Ukrenergo will buy 1099 MW of capacity to balance the power system

NPC Ukrenergo will hold the first specialized five-year auctions for ancillary services, where it plans to buy 99 MW and 1000 MW of power for balancing the power system.

According to Energoreforma, the relevant auctions will be held on August 15 and 22.

“The first auction will be held on August 15. Our need is 99 MW, this is the so-called primary regulation (frequency support reserve, execution of the command within 15 seconds – ER), and it will mainly involve energy storage systems (ESS) – very fast and very maneuverable installations,” said Volodymyr Kudrytskyi, Chairman of the Board of the company.

The second auction will take place on August 22 and will be more massive. It will involve the purchase of 1000 MW (automatic frequency restoration reserve, execution of a command within 15 minutes – ER). Of these, 579 MW is a loading service, i.e. balancing the system by increasing electricity generation, and 421 MW is a so-called symmetrical auction, when stations will be able to both unload and load at the dispatcher’s command.

This auction is open to gas piston, gas turbine and biomass power plants, among others.

“We offer a fixed contract in euros with the winners of the auctions for five years, starting from the end of September 2025. That is, within a year, the winners must build capacity capable of balancing the power system. The amount we pay is many times different from the amounts in the EU countries, because we have a huge shortage of such stations,” Kudrytskyi described the situation.

According to the terms of the auction, ancillary services are purchased for 1826 days – from October 1, 2025 to September 30, 2030.

The marginal cost of the service at the DAM auction is up to EUR 33/MW, and at the LMP auction – from EUR 24/MW to EUR 33/MW. In the first case, the service will be purchased in blocks of 4 hours, in the second – on an hourly basis.

Ukrenergo estimates that the payback period of the projects will be 3-4 years.

As a reminder, on June 26, the NEURC adopted a resolution to introduce special auctions for ancillary services to provide frequency and active power control reserves in the power system for a period of one to five years with a possibility of deferral for up to three years. In addition, the fee for the service is pegged to the euro.