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“The debt crisis in the renewable energy market remains severe,” emphasized Andriy Konechenkov, Chairman of the UWEA Board, speaking at the Energy Day 2024, organized by the European Business Association. As of September 2024, the debt owed by the SE “Energoatom” to the SE “Guaranteed Buyer” amounts to UAH 12.4 billion, while the SE “Guaranteed Buyer”, in turn, owes universal service providers UAH 12.3 billion. The situation is particularly severe with outstanding payments to renewable energy producers, which exceed UAH 35.8 billion.
As the UWEA has repeatedly informed, the debt chain to renewable energy producers begins with NPC “Ukrenergo”, which owes the SE “Guaranteed Buyer” around UAH 29 billion for services to increase the share of electricity produced from renewable sources. This is due to insufficient and incomplete tariff payments by other market participants (the current transmission tariff stands at UAH 528.57/MWh). Acting CEO of Ukrenergo, Oleksiy Brekht, recently stated that the company aims to achieve a break-even tariff for 2025, by, inter alia, raising it to UAH 780.41/MWh which could be one of the measures to resolve the protracted debt crisis, provided that market participants pay it on time and in full.
UWEA supports the national transmission system operator's intention to introduce an economically justified transmission tariff in 2025. According to our estimates, to cover the forecasted PSO for RES and the UAH 7 billion tariff deficit remaining from 2022-2023, the tariff needs to be at least UAH 710/MWh. However, even with this rate, it will be difficult for Ukrenergo to fully repay its debts to the SE “Guaranteed Buyer”.
The 2024 transmission tariff is also expected to be in deficit. It is estimated that the tariff will lack UAH 6-8 billion for the cost of PSO for RES alone. This deficit will be verified in 2025 and, accordingly, should be included in the 2025 tariff or future periods. “It is now crucial to stop the trend of deficit transmission tariffs, as this will continue to drive up the tariff to cover endless debts. The UWEA hopes that the NEURC will make a balanced decision and ensure stable funding for Ukrenergo,” commented Andriy Konechenkov.
UWEA also urges the Cabinet of Ministers of Ukraine, the Ministry of Energy, the Ministry of Economy, and the NEURC to continue working on finding financial sources and ways to improve the liquidity of the electricity market. One potential solution is engaging Ukrainian banks to provide targeted financing for Energoatom, which is currently being actively discussed.
While various options for restoring payment discipline in Ukraine’s electricity market are being considered by state market participants, including Ukrenergo, real results from the measures taken will only be achieved with the active involvement of all market stakeholders, including private businesses. The debt crisis is a shared challenge that affects the entire market—distribution and transmission system operators, , the Guaranteed Buyer, and RES electricity producers—so resolving it requires open and transparent dialogue between the government and businesses.
Moreover, the debt crisis is negatively impacting other market tools aimed at improving the market environment. For instance, because the SE “Guaranteed Buyer” appears financially unreliable, renewable energy producers are reluctant to participate in long-awaited auctions. This, in turn, threatens the government’s goal of constructing 6.1 GW of onshore wind projects by 2030, as outlined in the National Renewable Energy Action Plan—not to mention the start of offshore wind projects also included in the plan.
“Supporting market liquidity today is a matter of energy security and energy independence for Ukraine. The continued development of decentralized ‘green’ generation depends on favourable market conditions, which the government regularly commits to. We expect the government to move from declarations to actions and create attractive conditions for new investments in the renewable energy sector,” emphasized Andriy Konechenkov.
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