The Evolution of Trading in Ukraine's Bilateral Agreements Electricity Market: Challenges, Changes, and Prospects
Salashenko T. I.

Salashenko, Tetiana I. (2024) “The Evolution of Trading in Ukraine's Bilateral Agreements Electricity Market: Challenges, Changes, and Prospects.” The Problems of Economy 4:89–99.
https://doi.org/10.32983/2222-0712-2024-4-89-99

Section: Economics and national economy management

UDC 339.3: 621.3

Abstract:
In the structure of the Ukrainian electricity market, the bilateral agreements market was initially considered an unorganized segment. However, over time, most of the forward electricity trading has been transferred to an organised electronic platform. Over the 5 years of the liberalised electricity market in Ukraine, the bilateral agreements market has its own patterns, different from other market segments restricted by the price caps. The article aims to analyze the key trends in organized trading in the electricity at the bilateral agreements market and determine the directions for its further development, taking into account changes in the electricity system and regulatory advancements. The article provides analytical support for the organized forward electricity trading, which includes classification of trading forms, determination of the market balance and price trend, that allows to identify tendencies in its development. The analysis of organized electricity trading in the bilateral agreements market of Ukraine was carried out by the data of the Ukrainian Energy Exchange for the period from 01.07.2019 to 30.06.2024, which covers the launch of the European market model in Ukraine, the Covid-19 pandemic, the European energy crisis, the russian military aggression against Ukraine, including the 1st and 2nd phases of the energy terror. The key trends in the development of organized forward electricity trading in Ukraine can be identified as follows: (1) sharp changes in sales volumes due to changes in the condition of the electric power system and ongoing regulatory innovations; (2) wide diversification and lack of a consistent product portfolio; (3) dependence of agreement terms and electricity prices on the condition of the electric power system; (4) inconsistency between the bids of electricity supply and asks of electricity demand; (5) the own electricity price trend unrestricted by price caps. Further development of forward trading in Ukraine requires ensuring consistency between commercial and physical electricity flows as they approach the actual time of supply, which can be achieved by launching financial derivatives for electricity with the possibility of converting them into commodity products.

Keywords: electricity, bilateral agreements market, forward trading, auctions, organized platforms.

Fig.: 9. Bibl.: 10.

Salashenko Tetiana I. – Candidate of Sciences (Economics), Senior Research Fellow, Department of Industrial Policy and Energy Security, Research Centre for Industrial Problems of Development of NAS of Ukraine (2 floor 1-a Inzhenernyi Ln., Kharkіv, 61166, Ukraine)
Email: tisandch@gmail.com

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