Resale of electrical energy (trading activities)
Trader is a new concept for the Ukrainian electricity market.
Traders buy and sell electricity under bilateral agreements and in organized segments of the electricity market (except for its sale under an electricity supply agreement to a consumer), based on the license obtained.
The Law of Ukraine "On the Electricity Market" defines the legal, economic and organizational principles of the functioning of the electricity market, regulates relations related to the production, transmission, distribution, purchase and sale, and supply of electricity to ensure reliable and safe supply of electricity to consumers, taking into account the interests of consumers, the development of market relations, minimizing the costs of electricity supply, and minimizing the negative impact on the environment.
Electrical energy is a commodity that is generated and consumed immediately. Its storage capabilities are quite limited even at present. Therefore, electricity must be produced at the moment when consumers need to consume it. At the same time, it is important to maintain a balance of production and consumption for the proper functioning of the energy system of Ukraine.
These features of electricity are always taken into account when forming various markets. Therefore, the new electricity market in Ukraine involves the sequential establishment and operation of several markets - from bilateral contracts for the purchase of electricity a year or a month in advance to the actual supply of electricity "day in advance" and the intraday market.
Day-ahead market (DAM) – an organized segment of the electricity market where electricity is bought and sold for the day following the trading day
Intraday market (IDM) – an organized segment of the electricity market in which the purchase and sale of electricity is carried out continuously after the end of trading on the day-ahead market and during the day of physical supply of electricity
Balancing market (BR) – an organized market segment organized by the electricity transmission system operator to ensure sufficient volumes of electrical capacity and energy necessary for real-time balancing of electricity production and import volumes and electricity consumption and export volumes, settlement of system constraints in the unified energy system of Ukraine, as well as financial settlement of electricity imbalances
Bilateral Contracts Market (BCM) – the market for free commercial relations, including using exchange platforms, and its most interesting market for traders is the forward contracts market.
The enterprise is governed by the following regulatory legal acts:
- Law of Ukraine "On the Electricity Market"«
- Law of Ukraine "On the National Commission for State Regulation in the Spheres of Energy and Utilities"«
- Resolution of the National Commission for the Energy and Utilities of Ukraine No. 307 dated March 14, 2018 «On Approval of the Market Rules»
- Resolution of the National Commission for the Energy and Utilities of Ukraine No. 308 dated March 14, 2018 «On approval of the Rules of the day-ahead and intraday markets«
- Resolution of the National Commission for the Regulation of the Energy and Utilities Sector of Ukraine No. 309 dated March 14, 2018 «On Approval of the Transmission System Code»
- Resolution of the National Commission for the Regulation of the Energy Sector of Ukraine No. 310 dated March 14, 2018 «On Approval of the Distribution Systems Code»
- Resolution of the National Commission for the Regulation of the National Energy Regulatory Commission of Ukraine No. 311 dated March 14, 2018 «On Approval of the Code of Commercial Electricity Accounting»
- Resolution of the National Commission for the Regulation of the National Energy Regulatory Commission of Ukraine No. 312 dated March 14, 2018 «On Approval of the Rules of the Retail Electricity Market»
- RESOLUTION OF THE NEURC dated 27.12.2017 No. 1468 On approval of the Licensing Conditions for conducting economic activities for the resale of electricity (trading activities)
What principles are inherent in trading activities?
The wholesale electricity market is a purely financial market, and its mechanisms are financial mechanisms for ensuring the implementation of a purchase and sale agreement. It has nothing to do with goods.
A contract concluded on the wholesale market is irrevocable. Or rather, its termination costs a lot of money. Therefore, you need to know the client's consumption schedule in advance and predict prices in order to plan the necessary supplies. And the schedule will have to be checked daily and hourly during the contract period so as not to "fly out" to the most expensive segment - the balancing market.
A trader should forecast market prices, but never buy electricity at the forecast price. The forecast determines the trader's strategy: what, where, and how to buy to get the optimal price. And you need to buy at the forward price, which the market has determined using the supply and demand method.
The job of a trader is a job with risks. The price of electricity on the market can change every hour, but the trader must sell electricity at the contract price. The wholesale market lives one life, and the retail market another.
In his forecasts, the trader takes into account how the cost of electricity will be affected by regulatory restrictions (for example, price caps), capacity availability, repair campaigns, the increasing role of renewable energy sources, import availability, consumption characteristics, and weather conditions.
Traders are guided and choose the forward market as the most optimal, from the point of view of price formation. This market sells a mix of electricity of different generation (nuclear, thermal, hydro). While bilateral contracts are a specific contract with a specific generation, which never has signs of an optimal price.
Traders use a lot of analytical data in their activities: primary sources, statistics, analytical research, etc.
Traders have the right to:
buy and sell electricity on the electricity market;
freely choose a counterparty under a bilateral agreement;
for timely and full receipt of funds for sold electricity in accordance with concluded contracts;
access to information regarding activities on the electricity market in the manner and to the extent determined by market rules and other regulatory legal acts regulating the functioning of the electricity market;
other rights provided for by regulatory legal acts regulating the functioning of the electricity market and the terms of contracts concluded by them on the electricity market.
Traders are obliged to:
comply with the licensing conditions for conducting economic activities in trading activities and other regulatory legal acts regulating the functioning of the electricity market;
to conclude contracts mandatory for carrying out activities in the electricity market and to fulfill the terms of such contracts;
provide notifications about contractual volumes of purchase and sale of electricity under bilateral agreements, in particular imported and exported electricity, in accordance with the procedure determined by the market rules;
bear financial responsibility for electricity imbalances in accordance with market rules;
pay on time and in full for electricity purchased on the electricity market and services provided on the electricity market;
provide the Regulator with the information necessary for it to exercise its functions and powers established by law.
LLC «GREEN SYNERGY»
Working hours: Monday - Friday from 8 am to 5 pm. Closed: Saturday, Sunday.
Address: 88000, Ukraine, Zakarpattia region, Uzhhorod city, Mynayska st., building 38/80, sq. 215
Tel.: +38 (099) 358 17 89
E-mail: union.green.synergy@gmail.com