License for trading activity: peculiarities of implementation of activities on resale of electricity

As of the day of the present publication, the so-called “new electricity market” has been operating for more than a month in Ukraine.

But in practice, market participants still have many questions about its functioning. This holds especially true for the trading activities on the electricity market.

In this article, we will try to answer the following questions:

• What are the peculiarities of carrying out economic activities in the new electricity market under the electricity resale license?
• What differs this license from the electricity supply license?
• How to calculate the trader’s electricity imbalance?
• Which segments of the electricity market can a trader buy and sell electricity in?

Related article: The New Electricity Market Successfully Started Its Work In Ukraine

What are the peculiarities of obtaining the electricity resale license?

First of all, you need to obtain the license unless you don’t have any other licenses required for carrying out economic activities in the electricity market.

For example, you have a license for the supply of electricity or the production of electricity and according to the law of Ukraine, as an electricity producer, you are not obliged to sell electricity to GARANTIROVANNYI POKUPATEL, SE. In this case, you can carry out trading activities without obtaining a special license.

Note! You are obliged to adhere to the requirements of the electricity trading license terms and to get registered as an electricity market participant.

Related article: Registration Of the Supplier On the New Electricity Market: Procedure And Necessary Steps 

What is the difference between the electricity resale license and the electricity supply license?

The key differences are the license purpose and the possibility of selling electricity to consumers.

On the one hand, the electricity supply license is required primarily to supply electricity to the consumer, but it also allows the licensee, to resell electricity to other market participants, including suppliers or traders.

Related article: Obtaining EIC Codes Of Type X For Electricity Suppliers And Traders On the Electricity Market 

The electricity resale license allows the licensee to sell electricity to all electricity market participants, except consumers. Therefore, if you don’t intend to sell (supply) electricity to consumers in the future, it is advisable to apply for the electricity resale license.

If you intend to sell electricity to market participants and supply it to end users, you should obtain the electricity supply license.

Trader’s imbalance: How to calculate electricity imbalance 

First of all, it should be understood that the trader is a party that is financially responsible for any imbalance (difference) between purchased (imported) and sold (exported) electricity. To that end, the trader is financially responsible for the difference between the planned and actual electricity sale and purchase volumes. 

Which segments of the market can a trader buy and sell electricity in?

The new electricity market is divided into the following organizational and functional segments:

• Market of bilateral agreements;
• Day-ahead and intraday markets;
• Balancing market;
• Auxiliary services market.

The trader operates in the market of bilateral agreements and the day-ahead and the intraday markets, since the other two market segments are more targeted for the Transmission System Operator, electricity producers and auxiliary services providers.

Related article: Electricity Resale (Trading) License

Conclusion

When it comes to choosing one’s role as an electricity market participant (electricity supplier or trader), it is important first to consider all the differences, limitations and restrictions of the electricity resale license.

At the very least, the key differences relate to the procedure for obtaining the license and operating in the electricity market.

Consider that any type of economic activities has its own peculiarities, and registration of a market participant is a complex and multi-stage process.

If you want to learn more about the peculiarities of trading activities in the electricity market, the calculation of electricity imbalances or the registration procedure, please contact our company any way that is convenient for you.