The Ukrainian electric power industry on the front line: challenges and opportunities ahead
Russia’s invasion of Ukraine has directly threatened the operation and future of the country’s energy industry. Despite this, the ongoing challenges faced by the sector and opportunities that opened up may make it more resilient and adaptable in the long run.
Several days before Russia’s military invasion of Ukraine, the country’s energy system took one of the first blows of the rapidly impending war.
On February 22nd, the Luhansk Thermal Power Plant (TPP) came under massive fire from militants of the self-proclaimed “Luhansk People’s Republic”. This facility is located in the town of Shchastia, close to the line of contact demarcation with the separatist controlled areas of Donbas. Due to the damage imposed, the Luhansk plant had stopped its operations. As a result of the occupation of the town of Shchastia, control over the station has been completely lost.
Soon after the start of full-scale hostilities on the territory of Ukraine, a number of other power plants, as well as energy infrastructure facilities, began to be systematically attacked by the Russian occupation forces.
Due to the quick Russian troop advance in the south of Ukraine, the Kakhovka Hydroelectric Power Plant and Zaporizhzhia Nuclear Power Plant (NPP) in the city of Enerhodar have now been occupied by Moscow’s forces. The capture of the second facility following night shelling in March threatened the repetition of a man-made nuclear disaster. Indeed, it is one of the largest NPPs in Europe, consisting of six power units. As the International Atomic Energy Agency (IAEA) has recently confirmed Russia’s Rosatom is trying to take complete control over the Ukrainian NPP pressuring the plant’s personnel and demanding ‘daily reports on confidential issues’ on the functioning of the NPP.
As a result of the hostilities, a railway bridge was also blown up in Vasylivka not far from Enerhodar in Zaporizhzhia region. This provided the only route to supply coal to the large Zaporizhzhia TPP owned by DTEK Energy. This facility later switched to using natural gas.
Recent attempts by the Russian occupation military forces to advance further from the South towards Kryvyi Rih have led to the shelling of another important energy facility – the DTEK Energy-owned Kryvorizka TPP in the town of Zelenodolsk. As a result of the attack, the transformer unit was hit which caused a fire.
According to the Ministry of Energy of Ukraine, there have also been attempts to shell the Trypilska TPP in the Kyiv region. This is owned by the country’s state-run energy-generating company “Centrenergo”. Shells also hit the Chernihiv Combined Heat and Power Plant (CPP). In early March, the Okhtyrka CPP in the Sumy region was completely destroyed after Russian aerial bombardment. This left part of the city of Okhtyrka without electricity, heat and water.
Critical energy infrastructure facilities, such as high-voltage grids, transformers and substations, have been systematically shelled and destroyed since the very first days of the war. Electricity grids near the main advances of the occupying Russian troops were among the first to be damaged. Due to this, facilities in the Kyiv, Chernihiv, Sumy and Kharkiv regions in the north and north-east of Ukraine, as well as in the south and in the Donbas region, have been especially targeted by Moscow’s forces.
Thanks to the heroic efforts of Ukrainian maintenance crews, equipment has been restored at seven substations and 11 high-voltage lines. This made it possible to provide electricity to about two million consumers. However, a significant part of the Ukrainian population (about 760 000 consumers) still remained without electricity supply as of mid-April 2022.
The renewable energy sector has also faced serious challenges. Until recently, this industry was developing quite dynamically in Ukraine. As of mid-2021, it had reached a total capacity of about nine gigawatts. This amounted to about 15 per cent of the total balance of the United Energy System (UES) of Ukraine.
According to some estimates, around 30 to 40 per cent of Ukraine’s industrial solar generation facilities (1120 to 1500 megawatts) were affected by the Russian invasion. At the same time, the Ukrainian Wind Energy Association claims that more than two-thirds of all the country’s wind farms (1673 megawatts) have been shut down. These are mainly located in the southern regions of Zaporizhzhia, Mykolaiv and Kherson, areas now either threatened by, or under the control of, the Russian occupation forces. Naturally, the energy companies operating these facilities many of which have substantial loan obligations now could find themselves on the brink of bankruptcy.
The total amount of losses to the Ukrainian energy sector as a result of the war is already estimated today in billions of US dollars. At the end of March alone, the Ukrainian energy minister estimated this figure to be more than two billion and this figure is steadily growing.
Opportunities and the future of the Ukrainian energy sector
Despite all the challenges and losses that the Ukrainian energy sector has already incurred and continues to bear because of the war, its future does not seem so gloomy. There are at least a few reasons to be cautiously optimistic in this regard.
First of all, it is worth noting that the Ukrainian energy system has managed to maintain a balance of power generation and consumption. This is true even after the beginning of war conditions and the loss of some of its generating capacity. Sufficient coal reserves in the warehouses of power plants and the decline in industrial production rates due to the war will further contribute to the stability of the Ukrainian power system in the nearest future. It is also worth remembering that we are now experiencing the end of the autumn and winter period of increased energy consumption.
Secondly, a number of generating facilities currently under occupation were not severely damaged or destroyed (such as the Luhansk TPP or wind farms in the south of Ukraine) but only shut down. There is therefore at least a chance that these facilities will one day be returned to Ukraine and Ukrainian companies and owners following the restoration of Kyiv’s sovereignty over the respective territories. However, at this moment it is hard to predict their future given still substantial Russia’s military presence in the South of Ukraine and in the Donbas respectively.
Thirdly, Europe’s Energy Community has recently decided to set up the legal framework for a Ukraine Energy Support Fund, which aims to provide emergency financial support to the Ukrainian energy sector. Donors are expected to include EU member states, as well as international financial institutions, companies and corporations. The Ukrainian energy ministry that the collected funds “will be used to restore the energy infrastructure that was damaged or destroyed as a result of hostilities on the territory of Ukraine”.
Last but not least, the war in Ukraine has finally encouraged a meaningful process in terms of Ukraine’s integration with the European energy space.
In February, the country’s UES had to undergo a three-day test of its operations fully disconnected from the common system with Russia and Belarus. This testing was meant to prepare the Ukrainian energy system for synchronisation with the European Network of Transmission System Operators for Electricity’s (ENTSO-E) power system, which had to be completed by 2023.
However, Russia’s full-scale aggression against Ukraine began just hours after the start of the isolated test regime for the Ukrainian energy system. This made it virtually impossible to return to the common power grid with the aggressor country after the test period had been completed.
This extraordinary situation has contributed to the accelerated integration of the Ukrainian energy system with ENTSO-E ahead of schedule. As early as March 16th, operations were carried out to physically connect the synchronised power systems of Ukraine and Moldova with the common grid of continental Europe.
It is hard to overstate the importance of integration with ENTSO-E. Certainly, this is a crucial step in completing the protracted post-Soviet transition of Ukraine’s energy sector. From now on, the Ukrainian energy system can receive emergency supplies of electricity from a large group of EU countries. These states have a large reserve capacity and are much more reliable in many respects than emergency supplies from the common power grid with Russia and Belarus. It is well known that the issue of electricity supplies from these two countries has often been associated with speculation and energy blackmail. This factor has also caused internal political tension in Ukraine itself.
In the future, ENTSO-E also opens up the possibility for Ukraine to carry out full-fledged commercial operations with EU countries and attract investments in the industry. This is important in terms of providing additional financial liquidity to the war-damaged Ukrainian energy sector. Today, the technical capabilities of interstate flows allow for the export of up to two gigawatts of electricity. Kyiv’s energy ministry looks set to create conditions that would increase the capacity of such exports up to five or even six gigawatts.
As a result, the Ukrainian energy industry is dealing with its ongoing wartime tests and probably has every chance not only to survive but even become stronger and more stable. This will prove true if it manages to fully utilise the potential of the opportunities that are opening up to it now.
Ruslan Kermach is a freelance political analyst and non-regular contributor for public media in Ukraine and abroad. He has been working in the non-governmental sector of Ukraine starting from 2015 – initially as an analyst and public opinion researcher at the Kyiv-based non-governmental think tank Democratic Initiatives Foundation (DIF) and later as an international project coordinator at Yalta European Strategy (YES) which is the leading international forum in Ukraine. In 2021-2022 he has been working at DTEK which is the largest private investor in the energy industry in Ukraine. He holds an MA in Political Science from the National University of Kyiv-Mohyla Academy (NaUKMA) in Kyiv, Ukraine. Ruslan has also been a fellow of the PASOS Ilko Kucheriv Democracy Fellowship Program (2016), an alumnus of the DAAD ‘German and European Studies’ Program with the Friedrich Schiller University Jena in Germany (2014) and the US professional International Visitor Leadership Program (2019). This article was written in his individual capacity.
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