Ukrainian energy: deactivating coal

Ukrainian energy: deactivating coal

Ukraine Crisis Media Center presents the abridged translation of Deutsche Welle article on Ukraine’s energy crisis. Comprehensive explainer on blockade is available here, on how it all began is here, the assessment of anticipated consequences is here.

Ukraine is combating the consequences of the official blockade of coal supply from Donbas. Although the emergency state in the energy sector persists, consumers have not felt it yet. There have been no rolling blackouts in the country, and the heating season is almost over. However, anthracite deficit still manifests itself. Zmiiv, Trypilska and Prydniprovska TPPs have already suspended work; Kryvorizka TPP is next to go.

Vsevolod Kovalchuk, acting director of “Ukrenergo” (the state enterprise that provides operational and technological management of the united energy system of Ukraine) explained that the TPPS were suspended according to the plan of disconnection of generating units developed with due regard to the power system security. In case of emergency the units can be powered on in timely manner. He noted that the power system is ready for “disconnection” of all the units burning anthracite coal. The idle time will be used for repairs and accumulating coal for the summer peak loads.

Perks of global warming

Experts point out that the energy crisis was relieved by warm weather that allowed to end the heating season two weeks earlier in some regions. “Because of the early spring flood hydro power plants increased power generation, providing resources for maneuvers and maintaining the load,” explains Andrii Perevertaiev, expert of the Energy Reforms Coalition.

The Ukrainian government is moving in the right direction by saving power. “But this situation won’t last much longer. In summer, when the peak-load period of heat and use of air conditioners begins, the anthracite problem will escalate again,” warns Olena Pavlenko, president of the analytical center DiXi Group.

Strategic thinking

Volodymyr Omelchenko, Energy Programmes Director of Razumkov Center, believes that the government continues to act reactively, without proper long-term strategy against dependence on Donbas coal. “We have to start contracting for imported coal, switch the power generating units to gas coal, ensure real energy saving and think at least a year ahead,” he insists.

Until the end of 2017 Ukraine needs to import 4.7 million tons of anthracite coal. Energy Minister Ihor Nasalyk relies on imports of 2.5-3 million tons from the United States. Besides, he said, power companies have already begun contracting for anthracite coal from South Africa and other countries.

Energy: economics VS politics?

According to Andrii Perevertaiev, to import the required supply of anthracite coal we should either immediately begin negotiations with the exporting countries on additional coal production or offer a higher price for the coal available in storehouse at the foreign ports. According to him, due to Verkhovna Rada’s failure to adopt the Law “On the Electricity Market” the power generating companies are unable to get long-term loans. Therefore, they will have to include expenditures in the tariffs for consumers. However, even in case of successful agreements there is no guarantee that a sufficient amount of coal will be obtained before the heating season. The purchase price for imported coal is not announced yet.

Andrew Favorov, Director of “Energy Resources of Ukraine” believes that importing electricity from Moldova, Belarus, Romania, Slovakia or Hungary is cheaper than buying coal from South Africa and the United States and delivering it by rail with transshipment. According to him, the technological capability does exist, but it is unlikely that power generation companies (in other words – Rinat Akhmetov, who owns 70% of Ukrainian TPPs) will allow their production capacities to stand idle because of cheaper imported electricity.

Further reading: How Rinat Akhmetov found himself in a hot seat with all this and why his interests contradict the national ones.