Electricity — is one of the most important forms of energy.
In the past two decades in power markets all around the world a considerable changes in the direction of liberalization and restructuring of market principles functioning are taking place. The branch which once dominated by state-controlled monopolies subjected to large-scale privatization and liberalization. Today, almost all EU countries have free electricity market, all consumers have the right and possibility to choose supplier. Ukraine is no exception, and now reforms aimed at creating a transparent competitive market are being implemented on the domestic electricity market. In addition the electricity reform urgency is caused by accession of Ukraine in late 2010 to the European Energy Community, which requires transformation of the Ukrainian market to the competitive and transparent trading mechanisms.
Electricity is a commodity — it is produced, purchased and sold. This product has its own specific features:
- properties of the electricity as commodity can vary in time;
- processes of electricity production and consumption concur in time, and the volumes of produced and consumed electricity are the same every time;
- it is not possible to create energy reserves as a finished commodity;
- precise amount of generation and consumption can not be planned in advance;
- properties of the product largely depends not only on the supplier but also on the consumer.
One of the elements of the reformed electricity market structure will be a day-ahead market, which is presented by the power exchange. The day-ahead market is the most important sector in terms of market pricing and flexible management of production schedules. Market participants can submit bids to sell or buy energy in advance, but not later than a certain time for each hour of next day. The day-ahead market is based on competitive pricing mechanism and is a bids auction, which is held one day before the actual delivery of electricity.
Towards a new Electricity Market of Ukraine