15:46 30.11.2021

Fall in electricity prices can affect ability of thermal generation to purchase fuel in autumn-winter period – DTEK

3 min read
Fall in electricity prices can affect ability of thermal generation to purchase fuel in autumn-winter period – DTEK

The fall in electricity prices on the market to the minimum permissible level during night hours will lead to a catastrophic situation for all players, Dmytro Sakharuk, Executive Director of DTEK, has said.

"This means that all producers are working at a loss. This will lead to the impossibility of buying fuel, especially if we are talking about imported coal, and to the fact that we will have a financial imbalance already at the very beginning and in the middle of the autumn-winter period," he told Energy Reform on the sidelines of the European Business Association's energy debate held in Kyiv on Monday.

At the same time, the DTEK Executive Director pointed out the need for the regulator to intervene in this situation "in order to ensure market pricing and prevent such catastrophic prices at night."

According to Sakharuk, the collapse of prices is associated with a change in a commercial strategy of the state-owned enterprise Guaranteed Buyer, aimed at lowering prices on the market, and the import of electricity from Belarus.

"This is not a logical price at all. There cannot be a price of UAH 0.10 or UAH 0.30 in a situation when the market is in such great demand. From what we analyze and see, the reason for this is a change in a commercial strategy of Guaranteed Buyer. Immediately after the appointment of a new leader, a low price was set in order to lower its level on the market, as we understand it. At the same time, the import of electricity also has certain influence, which also comes in at night. Those suppliers who sell it have lowered the price. We get the domino principle, when suppliers successively reduce the price at night to UAH 0.10-0.30," the executive director said.

According to him, this will have serious negative consequences not only for thermal generation, but also for Energoatom, in particular.

"It is critically important for Energoatom to have an economically justified price in order to fulfill the service obligation to provide the population with the resource," Sakharuk emphasized.

At the same time, he pointed out that despite the observance of a planned level of coal production, as well as large import contracts, the company cannot yet provide guaranteed fuel reserves at its stations due to the increased load on them due to the operation of Centrenergo with a minimum set of equipment, no more than three-four units out of 23.

"We cannot provide guaranteed reserves, because we work instead of Centrenergo," Sakharuk said, noting that all the six contracted consignments of coal from the USA and Colombia will arrive in Ukraine according to the plan – in December-January.

"We have not been importing coal from Kazakhstan since November [due to the blocking of transit by Russia]," the top manager of DTEK said.

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