Mechanisms of functioning and development of the energy market of Ukraine

Abstract

Abstract. The article provides a comprehensive scientific and analytical review of the mechanisms of functioning and development of Ukraine’s energy resources market as a multi-level system of economic relations that covers the production, transmission, trade, and consumption of electricity, natural gas, and other energy carriers. The study clarifies the conceptual framework by defining the notions of the “energy resources market,” “market functioning mechanisms,” and “trader,” and by demonstrating how trading differs from supply to final consumers. The paper substantiates the importance of a systems approach to reforming the energy sector, which requires coordination of technical, economic, and regulatory–governance decisions, as well as the use of modeling tools to forecast development trajectories and assess crisis-response scenarios. The institutional architecture of Ukraine’s energy market, shaped by European integration commitments, is examined with attention to the legal foundations of gas and electricity market liberalization, unbundling processes, and the roles of the national regulator (NEURC) and key infrastructure operators. Particular focus is placed on the structure and operation of electricity market segments (bilateral contracts, day-ahead and intraday markets, balancing market, ancillary services, and retail), along with the mechanisms of the gas market, including exchange-based trading, import routes, and the use of underground gas storage as a hub-related infrastructure element. The analysis identifies core market imbalances associated with administrative price caps, cross-subsidization, and the insufficient development of long-term instruments for risk hedging. It is shown that wartime threats have intensified state intervention while simultaneously increasing the relevance of transparency requirements (approximation to REMIT-like standards), resilience, and decentralization of the energy system. The paper justifies priority directions for further market development, including deeper integration into the EU energy space, gradual liberalization and improvement of regulatory instruments, expansion of forward and other long-term market segments, and the “green” transformation of the energy sector.