EBA сalls for a systemic resolution of the debt crisis in the electricity balancing market

20/ 02/ 2026

The European Business Association has addressed the Chair of the National Energy and Utilities Regulatory Commission, calling for a comprehensive settlement of the debt crisis in the electricity balancing market. The balancing market, operating since 1 July 2019 alongside the new electricity market model, is a key element of the stable functioning of the power system. Through this mechanism, the transmission system operator — National Power Company Ukrenergo — purchases and sells electricity in real time to balance generation and consumption. Scale of the Problem As of early 2026, outstanding debts of balancing market participants to NPC Ukrenergo have reached approximately UAH 42 billion, while Ukrenergo’s debt to market participants exceeds UAH 22 billion. This trend indicates the systemic and annual accumulation of mutual debts. One of the main causes of indebtedness is non-payment for electricity by consumers that cannot be disconnected (water utilities, state-owned mines, underground rail systems and certain state- and municipally owned enterprises). In the absence of economic incentives to settle payments, some such consumers either lack the financial capacity to pay due to tariff imbalances or rely on the disconnection ban to defer payments. As a result, many debtors are transferred to the supplier of last resort, which is legally required to provide electricity supply temporarily (for up to three months). In practice, however, this supplier continues to provide electricity to such consumers for years, accumulating debts in the balancing market. Burden on Ukrenergo and Generation In cases where electricity supply cannot be terminated even through the supplier of last resort, consumption volumes are often recorded as technical losses of distribution system operators. This leads to Ukrenergo receiving insufficient funds and being unable to settle payments with electricity producers in a timely manner, effectively becoming a forced creditor to certain categories of consumers. The situation is further aggravated by repeated hostile attacks on transmission infrastructure, including high-voltage substations and key grid nodes. The restoration and protection of infrastructure require significant financial resources. At the same time, high levels of debt substantially limit opportunities for grid modernisation and resilience enhancement. Electricity generation companies are also negatively affected. Operating under conditions of regular attacks on production facilities, they require extensive repairs and investment. Shortfalls in payments from the balancing market slow down the restoration of damaged assets and reduce the power system’s ability to respond swiftly to new challenges. Threat to the Development of Flexible Capacity Under wartime risks, the development of flexible and balancing capacity — primarily small-scale gas generation and energy storage systems (battery storage) — is of particular importance. The balancing market is the primary source of revenue for such facilities, which provide rapid real-time response to system imbalances. However, the actual waiting period for payment for supplied electricity currently reaches 12–18 months. Under such conditions, the implementation of new projects becomes economically unviable, and investors and financial institutions are reluctant to invest in the development of flexible capacity. The continued accumulation of debt therefore poses a risk of losing the ability to properly balance the power system at a time when its resilience and flexibility are critical to electricity security. Business Community Proposals According to the Association’s experts, previous decisions to address the debt issue have been fragmented and have failed to eliminate the root causes of the problem. In this regard, the European Business Association proposes a comprehensive approach: introducing clearing mechanisms to offset part of the “circular” debts among balancing market participants; conducting an audit of the list of protected consumers and reviewing the approach to its formation to prevent further unjustified expansion; developing systemic solutions that prevent the emergence of new debts and ensure financial discipline in the balancing market. Resolving the debt problem in the balancing market is a necessary precondition for the resilience of the power system, the development of flexible capacity and the provision of reliable electricity supply both during the war and in the post-war recovery period. The EBA’s experts stand ready to engage in further dialogue with the relevant public authorities to jointly develop effective solutions.

The balancing market, operating since 1 July 2019 alongside the new electricity market model, is a key element of the stable functioning of the power system. Through this mechanism, the transmission system operator — National Power Company Ukrenergo — purchases and sells electricity in real time to balance generation and consumption.

Scale of the Problem

As of early 2026, outstanding debts of balancing market participants to NPC Ukrenergo have reached approximately UAH 42 billion, while Ukrenergo’s debt to market participants exceeds UAH 22 billion. This trend indicates the systemic and annual accumulation of mutual debts.

One of the main causes of indebtedness is non-payment for electricity by consumers that cannot be disconnected (water utilities, state-owned mines, underground rail systems and certain state- and municipally owned enterprises). In the absence of economic incentives to settle payments, some such consumers either lack the financial capacity to pay due to tariff imbalances or rely on the disconnection ban to defer payments.

As a result, many debtors are transferred to the supplier of last resort, which is legally required to provide electricity supply temporarily (for up to three months). In practice, however, this supplier continues to provide electricity to such consumers for years, accumulating debts in the balancing market.

Burden on Ukrenergo and Generation

In cases where electricity supply cannot be terminated even through the supplier of last resort, consumption volumes are often recorded as technical losses of distribution system operators. This leads to Ukrenergo receiving insufficient funds and being unable to settle payments with electricity producers in a timely manner, effectively becoming a forced creditor to certain categories of consumers.

The situation is further aggravated by repeated hostile attacks on transmission infrastructure, including high-voltage substations and key grid nodes. The restoration and protection of infrastructure require significant financial resources. At the same time, high levels of debt substantially limit opportunities for grid modernisation and resilience enhancement.

Electricity generation companies are also negatively affected. Operating under conditions of regular attacks on production facilities, they require extensive repairs and investment. Shortfalls in payments from the balancing market slow down the restoration of damaged assets and reduce the power system’s ability to respond swiftly to new challenges.

Threat to the Development of Flexible Capacity

Under wartime risks, the development of flexible and balancing capacity — primarily small-scale gas generation and energy storage systems (battery storage) — is of particular importance. The balancing market is the primary source of revenue for such facilities, which provide rapid real-time response to system imbalances.

However, the actual waiting period for payment for supplied electricity currently reaches 12–18 months. Under such conditions, the implementation of new projects becomes economically unviable, and investors and financial institutions are reluctant to invest in the development of flexible capacity.

The continued accumulation of debt therefore poses a risk of losing the ability to properly balance the power system at a time when its resilience and flexibility are critical to electricity security.

Business Community Proposals

According to the Association’s experts, previous decisions to address the debt issue have been fragmented and have failed to eliminate the root causes of the problem.

In this regard, the European Business Association proposes a comprehensive approach:

introducing clearing mechanisms to offset part of the “circular” debts among balancing market participants;
conducting an audit of the list of protected consumers and reviewing the approach to its formation to prevent further unjustified expansion;
developing systemic solutions that prevent the emergence of new debts and ensure financial discipline in the balancing market.

Resolving the debt problem in the balancing market is a necessary precondition for the resilience of the power system, the development of flexible capacity and the provision of reliable electricity supply both during the war and in the post-war recovery period.

The EBA’s experts stand ready to engage in further dialogue with the relevant public authorities to jointly develop effective solutions.