ECONOMIC FEASIBILITY OF DEVELOPMENT IN UKRAINE MODERATE LIBERALIZED MARKET OF THERMAL ENERGY

Keywords: heat production, third party access, single shopper model, operator in a competitive system, tariff, district heating

Abstract

Communities that own utilities in Ukraine suffer from poor quality services and high tariffs due to inefficient use. This article is devoted to the analysis of the dynamics of tariffs of enterprises that generate, transport and supply thermal energy, providing heating services for residential buildings and hot water supply in Ukraine, as well as the study of the functioning of the competitive market model of thermal energy producers in the European Union and borrowing their positive experience in Ukraine in order to protect the economic interests of consumers, preserve the heat supply system, prevent the division of the heating network into groups of objects that are heated by separate small boiler houses, by ensuring competitive tariffs in comparison with individual and autonomous heating systems. Different countries with a competitive heat market have different approaches to tariff setting, protection of heating utilities or investment protection. It was found that a moderately liberalized heat energy market may be acceptable for Ukrainian conditions, providing for moderate protection of the main producers – heat supply utilities and creating market conditions for independent producers. Considering that the overwhelming majority of apartment buildings in Ukraine are connected to the district heating system, and the system itself is monopolized by the state, a decrease in heat tariffs is possible if independent heat energy producers are connected to the centralized network of capacities, operating on biofuel or other alternative types of energy that can offer higher quality services at a lower cost compared to that offered by the old utility heat supply companies, which are mainly dependent on gas or coal. This article shows that the model of tariff formation in Ukraine, proposed on the basis of studying approaches to setting tariffs in the European Union, gives a moderate decrease in the weighted average tariff for heat energy for the end user at the initial stage of market development, ensures fair competition between the operator – a utility company and independent manufacturers, and also stimulates the operator to improve the efficiency of their own production.

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Published
2021-01-26
How to Cite
Yushchenko, N. (2021). ECONOMIC FEASIBILITY OF DEVELOPMENT IN UKRAINE MODERATE LIBERALIZED MARKET OF THERMAL ENERGY. Economy and Society, (23). https://doi.org/10.32782/2524-0072/2021-23-21
Section
ECONOMICS