23.09.2025
September 2025 was a month of price shock for the Ukrainian electricity market. A 40% price drop on the Day-Ahead Market (DAM) compared to August, with a virtually unchanged balance of supply and demand, triggered a crisis. Independent suppliers and traders suffered billions in losses, a wave of contract terminations began, and the financing for generation to get through the autumn-winter period was put at risk.
What really happened in the market? How transparent is competition today? And what changes will integration with the EU market bring? Participants of an online discussion hosted by the Energy Club on September 22 sought answers to these questions, moderated by the club’s Vice President and former Deputy Minister of Energy of Ukraine, Maksym Nemchynov.
The Price Shock and Its Causes
Dmytro Mariar, Commercial Director of D.TRADING, explained that the main factor behind the sharp decline was the operation of gas-fired generation in baseload mode due to the PSO (Public Service Obligations, which provide a preferential gas price for heat and electricity producers). This made gas generation competitive not only with coal but also with nuclear units.
Meanwhile, the electricity surplus led to a reduction in imports and a sharp increase in exports. Similar trends were observed in Europe: in September, prices fell by 46% in France and 21% in Spain.
Mariar emphasized that it is impossible to demand stability from the market:
“A trader’s earnings come from risk management. Only proper hedging allows companies to stay afloat.”
He also stressed the need to develop futures contracts, which requires strengthening the role of banks and the financial system.
The Need for New Tools
Kyrylo Arkhypov, Director of AK TRADE GROUP LLC, urged the market to switch to combined pricing formulas. In his opinion, contracts should incorporate a ratio like 50% DAM + 50% fixed price or another index to reduce volatility risks and provide predictability for consumers.
He proposed initiating a memorandum among suppliers willing to implement such formulas. According to Arkhypov, this would be the first step toward systemic changes that generating companies could later support.
Predictability and Long-Term Perspective
Volodymyr Omelchenko, Director of Energy Programs at the Razumkov Centre, considers the September price drop to be entirely predictable—due to seasonality, weather conditions, and the return of nuclear units from maintenance.
He emphasized that the key challenge is the instability of the DAM, and the solution lies in developing long-term contracts and financial instruments. At the same time, he noted, state-owned companies are afraid to move away from DAM-pegged pricing due to the risk of scrutiny from regulatory authorities.
Will Market Coupling Be the Solution?
The discussion’s moderator, Maksym Nemchynov, reminded participants that pegging prices to the DAM always carries high risks. Traders can earn a lot in favorable moments but can just as easily suffer losses. He supported the idea of introducing standardized products and stressed that creating a new index that considers both bilateral contracts and the DAM could be key to market development.
Information as the Key to Stability
Yuriy Pidlisnyi, Head of ENERGY 365 LLC, noted that no index alone can solve the market’s problems. In his view, the most important thing is access to information, which would allow for forecasting the situation a month or a quarter ahead.
“If there is information, there will be demand—and there will be products for consumers,” he summarized.
Conclusions
The September price collapse on the DAM exposed fundamental problems in the Ukrainian energy market:
The participants agreed that the future lies in implementing new pricing models, developing futures and standardized products, and ensuring transparent access to data. Market coupling with the EU will only accelerate this process, making the Ukrainian market more integrated but also more demanding in terms of player discipline.
