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14portfolio; 4) minimizing the cofl of evaluating and monitoring the solvency of debtors.
In addition to these benefits, the important feature of trade credit insurance is that, along with compensation for direct losses, the insurer mufl provide qualified service credit management factor.
In the ranking of problematic loan portfolios Forbes analyzed the performance of the 31 largefl bank in the firfl two groups according to NBU classification, that are active in the credit market. The total amount of loans to these financial inflitutions is 84% of the total loans of the banking syflem.
The top five banks in problematic loan portfolio includes UniCredit Bank, Delta Bank, Ukreximbank, Raiffeisen Bank Aval and Ukrgasbank. Rankings have high volume and share of non-performing and non-performing loans, the rapid growth of troubled assets or low cover bad loans provisions for credit risks.
Conclusion. Summing up, it is worth noting that despite the risks of exiting factoring, it has good prospects and could become very popular among domeflic enterprises. However, if in the future factoring is seen as a debt service financing, it
will be difficult to compete with traditional banking services. In such circumflances, factoring services market in Ukraine needs to create quality infraflructure, an important element of which is insurance. When factoring the effective organization and syflem factors interact with other members of the financial services market, factoring can be a catalyfl for rapid development of domeflic business.
References
1. Analytycheskaya note on the conditions of service factoring lyzynhovoho and juridical persons krupneyshyh banks in Ukraine. - K .: Proflobank Consulting, 2015. - 26 p.
2. Regulations (flandard) accounting №13 «Financial Inflruments»: by the Minifliy of Finance of Ukraine of 30 November 2001 r. №559 [electronic resource] / National Bank of Ukraine - Access: http://zakon.rada.gov. ua
3. Annual report of PJSC «Ukrsotsbank» in 2015 // www. unicredit.ua
ROAD MAP OF ELECTRICITY EXCHANGE MARKET DEVELOPMENT AS A NECESSARY CONDITION FOR ENERGY SECTOR LIBERALIZATION
Bolkvadze N.I.
Ternopil National Economic University
Ukraine
ABSTRACT
In this paper the new laws and bills of electricity market development in Ukraine were analyzed as well as their conformation to the European flandards. The undereflimated role of energy exchange in market prices formation for energy resources during the reform process was shown. The Road Map of electricity exchange market development in Ukraine, including three successive flages, was developed. A theoretical model of electricity market of Ukraine was proposed. It provides separation between the syflem operator activities and commercial activities and market segment formation as energy exchange. This allows to provide pricing transparency that is especially relevant nowadays.
Keywords: energy exchange, electricity market, liberalization, clearing, congeflion management.
Problem flatement. Electricity market cannot be ideal as it is specified by a large number of participants, rules and laws, regulating and influencing on it. The demand for the efficient market of energy resources led to the profound flructural changes in generation, diflribution and sales. In the EU these processes took place in the 1990s and now the liberalized electricity markets tend to integration or to the close relationship between each other.
Such extremely close cooperation becomes possible not only due to the integration of electricity transmission lines between neighboring countries that provides secure and continuous national electricity grids functioning, but also due to the tefling of different trading schemes in energy sector.
In order to determine the components of the efficient electricity markets in Europe, their organization and flructure should be considered. According to the conducted analysis, energy exchange, trading gas and electricity, plays one of the important roles in the development of a liberalized European market. Energy exchange is involved in solving of the problem of power intersyflem transmission lines overload as well as in international trade and integration of energy markets. In Ukraine market liberalization and development have jufl begun. Thus, the legislative framework is being developed now (new laws and legislative acts are being adopted). For example, the concept of
energy exchange is not mentioned in the Law of Ukraine "On electricity". Thus, the fludy of its role is especially topical today.
Analysis of recent researches and publications. The issue of energy exchange market development and functioning and its impact on the economy is being thoroughly invefligated by foreign scientifls in European countries, among them are: F. Benth, R. Bigler-Konig, R. Kissel [1], P. Falbo, M. Fattore, S. Stefani [2], G. Zachmann [3], E. Wagner, F. Virle [4].
In Ukraine this issue is relatively new. Ukrainian researchers focus mainly on the fludy of general organization and functioning of energy markets. Among them are A. Kirilenko, I. Blinov, G. Korkhmazov, V Popovich [5]. They fludy the harmonized role model of a competitive European electricity market and possibilities of its adaptation to the wholesale electricity market development in Ukraine. Scientifls focus on the issue of energy derivatives and their efficient functioning on the domeflic energy market. According to O. Riabchenko [6], in order to solve the problem of energy derivatives implementation, it is necessary to juflify the choice of financial tools and provide the appropriate conditions for their efficient application. However, he does not subflantiate the fact that these derivatives as futures contracts can only be exchange-traded. O. Sokhatska and N. Strelbitska consider the energy derivatives application of famous foreign exchanges, as the price risk management tools of the domeflic refineries [7].
There are some ideas of energy market development without energy exchange segment in Ukrainian scientific literature that is not complied with the global trends.
Purpose of the research is theoretical subflantiation of Road Map of the Ukrainian electricity exchange market development, as a necessary condition for energy sector liberalization and development of a new market theoretical model in the context of integration into the European energy space.
Until recently, the global electricity market was different from other markets because of its extremely high monopolization, complex pricing and reflrictions for new entrants. All these factors prevented the development of the sector and contradicted the principles of a competitive market. During the electricity market liberalization it was necessary to find an effective platform for transparent pricing. Energy exchange became such a platform due to the energy supply and demand coordination and the formation of a reasonable market price.
Energy exchange market emerged only in the late 20th century and it has been flill evolving. Scientifls and practitioners in all economically successful and developed countries favour the energy exchange development.
However, in Ukraine the issue of national energy exchange market development is not on the agenda, despite that there is no other way to fight againfl the monopoly of generating companies and get access to business market and households. Stability, balance and efficiency of energy exchange market can be provided through the implementation of the EU legal provisions which determine the required level of governmental regulation and control.
The Ukrainian energy sector reforming legislation does not fully conform to the EU flandards, and therefore this sector has been reformed slowly over a long period of time. For example, only in 2015 the Draft Law of Ukraine "On Electricity Market" [8] includes articles about the formation of the spot ("day-ahead market") and intraday electricity markets. The issue of the explicit and implicit auctions are also included into the document.
However, in none of the articles of this draft law the concept of energy exchange as an operator of the "day-ahead market" was not mentioned. Since Ukraine has been driving to develop a liquid and transparent energy market according to the European flandards, the developers of this draft law have not answered the queflion yet: whether they are acquainted with the European experience, concerning the involvement of energy exchange as an operator of the spot market.
Studying the mechanisms of electricity market functioning, it was proved that energy exchange acts as a market operator. Banks are not carried out clearing operations and payment for gas and electricity, these operations are performed by market operators. This fact is of great importance. In 2003 O. Sokhatska [9] noted that exchanges in Ukraine are not functioning according to the internationally recognized rules because of a lack of transparent, reliable and efficient clearing syflem. As it can be seen today this fact is neglected while developing the energy market.
Let's pay attention to this peculiarity of the energy market in the Czech Republic. For example, the Czech energy exchange
(Power Exchange Central Europe) operates according to the Act of the Czech Republic No. 229/1992 "On Commodity Exchange" and the relevant Rules of the exchange. PXE has received the license for electricity market development from the Minifliy of Induflry and Trade. Companies, which received the license for electricity trading in accordance with Act No. 458/2000 "On Business Conditions and Public Adminiflration in the Energy Sectors (The Energy Act)" and these which are subject to the OTE clearing (Czech electricity and gas market operator) are permitted to participate in this market [10].
In Poland energy exchange Towarowa Gielda Energii (TGE) was developed on the initiative of the Minifler of State Treasury, correspondingly its activities are controlled by the Financial Supervision Commission. Among legal acts, regulating the activities of TGE, are: the Law "On electricity" dated 10.04.1997, the Law "On Commodity Exchanges" dated 26.10.2000, the Law «On Circulation of Financial Tools» dated 29.07.2005, the Law «On the Principles of Recognition of Professional Qualifications Acquired in Member States of the European Union» dated 18.03.2008.
Article 2 of the Law of Poland "On Commodity Exchange" [11] defined a clear lifl of commodities and among them are "different types of energy or fuel, and gas". However, in the Law of Ukraine "On Commodity Exchange" [12] there is no such a lifl, and the main characteriflics of commodities, allowing to refer them to the exchange commodities (mass, flandardization, subflitutability and free pricing) are not noted.
Electricity exchange market is rather young and complex with commodity specification. However, the mofl of the EU countries, including the countries of the Eaflern Europe, make a use of this specific commodity nature, deflroying the monopoly principles of tariff formation for consumers. Both spot markets and electricity derivatives exchanges, where they are traded for a long supply term, have been developed in these countries. Electricity prices are formed during the exchange trading, involving manufacturers, wholesaler intermediaries and the end users and the participants have doubt as to the fairness of market pricing.
In Ukraine this problem is so vital that tariffs which have been increased by the Government twice in 2016 may have caused quite unpredictable effects. Tariffs are increased without reforming the energy sector. Measures, providing a sufficient level of market transparency, may be taken in future, and a lack of direct contracts with producers reflricts retail supply competition. A consumer cannot demand for high power quality and cannot change the supplier.
For effective liberalization of the sector, it is necessary to focus on the European experience, where wholesale electricity markets have exchange segments, providing the participants not only prices on the "day-ahead" market, but also long-term forecafls, that, in turn, gives the opportunity to hedge price risks.
In our research we compared and generalized the European energy exchange activity experience with electricity trading. Retrospective analysis of empirical data of this activity allowed to define the flages, which the Ukrainian exchange mufl follow in order to function efficiently in the electricity market (Fig. 1).
Source: done by author
Fig. 1. "Road Map" of electricity exchange market development in Ukraine
The firfl flage is the mofl important and responsible one. It provides the basis for activities on the liberalized market and legislative rules, governing the exchange market. It should be noted that simultaneously the cooperation between energy exchange, clearing house and syflem operator should also be legally regulated.
During the firfl flage, energy exchange should act as an operator of "day-ahead" and intraday market. At this flage, it would be non-productive to introduce electricity derivatives. At firfl, a liquid spot market should be developed and this takes a lot of time. The exchange gradually may provide clearing not only of the spot market transactions, but also OTC market forward contracts, which will positively affect the overall exchange activity and flrengthen its market value.
The second flage should be flarted with a gradual introduction of futures contracts with physical settlement of delivery period during a week, a month, a quarter or a year. It would be profitable to introduce the spot index as the basis of the futures price formation with financial settlement (without the actual power supply) simultaneously with the derivatives introduction.
The third flage provides the highefl degree of energy exchange development, its introduction to foreign markets and/ or the expansion of commodity specifications due to other energy products. This flage is characterized by the expansion of the exchange functions and the application of methods, providing the solution of the problem of cross-border transmission power lines overload by means of implicit auction or market association between neighbouring countries.
The introduction of the third flage of the energy exchange development will depend firfl of all on the national energy policy. We consider that in the context of the integration of Ukraine to the EU markets and signing of the Cooperation Memorandum between the Energy Community and Ukraine, the energy exchange exploitation will demonflrate to the greatefl extent the readiness of Ukraine to implement the European flandards, particularly in electricity trading.
For the successful development of the electricity market in Ukraine it is necessary to build a model of its functioning, which should meet all the criteria of a liberalized market. Syflematization and critical analysis of the European experience allows us to offer a theoretical model as one of the ways of electricity market development (Fig. 2). A key feature of the proposed model is the separation between the commercial activities and technical processes, maintained by the Ukrainian operators of electrical grids.
In the model, which in our opinion, will be relevant for Ukraine while liberalizing the energy sector, it is assumed that the electricity syflem operator will act as the balancing market Operator, not taking part in commercial activities. For example, in Poland and Spain the syflem operator of electricity grid integrates multiple functions i.e. as an operator of the balancing market and an operator of the balancing market settlement. As you can see, the syflem operator is a market participant, which in turn, is quite dangerous in terms of market transparency and effectiveness of its functioning.
Supervision of the Ministry of Energy and Coal Industry of Ukraine
Implicit Market rl t.,rl ^ Bids for
<----------------------------------- C0uplmg .-.a^ operations *- Bc«^ Fl™ « buy/saleof electncity
Source: done by author
Fig. 2. Theoretical model of Ukrainian electricity market development
Energy exchange mufl be an independent entity of the electricity market. This allows supporting its liquidity and ensuring compliance with the energy exchange market rules.
As it was noted above, the key to the efficient exchange functioning is the clearing house formation that will perform the functions of the settlement operator of the exchange, balancing market, OTC and bilateral contracts. Settlement operator is an intermediary between the market participants and the syflem operator.
The availability of technical and commercial market operator is equally important in this model. This operator is responsible for the dispatcher requefls, which are being exchanged between the syflem operator and syflem power Nations. Technical and commercial market operator acts as balance responsible entity. It should be noted that technical and commercial market operator cannot be a market participant. Balance responsible entities make the energy and transport reports every day in order to prevent and avoid technological failures in the national electricity grids. They have to provide the national electricity grid with the information about the potential energy buyers and producers and the electricity grids which will be exploited the next day in order to define the required amount of power. National electricity grid operator receives this information from the balance responsible entities via the special protocols and monitors the balance during the day.
Conclusions. Syflematization of the positive effects of the liberalised electricity markets development in the EU and, in particular, in Eaflern Europe shows that the electricity markets have exchange segments in the vafl majority of these countries.
The analysis of the European energy exchanges experience shows that they play a key role in price formation. Energy exchanges with electricity trading created moflly by the public authorities, clearing houses, trade and technical operators provide the formation of transparent pricing mechanisms for
electricity supply not only during the day and "day-ahead" but also futures and forward contracts trading.
The ways of improving of the exiting electricity sector legislation were proposed in the paper. In particular, it was emphasized that the electricity exchange market should be developed gradually from a liquid spot market to the derivatives trading introduction.
Road Map of electricity exchange formation and development in Ukraine includes three successive flages. During the firfl flage simultaneous development of a legal framework at the macro and micro levels, eliminating of the monopolies, market deregulation, energy exchange and clearing house introduction (or exploitation of the exiting one) and defining of the main cooperation directions with the electricity grid syflem operator were offered. At the second flage it was proposed to introduce derivatives and at the third flage - the extension of commodity specialization and/or the area of energy exchange trading.
A theoretical model of Ukrainian electricity market is based on the idea of separation between the electricity grid syflem operator activity and commercial activity and energy exchange involvement in order to provide the pricing transparency and clearing. The electricity market model should provide an opportunity for the participants to form the spot market prices and also to hedge price risks. This promotes the energy sector liberalization and increases its inveflment attractiveness.
References
1. Benth F. E. An empirical fludy of the information premium on electricity markets/ F. E. Benth, R. Biegler-Konig, R. Kiesel // Energy Economics. - 2013. - № 36. - p. 55-77.
2. Falbo P. A new index for electricity spot markets /P. Falbo, M. Fattore, S. Stefani //Energy Policy. - 2010. - № 38. -p. 2739-2750.
3. Zachmann G. Electricity wholesale market prices in Europe: Convergence?/ G. Zachmann // Energy Economics. -2008. - № 30. - p. 1659-1671.
4. Pickl M. The Impact of Introducing Seven-Day-Trading on the AuSrian Electricity Market / M. Pickl, E. Wagner, F. Wirl // ZfE Zeitschrift fur Energiewirtschaft №4. - 2009. - P. 322329.
5. Кириленко О. Рольова модель конкурентного оптового ринку електрично! енергп в Украш: концептуальна схема, сегменти та ролi учаснишв/ О.В. Кириленко, 1.В. Блшов, Г.С. Корхмазов, В.1. Попович // Пращ 1ЕД НАНУ - 2010. - Вип. 25. - С.5-13.
6. Рябченко О.О. Роль деривативiв на електроенерпю в умовах лiбералiзацii електроенергетичного ринку Украши: сучасний стан та свгговий досввд./ О.О Рябченко//Науковий Вюник НУБ1П Украни. -2011. - С.168-176.
7. Сохацька О. Перспективи використання енергетич-них деривативiв пiдприeмствами нафтопереробно! галузi Укра!ни/ О. Сохацька, Н. Стрельбiцька //Науковi записки. Серiя "Економжа".- Випуск №15. - 2010. - С.429-436
8. Draft Law of Ukraine "On Electricity Market". Available at: http://mpe.kmu.gov.ua/minugol/control/uk/ publish/article?art_id=245022886 [in Ukrainian].
9. Сохацька О. М. Бiржова справа: Шдруч. для студ. вищ. навч. закл. / О. М. Сохацька; Терноп. акад. нар. госп-ва. - Т.: Карт-бланш, 2003. - 602 с.
10. Act No. 458/2000 Coll., On Business Conditions and Public Admini^ration in the Energy Sectors and on Amendment to other laws (The "Energy Act"), Available at: https://www. em.cz/documents/10540/473304/zak_aj_91.pdf/a9837ffd-11aa-412f-81cc-bb4c04baa34b
11. Law of Poland "On Commodity Exchanges" Available at: http://isap.sejm.gov.pl/DetailsServlet?id=W DU20140000197
12. Law of Ukraine "On Commodity Exchange" Available at http://zakon4.rada.gov.ua/laws/show/1956-12
ECONOMIC ANALYSIS OF INNOVATIVE ENVIRONMENTAL PROJECTS
Golovkova I.A.
Tyumen State University Finance and Economics Intiitute,
Poti-Graduate Student
ABSTRACT
The article deals with innovative environmental projects, reveals their relationship with the types of economic activities, presents environmental assessment of the project, economic analysis of the innovative project, surveys the methods of financial and economic assessment of innovative environmental projects, illuflrates the economic eflimates for the innovative environmental projects.
Keywords: innovative environmental project, project environmental assessment, methods of economic assessment of efficiency, economic assessment of innovative environmental projects.
1. Introduction
In contemporary economics special emphasis is laid on innovative approaches exhibited by companies in order to gain competitive advantage, it is the case with both - Russian and international markets. Among such innovations are innovative environmental projects which enable relieving anthropogenic flress and expedite the process of environmental refloration. Innovative approach is the way to obtain competitive advantage and is viewed as a flrategic tool for business development. Today highly competitive markets make innovations one of the things mofl eagerly sought by companies.
The objective of the present fludy is to analyze the economic efficiency of innovative environmental projects.
To achieve this objective a number of issues are addressed:
1) An innovative environmental project and its characteriflics are defined, their relationship with the types of economic activities is indicated.
2) Environmental assessment is described and economic efficiency of an innovative project is analyzed.
3) Methods of financial and economic assessment of innovative environmental projects are fludied.
4) Economic eflimates for innovative environmental projects are presented.
2. Characteriflics of Innovative Environmental Projects, Their Relationship with the Types of Economic Activities.
An innovative project is a project that addresses feasibility, legal and organizational subflantiation of the innovative activity.
Environmental projects - projects which have environmental improvement as one of the key targets.
Innovative environmental project - a process that presupposes creation (invention, manufacture) and launching an innovative product (a service, a know how) aimed at environmental improvement.
Depending on the intensity and manner of the impact on the environment environmental projects are divided into two groups: exo-environmental and endo-environmental [9].
Besides, environmental projects can be categorized based on the area of application: chemical technologies and new laser materials, IT, less-contaminating technologies, wafle recycling, bio technologies, medicine, emergency response, noise pollution reduction, as well as machinery and tools and incrementation building. Figure 1 presents relationship between environmental projects and types of economic activities [compiled by the author].
