Electricity export from Ukraine becomes more profitable

The Government of Ukraine has improved profitability of electricity exports from Ukraine to Slovakia, Hungary, Romania and Poland by allowing exporters to purchase electricity at the Wholesale Electricity Market (WEM) at reduced price. Such price will be based on the WEM Price reduced by the amount of so called “subsidy certificates” used as a tool for shifting the cost of electricity supplies to households at reduced prices to commercial and industrial customers.

This has been confirmed by the Resolution of the Cabinet of Ministers 163-p dated 28 March 2012. The Government has instructed the WEM Operator, state enterprise Energorynok, to reflect this change in its contracts with electricity suppliers.

Such price setting principle for electricity export has been in force for supplies to Belarus and Moldova since the summer of 2009.

According to the data from Energorynok, in 2011 the share of “subsidy certificates” in the WEM Price was 27.1%. Considering that WEM Price for March 2011 amounted approx. to 671 UAH/MWh (63.1 EUR/MWh based on today’s official rate of the National Bank), new reduced purchase price for electricity exporters will be close to 46 EUR/MWh (leaving aside general increasing trend for the WEM Price) that will create attractive margins and improve profitability of operations.

With such new economics of export, it is possible to expect increase of electricity supplies to Poland as export volumes in this direction were limited in the past years due to absence of positive margin.

DTEK remains the largest Ukrainian exporter of electricity currently performing all supplies to the Central and Eastern European countries.