions, (4) Raise investments in the energy infrastructure, (5) Further increase energy efficiency in the residential sector.
The other big event was the opening of the new electricity wholesale market. This is an eventful process which we follow in more detail in our Monitor of Electricity Market Opening (MEMO) series. LCU’s general assessment is that the transparency of activities on the regulated segments is a good start, but that the current rules establish a complex series of segments with administratively fixed prices. As long as structural issues such as cross-subsidisation and market power are not resolved – the market will not function to the long-term benefit of Ukrainian consumers.
Finally, we argue that a quick and cheap way to enable the integration of higher shares of renewables and ensure system stability is to allow the transmission system operator to temporarily reduce the output of wind and solar plants (so called curtailment).
In this Quarterly Monitoring Report we exceptionally analyse the developments of the past four month (April-July).

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