There will be reasons to increase power tariffs next year, the head of the national energy regulation commission, Dmytro Vovk, has said on his Facebook page. Apart from inflation, dividend policies of state companies, and growing wages, power tariff growth will be prompted by the expected growth of the share of expensive power generation by coal- and gas-burning thermal power plants (TPPs), according to Vovk. He cited the energy ministry’s projections for next year, according to which the share of relatively cheap nuclear power in national power generation is to decline to 52.7% next year from 54.2% this year, the share of cheap hydropower is to decline to 5.0% from 5.3%, and that of alternative power sources is to inch up to only 1.3% from 1.2%. At the same time, the share of TPPs is expected to grow to 31.2% from 30.2%, and that of co-generation plants to grow to 7.6% from 7.2%.
The share of nuclear power grew this year at the expense of TPPs because of the coal of shortage prompted by the blockade of the rebel-held areas in Eastern Ukraine. However, Ukraine is likely to need more power because of economic growth and plans to increase power exports, so more expensive coal for TPPs will be imported. Nevertheless, we don’t think the government will be inclined to increase power tariffs for households ahead of the parliamentary and presidential elections scheduled for 2019. Power tariffs were increased significantly over 2015-2017, in line with agreements with the IMF.