Support for Household Prosumers in the Early Stages of Power Market Decentralization in Ukraine

Abstract

This paper aims to reconsider prosumers’ role in the power markets in the early stages of their decentralization, accounting for rising self-supply trends, security threats, and economic and regulatory barriers. The development of prosumerism envisages finding the ratio between retail market sales under the feed-in tariff and the net billing mechanism. Within the methodology section, the indicator of prosumer efficiency for electricity generation (EUR/kWh) is proposed based on average consumption/production ratios and consumption/delivery incentives. To support household prosumers, the mentioned incentives on the renewable energy market consider the self-supply cost of electricity, the levelized cost of electricity for small-scale green energy facilities (solar photovoltaic and wind), and transaction costs. This paper evaluates prosumer efficiency under three consumption/production ratio scenarios for Ukrainian households (self-consumption of 40%, 20%, and 100% of green electricity annually generated by a household and selling the leftovers via the feed-in tariff) for 2023. The gradual movement from fixed tariffs for households toward market-based prices promotes the emergence of new related market players and their consolidation in the market. Participation in the organized power market segments is relevant for day-ahead market prices above 130 EUR/MWh, disregarding the households’ tariff rate. The low price caps inhibit the prosumer’s participation in the market, while the transition from the feed-in tariff to net billing significantly promotes their development only under high price caps.

Keywords

• prosumers
• incentives
• net billing
• externalities
• day-ahead market
• local flexibility markets