Vsevolod Kovalchuk, CEO at Ukrenergo, during his speech on the Integration of the IPS of Ukraine with Europe highlighted the fact of dependence of the Ukrainian energy sector on the Russian Federation. Deficit of the anthracite coal and consequently its import from Russia as well as synchronization of the Ukranian, Russian and Moldovan grids are two key factors of the abovementioned issue.Integration with the EU energy system for Ukraine is not possible so as it is for Moldova (following the "Agreement on Conditions for Future Interconnections of the IPS of Ukraine and PS of Moldova with ENTSO-E"). Integration is vital both wihin security aspect and future economic benefits for Ukraine.

1. Integration of the IPS of Ukraine to ENTSOE.
Opportunities. Tasks.

2. ENERGY STRATEGY OF UKRAINE UNTIL 2035
2020 2025
New Energy Strategy “Safety, Energy Efficiency, Competitiveness” stipulates the strategic goals of
the fuel and energy complex of Ukraine by 2035. The Government approved the document on
August 18, 2017.
Implementation of the most actions to
integrate the IPS of Ukraine into ENTSO-E
by 2020.
Integration of the Ukrainian power system
and ENTSO-E continental Europe zone in an
operational mode by 2025.
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3. AGREEMENT ON INTEGRATION
OF THE IPS OF UKRAINE TO ENTSO-E
New energy market implementation is possible only within integration of the IPS of Ukraine to ENTSO-E
Advantages of synchronization:
• Strengthening of the reliability and resiliency of the IPS of Ukraine by means of facilities modernization according to the EU
standards within Agreement Action Catalogue implementation
• Diversification of the energy sources and transparent terms of the mutual assistance
• Introduction of the auxiliary services market (frequency control, ensuring the energy reliability and quality properties)
• Demonopolization of the domestic energy market by means of a competition right after ENTSO-E membership
• Increase the electricity trading by 4 times- up to 18-20 bln kV*h/y
The Agreement on Conditions for Future Interconnections of the IPS of
Ukraine and PS of Moldova with the ENTSO-E energy system of the
Continental Europe was signed on the 28th of June 2017 in Brussels.
The Agreement came into force
on the 7th of July 2017.
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4. TWO ELEMENTS OF THE EU-DIRECTION
MARKET INTEGRATION
Market integration
without network integration
is impossible
NETWORK INTEGRATION
Network integration without
market integration is futile
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5. MILESTONES TO THE EU-WIDE MARKET
Implementation of the electricity market target model
according to the “Third Energy Package” requirements
 Trade of the border-crossing throughput
 Day-ahead common market
 Common intraday market
 Common reserve market
 Common balancing market.
Integration into the EU-wide power market provides for the implementation of the market
relations in Ukraine in accordance with the EU Directives and Regulations.
Law № 2019-VIII «On electricity market» dd. 13.04.2017 provides for functioning in Ukraine
the following market sectors starting from 2019:
• Market of bilateral agreements;
• Day-ahead common market;
• Intraday market;
• Auxiliary services market;
• Balancing market
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6. SE “NPC”UKRENERGO” IS A REFORM KEY
INFRASTRUCTURE ENTERPRISE IN A NEW MARKET
Market balancing – real-time dispatch
and balancing market, imbalance
settlement post factum.
Assurance of the power
transmission between the country
regions and EU countries removing
some possible restrictions.
Assurance of the commercial
account– basis for the
“technocratic” distribution and
supply unbundling.
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7. WHAT IS THE AGREEMENT FOR?
The Agreement on Conditions for Future Interconnections of the IPS of Ukraine
with the ENTSO-E contains a number of obligations and deadlines for the
Ukrainian party as well as specific monitoring mechanisms by the ENTSO-E.
The Document includes as well the Catalogue of requirements which
unconditional implementation is mandatory to join the IPS of Ukraine to the
ENTSO-E, a list of the additional studies and a Roadmap.
The Agreement obliges Ukrenergo to implement the technical provisions listed in the Action Catalogue.
Deadline to implement the Action Catalogue- July, 2022.
In case of a successful isolated functioning of the IPS of Ukraine, the ENTSO-E will consider the synchronic
functioning with the Ukrainian power system.
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8. TECHNICAL INTEGRATION – COMPLIANCE WITH THE ENTSO-E
STANDARDS
Network integration involves the implementation of the organizational and technical
measures which main task is to ensure an adequate level of the ENTSO-E union
operational security.
Ukraine should ensure:
 Frequency and voltage control;
 Voltage and reactive power control;
 Protection of the power system (RPAE and AEC)
 Operational planning
 Operational security analysis (frequency and quality of the electric modes calculation)
 Emergencies prevention and liquidation measures
The Agreement Action Catalogue is 95% based on the requirements of the «Operational Handbook».
Most of actions relate to the improvement of the internal processes of the SE “NPC”Ukrenergo” as a TSO.
Implementation of measures regarding frequency and voltage control as well as ensuring of the voltage
stability are impossible without the involvement of the other companies.
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9. TECHNICAL INTEGRATION – TSO AND MARKET PLAYERS
JOINT PROJECT
TRANSMISSION SYSTEM
OPERATOR
Balancing organization and
coordination
BALANCING SERVICES
SUPPLIERS
Changing the voltage due to the TSO
instructions
СПОЖИВАЧІ
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10. SE “NPC “UKRENERGO” ACTIONS
 Modernization of the company internal processes and reporting for the
ENTSO-E;
 Study of the IPS of Ukraine sustainability;
 Organization of communication channels with SS and TSO;
 Modernization of the dispatch control automation system
(SCADA/AGC/EMS, WAMS);
 Reconstruction of PTL (KhNPP – Zheshuv, Lviv – Stryi)
 Construction of new PTL and SS(SS 330 kV «Slobozhanska», OHL 330kV
Kupiansk - Kremenska, OHL 330kV Zmiivska TPP-Kupiansk, OHL 220kV
Luhanska TPP-Lysychansk, OHL-220kV and Luhanska TPP - Youvileyna,
OHL-330kV Vuhlehirska - Tsentralna No 1,2)
 Testing of the IPS of Ukraine functioning
SE “NPC”Ukrenergo” actions contain five directions: processes and reporting, researches and
calculations, TSO technical support, strengthening of the home networks and IPS of Ukraine testing.
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Action Catalogue implementation costs amount to UAH 4 bln

11. MARKET PLAYERS ACTIONS
GENERATION CONSUMERS NEW PLAYERS
• The power system needs different types of reserves to control the frequency and voltage: primary
reserves (FCR), automatic and manual secondary reserves (aFRR та mFRR), tertiary reserves (RR).
• Transmission System Operator defines the necessary scope of the reserve.
• Balancing services may be provided both by the traditional suppliers (production) and new players
(consumers and facilities according to new technologies).
• Particular suppliers of the balancing services are defined at the Auxiliary Services Market
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Costs:
up to UAH 10 bln

12. WHY DO WE NEED CHANGES?
4% 96%
A complete synchronization of the Ukrainian power system with the ENTSO-E one as well as its separation from the
interconnected operation with the Russian and Belarussian power systems are the only ways to change the current situation.
The Integrated Power System of Ukraine is technologically connected to the power systems of Russia, Belarus and Moldova
as well they operate in parallel.
It means the power systems operate in a common mode and the frequency is similar. An actual control of the system is
carried out by Russia as an owner of the greatest generating facilities.
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13. SYNCHRONIZATION ESSENCE
SECURITY ASPECT
 Technologically the synchronization with ENTSO-E will strengthen the stability
of the Ukrainian power system and minimize the dependence on the coal
supply to the thermal units in Ukraine.
 Ukraine will have the opportunity to get the emergency aid from the ENTSO-E
countries power systems on commercial and competitive terms.
 Total technological level of the power system exploitation and the supplying
security level will be higher due to the ENTSO-E strict requirements for the
synchronization preparation.
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14. SYNCHRONIZATION ESSENCE
ECONOMICAL ASPECT 18-20
bln kV*h/y
4-5
Outlook of the electricity trading with the EU-countries
As of today
After
synchronization
Synchronous operation with ENТSO-E allows
to increase the electricity trading with the
EU-countries using the production facilities
more efficiently (including NPP).
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15. SYNCHRONIZATION ESSENCE
CONSUMER PROTECTION
Ensuring the consumer with the right to choose is a
key element of a free market which is possible only via
integration to ENTSO-E.
Any synchronization with ENTSO-E: new power market model may not come into force given a high probability of the
monopolists influence on the competition to preserve their excess profit.
Market coupling with the other countries allows to reduce the cost of
electricity drastically. European power markets liberalization proves a
tendency of lower prices (Baltic countries).
Estimation of the cost of electricity at the day-
ahead market after synchronization with ENTSO-
E
- 25-30%
Ukrainian business and production in particular will become more
competitive on the foreign and domestic markets owing to the
expected lower cost of prices.
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16. BUSINESS BENEFITS FROM INTEGRATION WITH ENTSO-E
Transparent electricity pricing and stable
price for a long period of time
30 % decrease in the wholesale
electricity price in the long-term
perspective.
New options for electricity trading
Choice of the energy supplier
Investor in the Ukrainian energy
sector gets an opportunity for free
electricity export
More than 85% of the electricity will be
sold under direct agreements between the
energy producer and supplier/consumer
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17. KEY RISKS
Lack of proper coordination
Lack of funding
Lack of commitment from key market players
Agreement execution requires a coordinated work of the market
players on the implementation of specific steps to modernization
according to the ENTSO-E rules.
Power units of the generating companies should be dramatically
modernized. Such actions should be funded by the market players
(up to UAH10 bln).
Key market players may be against the synchronization with ENTSO-
E as they are not interested in the power market demonopolization.
EXTERNAL RISKS
INNER RISKS:
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18. REQUIRED
 Coordinated work of all stakeholders in the market - “one-voiсe policy”.
 Support of the synchronization process from the leadership of the state.
 Execution of the action catalogue and ENTSO-E synchronization requirements
should be a key priority for the state policy.
 Adequate funding.
To coordinate the work and processes regarding Ukraine-ENTSO-E synchronization the
SE “NPC”Ukrenergo” offers:
- to define the key tasks of the leadership of state on the way to ENSO-E integration
- to hold a separate meeting of the NSDCU
- to establish a Coordinating Center within the Cabinet of Ministers.
!
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19. THANK YOU FOR YOUR
ATTENTION!