DIRECTIONS OF REALIZATION OF THE ORGANIZATIONAL AND ECONOMIC MECHANISM OF FORMATION OF THE ENERGY SECURITY SYSTEM OF UKRAINE: THE ELECTRIC POWER ASPECT

Abstract

The process of reforming the electricity market has been underway for a long time. The European market liberalization guidelines encourage changes in Ukraine. However, internal contradictions of the domestic market slow down these changes. The basis for these changes is the Law of Ukraine, "On the Electricity Market," adopted in 2017, which lays the foundation for deep reform. This is manifested in the following: all enterprises (producers and suppliers) in the electricity market must operate on separate, self-organized principles; openness and transparency, and free access to the use of networks of all business entities based on public contracts; the law provides for and creates several electricity markets: the intraday market, the balancing market, and the ancillary services market. Each has a separate operating procedure, electricity purchase and sale system, pricing, and the establishment of sales volume standards and quotas. The purpose of the article is to determine the priority areas for implementing the organizational and economic mechanism for the formation of Ukraine's energy security system in the context of the electricity sector. The situation in the electricity market requires significant investments (about USD 25 billion over ten years) to ensure the reliability and continuity of electricity supply. Reform of the electricity market should be based on the following principles: efficiency and transparency of the National Commission for State Regulation of Energy and Public Utilities; separation of electricity generation from distribution; certification of the transmission system operator; updating system, technical, software and information software; optimization of measures and reform of the retail market to meet the needs of consumers; economic justification of pricing to meet the needs and capabilities of consumers, including changes in the cross-subsidization mechanism. Implementing the planned goals and priority areas will help reduce risks in reforming the electricity market, intensify the competitive basis between market participants (entities), create conditions for improving service quality, and limit negative factors' impact on the environment with an incentive pricing policy. The structured structure of the organizational and economic mechanism will allow us to systematize the understanding of the stages of the electricity market functioning. Thus, a unified system of interrelations between the goals of reform, the search for reform methods, sources of financial support, subject and object positions, principles, and methods of their regulation, which directly or indirectly affect the efficiency of the electricity market, will be formed.