PJSC Donbasenergo alerts that the avalanche collapse of electricity prices in July 2021 will cause irreversible effects for the entire power grid of Ukraine.

Systematic market juggling, as well as imperfections in the regulatory framework under which the Ukrainian power generation has to operate brought the price in the Day-Ahead Market to 930 UAH/MWh in May and to 1362 UAH/MWh in June. In some six days of July, the price "collapsed" to 770 UAH/MWh. As a result, the price on the Day-Ahead Market fell to its lowest point in the history of the new market model in just a few days this month.

Any generation facility, let alone thermal generation, which produces between 2.7 and 5.6 GW of power to the system every day, cannot cover the electricity cost at this price level. All producers are now making catastrophic losses, especially as fuel prices are rising (coal on the European hub (API2) is offered at $120/t, while the price of gas in Ukraine exceeds 15,000 UAH/m3). Just to compare, electricity prices in European neighboring markets (Hungary, Slovakia, Romania) have reached the €100/MWh point.

Donbasenergo has repeatedly spoken to state authorities - the Cabinet of Ministers of Ukraine, the Ministry of Energy and Coal Industry, the National Energy and Utilities Regulatory Commission (the NEURC), the National Security and Defense Council of Ukraine - about the irreversible effects of such losses for thermal generation which costs about UAH 1,600/MWh to produce.

Yesterday, the Regulator's efforts began an investigation into the events that took place in recent days on the Day-Ahead Market. The NEURC chairman, Valerii Tarasiuk, said, however, that "this is not a market action - it is a life-saving action... when the market "went down". Note that even these life-saving actions only helped the price rise to the 861-hryvnia mark.

PJSC Donbasenergo claims that it has been generating only losses for a long time now, which led to its inability to pay NEC Ukrenergo, after which the latter classified the company as "defaulted".

Unless the situation is stabilized promptly, Ukrainian power-generating companies will not be able to stockpile coal in preparation for the autumn-winter period of 2021/2022. Because of the Regulator's inaction, generating businesses may soon be unable to meet their financial responsibilities to counterparties and employees, resulting in the next energy company bankruptcy and a social explosion involving the firing of tens of thousands of people.

With insufficient in-house capacity, Ukraine's 2022 strategic goal of synchronization with the European ENTSO-E grid is out of the question. Ukraine is progressively losing its own generation, becoming import-dependent, and eventually losing entire energy independence!

Donbasenergo urges the Regulator and all state bodies to step in without delay and remedy the situation in the electricity market, put an end to juggling and work out ways to keep such large-scale disasters from happening in the market again.

For reference: As of July 01, 2021, 60.86% holder of PJSC Donbasenergo is ENERGOINVEST HOLDING Private Joint Stock Company, 25% + 1 share are held by the state represented by the State Property Fund of Ukraine.

PJSC Donbasenergo unites two power plants: Sloviansk and Starobeshevo TPP (the latter has been located in the territory beyond the control of Ukraine since 2014). Since March 2017, due to the loss of control over the temporarily occupied Donetsk Region, annual performance indicators of assets located there are not included in Donbasenergo consolidated records of accounts.

The total installed capacity of Sloviansk TPP is 880 MW.