Increase in electricity tariffs in Ukraine in 2024: reasons and prerequisites
In 2024, Ukraine plans to increase electricity tariffs for households. Currently, the tariff for households is UAH 2.64 per kWh, and it is expected to increase to UAH 3.5-4 per kWh.
Reasons for the tariff increase
The main reasons for the tariff increase are:
- Rising electricity prices on global markets. In 2023, electricity prices on global markets increased by more than 50%. This was due to a number of factors, including the war in Ukraine, which disrupted electricity supply chains, and rising gas prices, which are the main source of electricity generation in Ukraine.
- Increased costs of electricity generation in Ukraine. The cost of electricity generation in Ukraine increased as a result of rising gas prices and damage to power grids and equipment caused by the hostilities.
- Insufficient financing of the energy sector. Ukraine’s energy sector requires significant investments in equipment modernization and development of new capacities. However, the Ukrainian government does not allocate sufficient funds for these needs.
The increase in electricity tariffs for households in 2024 is predictable. The Ukrainian government has repeatedly stated the need for this step. In addition, the National Energy and Utilities Regulatory Commission, which regulates electricity tariffs, has already begun preparations for the tariff increase.
An increase in electricity tariffs for households will result in higher household spending on electricity. This could have a negative impact on the living standards of the population, especially on low-income households.
In addition, an increase in tariffs could lead to higher prices for other goods and services, as electricity is an important component of production costs.
Households that want to reduce their electricity costs should take the following steps:
- Save electricity. This can be done, for example, by replacing light bulbs with energy-saving ones, turning off lights in rooms when not in use, and striving to use appliances that are more energy efficient.
- Switch to green electricity. Green electricity is produced from renewable sources such as solar and wind power. It is more environmentally friendly and usually more expensive than traditional electricity. However, if a household is saving energy, switching to green electricity can be economically justified.
The Ukrainian government could also take measures to mitigate the negative effects of the electricity tariff increase. For example, the government could provide subsidies to low-income households or introduce a program to support energy efficiency.