A new exchange-traded price risk management tool—futures contracts—may soon appear in the Ukrainian electricity market.
For most European energy markets, this has long been a common practice. Futures contracts allow market participants to fix the price of electricity for future periods in advance, effectively manage price risks, increase the predictability of financial results, and form long-term strategies for purchasing and selling electricity.
For Ukraine, the development of such a market segment is not just the introduction of a new exchange product. It is another step towards forming a modern, competitive, and mature electricity market that operates according to European rules and offers participants effective risk management tools.
This exact topic was the focus of a presentation by Anton Shevchenko, International Cooperation Manager at the Ukrainian Energy Exchange, which took place during an online meeting of the PA “Energy Union”.
During the report, the concept of developing an electricity futures market in Ukraine was presented, along with international experience in using derivative instruments and the Ukrainian Energy Exchange’s vision regarding potential mechanisms for their implementation in the Ukrainian market.
Following the presentation, an active professional discussion took place, during which participants asked a series of practical questions regarding the prospects of launching the new exchange tool, the specifics of its application, and potential challenges during the implementation stage.
Proposals for Further Steps
Based on the results of the discussion, the PA “Energy Union” approached the Ukrainian Energy Exchange with a proposal to organize a separate cycle of practical training for the Association’s members dedicated to working with futures contracts. We are convinced that the successful implementation of the new tool is impossible without proper training for traders, suppliers, and other market participants. That is why practical training should become the next stage after the concept presentation.
Additionally, it was proposed to consider the possibility of creating an educational (test) trading platform. On such a platform, market participants could familiarize themselves with the mechanisms of concluding futures contracts without financial risks, practice trading skills, and better understand the operating principles of this tool even before its full launch in Ukraine.
The PA “Energy Union” expresses its sincere gratitude to the Ukrainian Energy Exchange and Anton Shevchenko personally for their openness to professional dialogue, the informative presentation, and their readiness to work together on the development of modern exchange tools, which can become an important component of the further integration of the Ukrainian electricity market into the European energy space.
