10.09.2025
The electricity market of Ukraine is experiencing an unprecedented crisis. A 40% collapse in spot prices on the day-ahead market (DAM) and intraday market (IDM) compared to August, with an unchanged supply and demand balance, poses real threats to the entire industry. Market participants—traders, suppliers, and balancing groups—have already incurred losses of several billion hryvnias. The price crisis is triggering a chain reaction: consumers are massively terminating fixed-price contracts, payment discipline is deteriorating, and companies are unable to fulfill their obligations.
This poses a direct threat to the financing of generation, the stable passage of the 2025/2026 autumn-winter period (AWP), and risks a systemic energy crisis. If the current practice continues, there is a high probability that a significant number of suppliers will exit the market, leading to the disappearance of competition and creating the conditions for monopolization.
These issues were central to an emergency online meeting, “Power Market Crisis — Falling Prices and a Threat to the 2025/2026 AWP,” organized by Energy Club, which brought together over 55 market participants.
Market Diagnosis: The Retail Market is Pegged to a Non-Indicative DAM
Olha Babii, Advisor to the Head of the National Security and Defense Council of Ukraine and a member of NEURC (2019-2024), expressed a professional opinion with which all attendees agreed:
Demand has disappeared from the DAM spot market, leading to a significant decrease in the price of electricity, which has serious consequences for the market. Traders who purchased electricity under bilateral contracts at an “Energoatom” auction are facing losses and terminating contracts. NNEGC “Energoatom” is forced to enter the DAM with its supply to sell the remaining volume, which in turn affects both the intraday and balancing markets.
The root of the situation is that the retail market is pegged to the price on the DAM, which is not indicative, as its share in the overall structure is only 25-27%. The retail price for the end consumer cannot be formed on a segment with such a small share.
This scenario of price collapses on the DAM has repeated for the fifth time, particularly in September when there is a large volume of generation. The problem is not the DAM itself, but the retail price being pegged to it. If it were pegged to the price of forwards on the Ukrainian Energy Exchange (UEB), no one would pay attention to the DAM, and it would become a regular spot market.
There are now grounds for an investigation based on participants’ complaints regarding the justification for low-priced sales bids. The investigation should not aim to punish anyone but to draw conclusions and prevent such bids in the future. The retail market needs to be “healed,” otherwise, in a month, we will see how many suppliers survive.
This position was supported by Maksym Nemchynov, Vice President of Energy Club:
We must clearly understand: the objective market price for electricity should be formed as an index from several markets based on volumes. Pegging it to DAM prices causes numerous problems. Unfortunately, the desire of traders to make a profit is somehow not supported by risk assessment.
Position of the Transmission System Operator and the Exchange
Oleksandr Volkov, Head of the Settlement Administration Department at NPC “Ukrenergo,” reported that in recent weeks, significant generation surpluses have been occurring, especially during the day.
In this situation, the substantial generation potential leads to certain companies lowering their bids to avoid imbalances and maximize the sale of electricity. Unfortunately, payment delays to generators have been ongoing for almost a year, and we are trying to support them. Under the REMIT procedure, we will compile indicators and submit them to the regulator so that it can draw the appropriate conclusions.
Representatives of the Ukrainian Energy Exchange (UEB) demonstrated that volatility also exists in other European markets, but they apply risk-management tools. To solve the problem, the UEB proposed additional hedging products (deliverable forwards and financial futures) and reminded participants of the possibility of using short-term contracts (weekly, ten-day) for a more flexible response to market changes.
Market Participants’ Views
Yurii Pidlisnyi, Head of ENERGY 365 LLC:
In my opinion, it is better to introduce long-term contracts and not adjust to the DAM, but rather to allow the lineup of suppliers to develop.
Bohdan Koval, Head of the Legal Department at Energy Link Trade LLC:
The situation is systemic in nature. We support the position outlined in the appeal and consider it necessary to urgently hold a meeting with all key players. If the current practice continues, there is a high risk of dismantling free-market mechanisms and leading to monopolization. Regarding penalties, in such situations, traders suffer losses due to external factors. Imposing fines and restricting access to trading only deepens the crisis.
Maksym Osaulenko, “Volynenergospostach”:
He called the situation a result of manipulative actions by state-owned generation aimed at pushing traders out of the market. As a result, our company has been operating at a loss for 5 of the last 8 months. The average purchase price on the UEB is UAH 4,900, while the price on the DAM over the last 8 days has been UAH 3,735, which is almost 25% lower.
Conclusions and Next Steps
Summarizing the discussion, Maksym Nemchynov, Vice President of Energy Club, emphasized that discipline and guarantees in the electricity market must be mutual. He announced follow-up meetings on this topic, after which, taking into account all proposals, letters will be sent to the relevant authorities to convey the consolidated position of market participants and propose solutions to the problem.
