Ukraine prepared for winter but Russian missile attacks still a risk

LONDON (ICIS)–Ukraine has stocked up on coal and gas resources for winter but increased Russian missile attacks and an extensive cold weather could leave it struggling to cover the deficit.

Speaking to ICIS, Oleksandr Kharchenko, managing director of the Kyiv-based Energy Industry Research Center said Ukraine could meet peak demand if current supplies and demand were stable.

However, he said the electricity generation and transmission infrastructure remained vulnerable to Russian attacks unless Ukraine received air defences urgently to protect its population and power plants.

HEAVY DAMAGES

“We did a lot of coordination work with our military to protect the infrastructure. We also have a lot of experience from last year’s attacks but we need air defences and we need hardware such as high-voltage transformers,” he said.

Ukraine’s power generation and transmission infrastructure suffered heavy damages during repeated Russian missile and drone attacks last year.

This means that from a total of 13.6GW of coal-fired capacity prior to Russia’s attacks in October 2022, Ukraine has 4GW left.

Meanwhile, its largest 6GW Zaporizhzhia nuclear power plant is under Russian occupation, which means Ukraine has nine nuclear units in operation with a total installed capacity of 7.6GW to cover baseload production.

Demand fell by more than 50% last year as consumers were disconnected from the grid because of repeated attacks and 10 million people fled the country, seeking refuge abroad.

However, Kharchenko said consumption has been increasing by 2-3% each month recently.

COAL AND GAS STOCKS

State and private companies have been working to stock up on coal and natural gas to ensure there are enough resources to keep the lights on and consumers warm.

Traders say the country has around 1.3million tonnes of coal and 16billion cubic metres (bcm) of gas in storage, compared to 14.7bcm this time last year.

Ukraine’s transmission and storage operators, GTSOU and Ukrtransgaz insist they do not expect any supply issues as the infrastructure is well protected and resilient enough to cope with extreme scenarios where it would face both missile attacks and a complete curtailment of the gas transit.

Although Ukraine could replace some of its lost coal capacity with gas-fired generation, Kharchenko says the transition is unlikely to happen this winter.

“We need a year from the moment we have the money to buy small units until we can operate them,” he said.

TRANSITION

Ideally, Ukraine should install units of 30-80MW gas-fired capacity which would be used to produce electricity to cover demand in each city.

Small-scale production would also allow it to transition from a centralised to a decentralised transmission infrastructure, which would be more secure and resilient, he said.

Until then, however, Ukraine remains in a vulnerable situation and will need to use available resources as well as seek support from neighbouring countries to import electricity.

The electricity transmission system operator said it would resume capacity auctions aligned with EU rules with Romania from November. Similar arrangements are also expected to be put in place with other neighbouring EU countries such as Hungary and Slovakia.

In theory, Ukraine’s import capacity with the EU stands at 1.2GW. In practice, however, its ability to secure supplies from other countries will also depend on the price spreads between markets. On 31 October, the Ukrainian day-ahead baseload price settled at €119.51/MWh, To compare, the Romanian equivalent out-turned at €108.11/MWh.