Challenges for the Electricity Market in the Region

CEE countries face various problems regarding the electricity market in many different areas such as environmental protection as well the broader economic and political contexts. Good examples of cooperation, such as the energy bridge with Lithuania, may encourage further efforts to integrate the electricity market in region enen beyond the current borders of the European Union. To what extent will it be possible to include Ukraine with its significant potential in the European electricity market?

 

The acquisition of electricity from renewable sources slowly repaces the traditional production methods found in Western Europe. The search for new solutions in the field of energy efficiency is also continuing. How can Central and Eastern Europe benefit from these experiences? What kind of undertakings and investments are necessary to change the energy market model? These and other challenges were discussed during the panel moderated by Professor Wojciech Gizicki.

The panel speakers included:

Natalia Slobodian, Head of Strategic Planning and Analysis Division, National Power Company “Ukrenergo”,

Isabel Soares, Director of Institutional Affairs and Markets, Directorate General of Energy and Geology,

Torsten Woellert, Team Leader Energy and Environment, Support Group for Ukraine, European Commission,

Victor Logatskiy, Leading Expert, Energy Programmes, Razumkov Centre for Economic & Political Studies.

The first speaker was Isabel Soares, who discussed the development and the challenges of the energy market in Portugal. She pointed out that the current energy policy assumes moving away from fossil fuel and placing emphasis on renewable energy – mainly wind and solar energy. – Portugal has a renewable energy development program with targets set by 2020. The main focus will be energy efficiency, as well as reaching the threshold of 32% of energy coming from renewable sources. This is why, the State will keep investing in this area. Wind energy cluster will be another focal point. Over the past ten years, Portugal has doubled the number of renewable energy sources installations. Isabel Soares mentioned that the development of renewable sources and energy efficiency is also possible due to the liberalization of the market. Thanks to this, competitiveness has increased. In addition, the legislation favors setting ambitious goals, such as construction of interconnectors for transferring solar energy from Portugal and Spain to other European countries. Ukraine could benefit from the rich Portuguese experience, where the situation looks quite different. In response Victor Logatskiy said that Ukraine has been introducing reforms in its energy sector since 2015. The new law – regarding the energy market and the natural gas market – is already ready. According to him, the new law is a milestone for the Ukrainian transformations in the energy area. However, the local market is still struggling with many problems. There are no stimulating transmission tariffs in Ukraine, therefore energy costs are very high. Victor Logatskyi also pointed out that investments in the energy and natural gas sector are still insufficient. Infrastructure and costs remain the key issues for the Ukrainian energy market. A slightly more optimistic vision of the development of the energy sector in Ukraine was presented by Natalia Slobodan from UkrEnergo. She sees the opportunity in building stations for electric cars, mainly those made in China. Contrary to the words of the previous speaker, Natalia Slobodan mentioned a multi-million investment in interconnectors. Another area that UkrEnergo intends to engage in is information technology. The electric power engineering is closely related to it and, above all, due to the security of transmission networks, digitization is necessary.

A similar opinion on the costs and low investments in the energy market in Ukraine was expressed by Torsten Woellert. According to him another problem is the lack of new power stations and that the government should have a concrete plan for tackiling this by developing a long-term solution plan for Ukrainian energy sector. The Ukrainian authorities should also not forget about the social support for those customers who are not able to pay high energy bills. Torsten Woellert also emphasized the issue of Ukrainian energy security: – Ukraine’s energy security affects the security of other countries as well. Every effort should be made to synchronize Ukraine with the European energy system and gradually disconnect it from the Russian system. Energy security is a matter of great effort, but it is worth taking. The German expert gave Poland as a rolemodel example, highlighting Poland’s activness in the field of electricity and intelligent solutions.

Changes in the energy sector of Ukraine still require a huge investment budget and support from the central authorities. The participants of the debate agreed that Ukraine has the potential to become an exporter of cheap and clean energy to other European countries. Before that Ukraine must face challenges in breaking away from Russia which will not be asy but will later benefit in the long run.