Elementum Energy, a subsidiary of VR Capital Group operating in the renewable energy sector, has signed the first pilot contract in Ukraine for price stabilization, the so-called Contract for Difference (CfD), between the 100 MW Dnistrovska Wind Power Plant, which it manages, and an industrial enterprise.

"The contract is designed for one year and is based on the CfD mechanism, which allows businesses to forecast their electricity costs and protects against price fluctuations. This mechanism has been successfully used in other countries, and is now being tested for the first time in the Ukrainian energy market," Elementum Energy noted in a release provided to the Energy Reform online portal.

It did not name the company with which the contract was concluded.

As explained by the company, according to the terms of the contract, the parties agree on a "price corridor" - a range within which market fluctuations do not entail additional settlements between the producer and the consumer. If the price of electricity on the market exceeds the upper limit, the producer compensates the consumer for the difference. If the lower limit is exceeded, the consumer compensates the producer for the difference. The settlements are based on the indicative price specified in the contract (for example, the basic index of the day-ahead market) and the agreed volume of electricity. At the same time, the company noted that there is no physical supply of electricity, and all transactions are carried out on the open market.

In its opinion, this approach minimizes volatility risks for both parties and creates the possibility of effective planning of costs in the energy market, and the pilot project will test the viability of the CfD mechanism in the conditions of modern regulation of the Ukrainian energy market.

"We are implementing an innovative tool in practice in the complex energy market of Ukraine, where instability has become the norm. Our pilot project will help evaluate how the CfD mechanism works in real conditions and will prepare the basis for its application in new large-scale projects that we are already developing," said Olha Rybachuk, Managing Director of Elementum Energy.

The company also emphasized that in war conditions, businesses are not ready to enter into long-term contracts for 10-20 years due to market uncertainty, but price stabilization tools for 1-3 years are of significant interest, since they allow you to predict costs and reduce risks.

The release notes that Elementum Energy is an international investor in the renewable energy sector of Ukraine. The company manages a portfolio of solar and wind power plants with a total capacity of 636 MW and continues to develop new projects in the field of wind energy and energy storage systems.

As reported, in early December 2024, Elementum Energy announced that it had acquired a 200 MW wind project in western Ukraine and planned to have it ready for construction in late 2025.