Russia is trying to destroy our energy system in order to force Ukraine to make concessions on the issues of freezing the conflict and ceasefire. The enemy’s goal is not only to create an electricity deficit, but also to put psychological pressure on society and tie attacks to political events.

Is Ukraine ready for a severe military winter with enemy strikes on critical infrastructure? This is a question that is currently worrying both ordinary citizens and businesses.

Therefore, the Ukrainian Institute for the Future held a discussion on the topic: “Debates on the Future: Energy of the Future”, which was joined by experts who assessed energy reserves, infrastructure readiness, and strategies for successfully passing the heating season.

Ukrainian Energy also attended the event.

Losses and Destruction

Expert in energy resource management, former member of the National Energy and Utilities Commission of Ukraine Olga Babiy told how Ukraine entered the heating season. According to the expert, due to the spring attacks by the Russians, Ukraine lost 9 GW of maneuvering capacity in the unified energy system, although even before that, since the beginning of the full-scale invasion, the energy sector has suffered significant destruction and losses. As for the reserves of domestically produced gas, these are long-term programs that cannot be assessed in half a year - because their work is stretched for years.

"We entered the heating season with certain reserves of gas in storage - this is mainly domestically produced gas. It is worth noting that we entered this year's heating season with prepared heating and power facilities, with a certain volume of cogeneration units. Which were built quickly - in about 6 months. Also, by the end of the year, 230-280 MW of capacity will be put into operation. By the end of March, we can reach the figure of 350 MW," the expert says.

Also, according to her, this year Ukraine has increased the volume of solar generation - according to various estimates, it already reaches 700 MW. And this is only the capacity that was built this year. And next year this volume may exceed 1.5 GW.

Therefore, we can say with confidence that as of today, a large amount of electricity generation has been restored.

“However, we have another problem - the Ukrenergo network, which is constantly collapsing and is under enemy attacks. However, Ukrenergo, given the circumstances, was able to create a serious stock of repair equipment,” says Olga Babiy.

She emphasizes that Ukraine has done everything it could do for the energy system, in addition, a large number of projects are currently underway that are designed to strengthen the energy grid and provide more electricity to the system, and the state and the regulator have simplified some procedures to help with this.

Unprepared cities

Stanislav Ignatiev, an energy market analyst and energy security consultant, said that in Ukraine, only for critical infrastructure facilities (heating and power utilities, water utilities) 1.5 GW of gas-piston plant capacity is needed.

“Unfortunately, only 122 MW of such capacity has been built in our entire infrastructure – that is, less than 10%. The leaders in capacity construction are Zhytomyr and Khmelnytskyi. The city of Kyiv, for example, has fuel oil reserves for only 1 month. Therefore, in the event of a critical situation, we will have difficulties,” says energy market analyst and energy security consultant Stanislav Ignatiev.

Artem Nekrasov, a representative of GarPok (Guaranteed Buyer), an electricity market specialist, says that work on installing power plants this year was indeed carried out very actively. Business has understood that saving the drowning is the work of the drowning themselves. The development of solar generation was influenced by interest-free loans, simplification of bureaucratic procedures from the National Energy and Power Generation Commission, as well as consumer activity. Thus, the business built about 200 MW for its needs. As for wind generation, since the beginning of the full-scale invasion in Ukraine, four projects with a total capacity of 233 MW have already been launched. Such projects do not currently operate on a “green” tariff, but sell electricity on the free market.

Viktor Kurtyev, an expert on energy investments, is not as optimistic as his colleagues. He considers the situation in the energy system to be a symbiosis of the incompetence of the authorities and the uniqueness of Ukrainian society, which was able to self-organize.

According to him, currently 17 thousand MW of capacity remains in the occupied territories, and another 9 thousand MW were destroyed by the Russians.

“However, there are systemic things that could be done centrally. There are things that do not even require capital investments. But they were not done. For example, Ukrainians remember the power outage in July – all because the Russian strikes coincided with repairs to nuclear power units at the NPP. At the same time, Ukraine imported 1,100 MW from the EU, while it was allowed to import 1,700 MW and connect 250 MW of emergency assistance. Here the question is for the authorities – after all, such organizational issues are resolved in one day,” Kurtyev explained.

In his opinion, Ukraine has every chance of successfully getting through the winter (with schedules and restrictions, of course), if the Russians do not cross the “red line” – which Kurtyev considers the strikes on the NPP.

Business is self-organizing

As for business, expert Olga Babiy advises those businesses that have a closed production cycle to invest, attract investments, take out loans and ensure their own energy security at least minimally. It is not about profit, but about investments in the security of their business. This is a security component today.

“It is worth noting that even if a business builds energy infrastructure for itself and it is not in demand, in the conditions of electricity shortage in the next five years, this energy will be in demand and can become a good source of additional income even under the conditions of the end of the active phase of the war,” explains Babiy.

The energy market is a large deficit on which you can earn money. Therefore, it is worth building your own generation and starting to calculate costs and consumption.

Andrian Prokip, UIF expert, head of the Energy program, believes that thousands of small generators across the country will have a positive impact on the energy market as a whole, as they will stimulate competition and force large players to review prices. This model has a chance to launch a highly competitive market in the future.

The experts also touched on the topic of debts to businesses under the “green” tariff.

The state enterprise “Guaranteed Buyer” filed a lawsuit against NPC “Ukrenergo” to collect over UAH 6.5 billion in debt for payment for the service to increase the share of renewable energy sources (RES), the funds from which are directed to payments to electricity producers under the “green tariff”.

GarPok representative Artem Nekrasov explained why they appeared – because it was initially assumed that the state would compensate for a share of the tariff, but for several years now, deputies have been forgetting to vote on the allocation of funds from the state budget. Plus, an unbalanced tariff - when state-owned generating capacities are unable to pay funds to other market participants, a chain of debts is formed in the market.

To date, the State Enterprise "Guaranteed Buyer" owes renewable energy producers more than UAH 32.2 billion for 2021-2023.

"To date, the amount of debt to renewable energy producers exceeds UAH 32.2 billion. It consists of debts for 2021 - UAH 0.6 billion, for 2022 - about UAH 17.1 billion, for 2023 - about UAH 14.5 billion," Nekrasov said.

He emphasized that the "Guaranteed Buyer" is trying to ensure settlements with "green" generation at the level of 50% - at the expense of its own electricity trade. The rest of the settlements should be provided at the expense of the transmission tariff of NPP "Ukrenergo".

"Unfortunately, today the transmission system operator is unable to provide these calculations due to the need for funds for repairs. NPC Ukrenergo has not been paying us for services since January 2022," Nekrasov said.

The expert sees a solution for producers to conclude contracts with consumers directly.

The protracted debt crisis in the electricity market can be resolved by the state issuing bonds, providing certain guarantees to investors, and postponing payments, explains Olga Babiy.

Energy with potential

Given the existing problems and challenges, as well as the opportunities that open up for renewable energy, Ukraine has significant potential for the development of this sector. Ukraine can receive up to 1.9 GW of new wind generation capacity alone over the next two years, if bureaucratic obstacles are reduced, - concludes Viktor Ignatiev.

Therefore, reducing administrative barriers and stimulating investment in renewable energy sources may become key factors for the country's energy security in the future.

Olga Babiy emphasized that the restoration of the energy sector will take place in two stages: the transitional stage will last up to 7 years and will include the completion of destroyed facilities and the creation of new reserves to increase stability. This will be accompanied by a deficit. The second stage - stable - will include the formation of the energy sector of the future, integrated into European markets and a vector of movement towards renewable energy sources.

Andrian Prokip added that the development of the energy sector must take into account possible risks even in peacetime:
“Our enemies may remain not only in the north. New challenges require the creation of a decentralized and sustainable system,” the expert believes.

The speakers emphasized that business is already beginning to adapt to new realities by investing in local generation. According to Stanislav Ignatiev:
“Today, all conditions are conducive to the development of our own generation. This is beneficial and will help avoid problems in the future.”

The key task for society is to maintain unity. Experts emphasized: any attempts to divide citizens, to sow distrust in energy professionals or the government play into the hands of the enemy.

So, as we can see, the issue of preparing for winter remains one of the most important for Ukrainians. Leading energy experts gave an optimistic assessment of the state of Ukraine's energy system. There is enough gas in storage facilities, and most of it is domestically produced gas.

The facilities of the district heating and power plant have been successfully prepared for the heating season.

New cogeneration plants were put into operation in record time — just 6 months, which is three times faster than European standards.

A large number of energy initiatives are scheduled to be launched by December, and Ukrainian companies are actively investing in their own generation, strengthening energy independence.

According to Stanislav Ignatiev, Chairman of the Council of the Ukrainian Renewable Energy Association, the power outage schedules may be canceled by the end of this week. The cancellation of restrictions will be influenced by weather conditions, the completion of emergency work, and the absence of new large-scale attacks by Russia on the Ukrainian power system.

Thus, experts conclude that we will get through the winter, because Ukrainian energy demonstrates endurance and reliability.

Yuriy Atanov and Olena Marchenko, specially for "Ukrainian Energy"