Energy market liberalisation: Sequencing market reforms, carbon pricing and subsidy reforms

Ukraine is entering a critical phase of electricity market reform. Wholesale price caps are expected to be phased out by May 2027, while reforms of the household electricity PSO, balancing market design, renewable support schemes, carbon pricing and EU electricity market integration are advancing in parallel. These reforms are closely interconnected and require careful sequencing.

This URC side event will discuss how Ukraine can approach the broader electricity market liberalisation package while maintaining affordability, fiscal sustainability and investment incentives. It will place key reform measures - including price-cap removal, balancing market reform, RES support, carbon pricing, electricity market coupling and targeted support for vulnerable households - into a broader market-design context.

The event will then provide a deep dive into one concrete reform area: the household electricity PSO. A presentation will explain the current mechanism, its effects on household price signals, market liquidity and quasi-fiscal burdens, and possible short- and medium-term reform options. Particular attention will be paid to strengthening incentives for energy savings and distributed renewables, increasing liquidity in organised market segments, and protecting
vulnerable consumers.

The presentation will be followed by an open discussion with policymakers, institutions, market participants and experts.

The event will focus on:

• sequencing key electricity market reforms in the context of EU integration;
• interactions between wholesale market reform, retail pricing, balancing markets, RES support and carbon pricing;
• the household electricity PSO and its implications for market liquidity, fiscal sustainability and investment incentives;
• options for reforming the household electricity PSO;
• and targeted support for vulnerable households during the transition.

Agenda