Bìznes Inform (Mar 2024)
Conceptual Aspects and Principles of Formation of Competitive Heat Energy Markets
Abstract
Thermal energy should be considered as a commodity that has its own competitive market, where equilibrium is established in the plane of «supply and demand», so it is necessary to separate commercial (production and supply) and non-commercial (transmission and distribution) functions of heat supply, ensuring the development of fair competition between producers of heat energy and minimization of its costs for consumers. It is proposed to develop competition in the heat energy markets according to the single buyer model. Such a market will be managed by an independent system operator. It consists of a market operator – a single buyer who manages the trading platform, as well as performs the functions of an administrator of settlements between producers and consumers, and a transmission system operator who is responsible for the transmission, distribution and dispatching of heating networks. The peculiarity of heat energy markets is the impossibility of separating the wholesale and retail levels, so there is no need to allocate the supply function. Conceptual provisions for the formation of competitive heat energy markets are based on: 1) zonal delimitation with flow market relations; 2) centralized dispatching; 3) the embodiment of the market infrastructure by an independent system operator; 4) organized over-the-counter trading in the form of a price dialogue for small settlements without backbone networks and exchange trading in the form of heat auctions for medium and large settlements with backbone networks; 5) derivatives (annual), spot (monthly), and balancing segments of the market; 6) the uniform non-discriminatory pricing for consumers and declared pricing on the basis of benchmarking for producers; 7) annual baseload contracts, monthly peak load contracts, and balancing time contracts. The principles of formation of competitive heat energy markets are: transparency, openness, economic efficiency, fair access, competitiveness of producers, fair competition, price compromise, balance and reliability, decarbonization. The expected results of the opening of competition in the heat energy markets are: transparency of heat purchase and sale transactions; minimization of heat purchase prices by consumers; optimization of the utilization of heat-generating capacities of the heat and power system; promoting the development of highly efficient and low-carbon district heating. The latter is especially important from the point of view of restoring Ukraine's energy system after russian aggression, as priority should be given to independent heat producers who use renewable energy sources, have excess or waste thermal energy.
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