Efficiency of institutionregulation of regional electricity markets in ukraine: analysis of international experience and mechanism of ensuring

Abstract

The current state of Ukraine's electricity market is characterized by a contradiction between the state's declared intentions for its development, which stimulated investment activity, in the field of renewable energy sources (RES), and current development trends, which are complicated by the decline in electricity demand due to the pandemic, as well as macroeconomic and political instability. The market is further complicated by imperfect market mechanisms, such as price regulation and lack of competition, and infrastructure problems, including outdated transmission lines and insufficient grid capacity, which impede the balancing of market participants' interests, and the formation of a competitive environment focused on innovative development. Relevance. Studying international experience in regulating the electricity market is crucial for Ukraine and its regions, especially those with significant electricity production potential (e.g., the Southeastern region). This study can serve as a catalyst for intensified investment and innovation activities, leading to a brighter future for the country's energy sector. Objective. The purpose of the article is to analyze the effectiveness of institutional regulation of regional electricity markets in Ukraine and assess the efficiency of RES use at the regional level. Results. It is established that the domestic electricity sector is inferior regarding support for attracting investment and international cooperation in innovation. Despite the EU's increased interest in investing in Ukrainian projects due to integration prospects and the potential for using transit and production capacities, Ukraine needs to increase the attractiveness of investments in the electricity sector, including in innovative projects. It is argued that Ukraine's strengths are its high potential for the development of some regions of electricity (nuclear, hydro, solar, wind), unique transit potential (which, at the same time, creates additional risks due to the country's involvement in international competition for resources) and significant human resources (the possibility of cooperation at the level of scientific schools and research and development institutes). International experience developing the electricity market shows a tendency to liberalize regulatory influences and regionalize regulation. Conclusions. Understanding not only the national priorities for regulating investment and innovation processes in the energy sector, but also the peculiarities of alternative energy development in the regional context, is crucial for Ukraine. This comprehensive understanding will enable the optimization of management decisions, considering the specifics of the regional economy, natural ecosystems, and social aspects.