Crossing access auctions are sensational, and the country needs long-term contracts
Electricity prices in Ukraine in the conditions of its deficit are a problem for the iron and steel industry, and auctions for access to the intersection are agitated. About this in an interview for Forbes Ukraine said the general director of the group Metinvest Yuri Ryzhenkov.
For example, Ingulets Mining So has not been working for several months precisely because of the high cost of electricity and logistics.
Now, by decision of the government, the enterprise must import 80% of electricity from consumption to avoid blackouts, whereas earlier this quota was 30%, Yuri Ryzhenkov recalled. However, it is extremely important for the company to avoid sudden shutdowns for safety reasons and due to the possibility of equipment damage.
According to the general director of the company, the problem is not even in imports, because electricity prices in Ukraine are no less than in Europe.
«The problem is that auctions for access to the intersection are agitated, since large consumers need to purchase 80% of their consumption. The more competition for the intersection, the more you have to pay for it, «he explained.
Metinvest CEO noted that the company often pays more for the crossing than for the electricity itself, that is, overpays at least twice. In addition, these auctions are daily, that is, it is impossible to purchase a crossing for months, half a year or a year and have predictability. Therefore, with the auction, the company buys the intersection at any price, since the alternative to overpayment is a stop.
«We have repeatedly drawn the attention of the country’s leadership to this problem. I hope the Ministry of Energy will hear us. We need long-term contracts. In the EU, you have monthly predictability. In Ukraine – for a day,» said Yuri Ryzhenkov.
Like other large businesses, Metinvest has projects to build its own generation. The company has already contracted more than 30 MW of gas turbine stations for $36 million, which in November of this year should be installed at the group’s enterprises. In addition, 50 MW of generation is installed in case of emergency, which allows you to safely stop production in case of loss of power from the power system.
«80 MW will not cover our need. But 100% to provide themselves with generation in our case is not very reasonable. Large centralized generation is still more efficient and environmentally friendly. We hope that our power engineers will be able to restore and stabilize the energy system, «Ryzhenkov added.
According to him, the group is the largest consumer of electricity in the country. Its enterprises consume more than 550 MW, before the war, when Mariupol assets were operating, this volume was 1000 MW, which is comparable to the consumption of Kyiv. To cover its own needs, Metinvest must invest more than $500 million in new generation.
«There are thoughts in Metinvest that maybe we need to build something to provide for ourselves more than 10-15%, or maybe better provide for ourselves 50% by our own generation. We are thinking about this, «the company’s CEO said.
Nevertheless, according to Yuri Ryzhenkov, the company still needs to invest in updating the steel industry, leaving the issue of energy to DTEK.
As reported earlier, in Ukraine, electricity prices are currently not lower than European ones. So, in August, the weighted average price for DAM in the country amounted to €126.7/MWh, which is 40.4% more than the average for 2023. In addition, during this period, Ukraine reduced electricity imports due to increased consumption in neighboring countries, which caused high spot prices on the western border of our state.
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