European operators to compensate Ukrenergo for transit costs of electricity

From July 1, Ukrenergo will be able to receive compensation for its costs for the transit of electricity from other countries through Ukrainian high-voltage grids from European ENTSO-E system operators, as reported by the Ukrenergo press service.

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Previously, such costs for Ukrenergo were compensated by Ukrainian participants in the electricity market, who contested this obligation in court. Now they will be relieved of this financial burden.

To receive compensation according to European rules, Ukrenergo has joined the ITC mechanism. This multilateral agreement between ENTSO-E power system operators establishes the principle of compensation for costs during electricity transit between states through interstate interconnectors in the European power system.

Ukrenergo obtained the possibility of becoming a party to this agreement after it became a full member of ENTSO-E.

The amount of compensation depends on the annual volume of cross-border electricity flows in the high-voltage grid. The larger the amount of transmit power, the greater the compensation for infrastructure costs and technological losses in the grid that occurred during its transmission.

The funds received by Ukrenergo can be directed to the development of energy infrastructure. Ukrenergo will also pay its share for the transit of Ukrainian electricity through the grids of neighboring countries.

"The entry of the Ukrainian operator into the ITC mechanism will have a positive impact on the development of cross-border electricity trade and will eliminate the reason for legal disputes between Ukrenergo and market participants. Ukrenergo also received another source of revenue for the development of cross-border grids," said Ukrenergo CEO Volodymyr Kudrytskyi.