Еhe average cost of electricity imports doubled amid restrictions on the crossing capacity by Ukrenergo on August 3-4

On August 3-4, from 8:00 a.m. to 5:00 p.m., amid existing restrictions on access to the crossing, Ukrainian industry incurred additional costs for importing electricity in the amount of 83 euros/MWh.

This is reported by domestic industrial consumers.

On the specified days, a low level of renewable energy generation was observed in Ukraine due to cloudy weather, which led to a high price of electricity and led to an increase in the cost of crossing.

For two days (August 3-4), of the agreed ENTSO-E 1,445 MW (not including Moldova), on average 550 MW of crossing was available, or 38%, and from 11:00 a.m. to 4:00 p.m. imports were maximally limited.

The resource price of the daytime zone on August 3-4 from 08:00 to 17:00 for Ukraine was €126/MWh, import – €43/MWh (in certain hours – €0.00).

If in the last 9 weeks the crossing price was €10-30/MWh, then on August 3-4 the weighted average price was €60/MWh, during the hours of maximum restrictions – €150/MWh (average for 4 countries). On August 3 at 2 p.m., the maximum price for crossing with Slovakia was €300/MWh.

Thus, on August 3-4, in the time period from 08:00 to 17:00, the Ukrainian industry incurred additional costs related to the payment of access to the crossing in the amount of €83/MWh.

On June 1, 2024, the CMU Resolution No. 661 amended the «Regulations on the peculiarities of the import of electric energy under the conditions of the legal regime of martial law in Ukraine.» It obliges Ukrainian producers to buy at least 80% of electricity in the EU at the European price in order to avoid forced restrictions on electricity supply. Previously, the mandatory share of imports was 30%.

Such a decision of the government of Ukraine can lead to numerous negative consequences for domestic energy-dependent industrial companies.

The increase in electricity costs leads to a sharp increase in the cost of production, which makes it economically unprofitable to continue production, and some iron and steel enterprises warn that this may cause a complete stoppage of production. In general, the restriction of electricity supplies will inevitably lead to a significant decrease in production and exports.

As GMK Center reported, the wholesale price of electricity in Ukraine in July increased by 62% y/y, and is currently higher than in most EU countries. At the same time, more than 90% of steel in the European Union is produced in countries with cheaper electricity than in Ukraine.