What future for the Ukrainian energy sector?

Even as it attempts to keep the lights on amid Russian attacks on its energy infrastructure, Ukraine is already starting to think about the long term future of energy production.

Ukraine’s energy system has survived 13 enemy missile attacks and 15 waves of drone attacks on power facilities.

As of the end of September, damage to Ukraine’s energy sector, including utilities and the district heating sector, totalled about 5.9 billion US dollars. As of November 22, damage to Ukraine’s transmission system operator Ukrenergo alone was estimated at more than two billion US dollars.

The production of electricity at Ukraine’s power plants in operation cannot fully cover consumption. More than 10 GW of the main installed capacity is inaccessible to the Ukrainian energy system and is under the control of the Russian occupiers. This includes the largest nuclear power plant in Ukraine and Europe at Zaporizhzhia.

Current production of electricity in Ukraine amounts to about 12,000 MW, while the capacity deficit remains significant at of 4,500 MW. In this regard, distribution system operators apply rolling blackout schedules and the Ukrainian government, together with international partners, is simultaneously restoring the functionality of damaged power system facilities and looking for alternative ways to produce energy while ensuring the safety of power facilities.

Allies save Ukraine’s power system

Since the outbreak of hostilities in February last year, Ukraine has been receiving equipment and materials to restore its  energy sector from allied states.

According to Herman Galushchenko, Ukraine’s Minister of Energy, by the end of 2022 the country received about 840 tonnes of equipment from 20 countries. More is on the way. The assistance includes 1,239 transformers, 1,427 generators as well as mobile heating systems, batteries, accumulators, welding and cutting equipment, and cables.

According to Artur Lorkovsky, director of the EU Secretariat, to date 156 million euros have been pledged to the Energy Support Fund, created by the Energy Community on the basis of an agreement between the European Commission and the Ministry of Energy of Ukraine.

Donors include Germany, the UK, the Netherlands, Spain, Austria, Denmark, the European Commission, the KfW Development Bank, the Energy Regulators Regional Association and the Regional Centre for Energy Policy Research. Germany is the main contributor to the fund. The German Federal Foreign Office contributed 30 million euros and the German Federal Ministry of Economics and Climate Action contributed 99.5 million euros, which will be implemented by KfW.

In addition to donating to the Ukraine Support Fund, EU states will also donate equipment. At the end of December 2022, a 54-tonne, 110 kV three-phase transformer was donated by the Latvian state-owned firm Latvenergo. Another powerful transformer, this time from Lithuania, will soon arrive in Ukraine.

The US has already allocated over 100 million US dollars to Ukraine for the purchase of equipment to restore the energy system. In addition, the US Agency for International Development (USAID) has provided Ukraine with more than 1,000 generators for schools, hospitals, government agencies and rescue services.

Israel and South Korea will also provide dozens of generators to Ukraine, while Switzerland has allocated almost 100 million US dollars for the urgent restoration of energy infrastructure. Canada has provided Ukraine with nearly 50 million US dollars in assistance in this area, and Japan has sent generators worth almost three million US dollars. The UK has allocated about six million US dollars for use in the energy sector.

Gas turbine and gas piston generating equipment

Despite the losses associated with the occupation of several nuclear power plants, nuclear energy generation remains key for Ukraine, producing electricity on an even schedule. However, because of the damage to thermal and hydroelectric power plants, as well as green energy generation facilities, the power system has become difficult to balance, especially during peak hours.

Consequently, Ukraine has begun to consider the construction of gas turbine and gas piston mini-electric power plants.

Prime Minister Denis Shmygal has recognised gas turbine and gas piston mini power plants as one of the options for creating alternative mobile generation capacity. “Although they are expensive, they are good because they come online quickly, in three minutes. For comparison, a nuclear unit takes three days to ramp up and a month and a half to extinguish,” he said.

Gas turbine and gas piston power plants are small – 50 MW on average – but it is possible to combine them. “If you put 20 of them in a row, you get 1,000 MW – that’s a nuclear unit. They usually do not need special human intervention and maintenance, this is a huge plus,” says Shmygal.

They can also help keep get nuclear power plants back online, according to Shmygal. “During a blackout, the grid gets unbalanced and everything shuts down. You need 100-150 MW to raise a nuclear unit. You can’t get that kind of power on generators. The gas turbine units could help with this.”

A decentralised approach

According to the PM, the problem of the energy sector should be divided into two blocks: the shortage of generating capacity, and the shortage of grid capacity.

Energy expert Gennady Ryabtsev says that gas turbine and gas piston mini-electric power plants can work as elements of a decentralised energy system and provide electricity directly to consumers, while sending the remainder to the national grid.

They can also be made mobile, placing them on railway platforms for example, for easy transportation in case of shelling.

At the same time, according to Vladimir Omelchenko, director of energy programmes at the Razumkov Centre, a think tank, a mini power plant cannot be installed in a week. This is a project for the future, after the war.

“A power plant is also a capital investment. It is not profitable for business, because now the price of Ukrainian electricity from the existing generation for industry is three times cheaper than in the EU. If we invest in the construction of gas turbine mini stations, the price of electricity for business will be several times higher than it is now,” says Omelchenko.

Ukraine: A European green energy hub

Despite the fact that the war continues and its full consequences are difficult to assess, the Ukrainian government has begun discussions on the post-war future of Ukrainian energy. At a recent meeting with Frans Timmermans, executive vice president of the European Commission for the European Green Deal, Ukrainian President Vladimir Zelensky announced the government’s priorities.

“We already have to determine what [energy] generation in Ukraine should be,” said Zelensky. “We will win this war, but Russia will still be a neighbour. And that’s why the European Union must be independent from any decisions of the Russian Federation. Here, we see ourselves as a reliable green energy partner.”

Zelensky stressed that during the reconstruction Ukraine will concentrate on the implementation of green projects and is ready to become a European hub of modern, clean energy. “We are ready to be a normal, understandable and guaranteed partner of the EU in hydrogen production. We have everything for this: territory, opportunities, people.”

Energy Minister Galuschenko has said that by 2050 the share of electricity production from carbon-free sources will be 90 per cent. He says that the state plans to rebuild the energy system according to the following principles: decentralisation, resistance to military challenges, the development of green energy and nuclear power.

“Our vision is a gradual replacement of thermal generation capacity, which suffered most from Russian attacks, with modern, carbon-free technologies,” Galushchenko said.

He also noted that Ukraine hopes for close cooperation with the US on the introduction of small modular reactor (SMR) technology.

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SMRs: Ahead of their time

Ukraine wants to add a further two GW to its existing nuclear power generation by 2030.

Last month, the government adopted a decree that could see the construction of two US nuclear reactors in Ukraine, at the Khmelnytskyi nuclear power plant. Herman Galushchenko announced “the end of the era of nuclear generation based on Soviet technology.”

The American company Westinghouse will supply the technology. It is expected that the third and fourth reactors at the plant will be American-made AP1000 reactors. The approximate term of construction of these new reactors is 2030-32. The cost of one US-made unit will be around five billion US dollars.

Ukraine has been cooperating with Westinghouse for several years, buying fuel for its current reactors. At first, these supplies replaced only part of the fuel purchased from Russia’s Rosatom, but after the start of the full-scale war, purchases from Russia were abandoned completely.

Analysts on Ukraine’s energy market assess the government’s statements with scepticism, however. “This is a big investment. And now it looks a little premature. There is still a war going on. Certainly, we have to switch to Western technology. But first we need to carry out an audit and devise a plan for the development of the industry,” says energy expert Sergei Mirny.

As for the deployment of SMR technology, “It is technically impossible to speed up the launch of small modular reactors, because these reactors do not exist now at all, they have just been invented,” says Gennady Ryabtsev.

Westinghouse recently obtained a license for the use of SMR technology in the United States. These reactors still need to be finalised, manufactured and approved for use in Ukraine, however.

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