Russian War Against Ukraine: Energy Dimension (DiXi Group alert) – March 10 | DiXi Group
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10.03.2023

Russian War Against Ukraine: Energy Dimension (daily updating DiXi Group alert) 

March 6 – 10

Summary of the week

— On March 9, Russia launched another massive air attack on the energy infrastructure, firing 81 missiles of different kinds and 8 attack UAVs.  Impacts were recorded at electricity generation, transmission and distribution facilities in 8 regions, according to the Minister of Energy Herman Halushchenko. The CEO of Ukrenergo Volodymyr Kudrytskyi said that the Russian attack targeted Ukrenergo’s substations, particularly in the east and south, as well as thermal power plants across the country. DTEK reported shelling on three TPPs, with equipment severely damaged. On March 10, the shelling continued, with energy facilities in the Dnipropetrovsk and Zaporizhzhia regions being attacked.

As a result of the March 9 attack, the Zaporizhzhia NPP was completely disconnected – for the sixth time since the full-scale invasion started – and received electricity for its own needs from backup diesel generators for 11 hours. The IAEA, the Ministry of Energy, Energoatom and the State Nuclear Regulatory Inspectorate continue to emphasize that the nuclear safety situation at the ZNPP continues to deteriorate. Among the violations – illegal modifications of equipment, such as heat and power supply systems, spent fuel storage facility, construction of a backup diesel power plant in the area, and pressure on personnel.

— Ukraine calls for sanctions and a ban on the use of nuclear facilities for terror. The President Volodymyr Zelenskyi said the sooner the Russian nuclear industry is under sanctions, the safer the world will be. At a meeting with the UN Secretary-General Antonio Guterres, the President Volodymyr Zelenskyi said that the ZNPP should return under Ukrainian control and that this is a matter of global security. Euroatom and 49 countries have appealed to the IAEA to demand Russia leave the ZNPP, the Prime Minister Denys Shmyhal wrote. According to him, in the statement, the countries also call to end the shelling of Ukrainian energy facilities.

After the Russian attacks, electricity consumption is at the level of a working day and is covered by existing production. Network restrictions are in place in the Zhytomyr and Kharkiv regions, while emergency outages apply in the Dnipropetrovsk and Zaporizhzhia regions – Ukrenergo. Since October 2022, Russia has carried out 33 air attacks on energy infrastructure, including 15 massive missile strikes and 18 attacks by groups of drones. In the most critical period, the number of disconnected metering points exceeded 13.5 million, i.e. over 80% of all consumers – so the Minister of Energy Herman Halushchenko.

Despite the war, the full integration of Ukraine’s electricity market into the EU Single Market remains a priority – so the Deputy Minister of Energy Yaroslav Demchenkov. Ukraine looks to further expand opportunities for commercial exchanges of electricity, with exports to support the financial stabilization of Ukraine’s energy market and help the EU to move away from Russian energy resources. Meanwhile, Ukraine has been integrated into the EU Energy Platform, with the goal to get 2 bcm of gas through joint purchasing.

According to the Minister Halushchenko, Ukraine is completing the heating season with sufficient reserves of energy resources. As of March 3, coal reserves amount to 1.16 Mt (+0.37 Mt YoY), natural gas in storage – to 9.7 bcm (close to YoY volumes).

According to media reports, the Chair of the Supervisory Board of Mahistralni Gazoprovody Ukrainy (parent company of GTSOU) Huberte Bettonville has resigned. In a respective letter, she stated the main reason for resignation being that some members of the Supervisory Board do not want to apply EU standards and principles of corporate governance. To remind, the TSO corporate reform is still not complete: different stakeholders have different views on the procedure, regulatory methods and stages of transition to the model of a single management company (without MGU as intermediary).

— International assistance for fast recovery is being engaged. The government approved the draft Grant Agreement with the Japan International Cooperation Agency (22.44 billion JPY) to implement an emergency recovery program. The procedure for the Chornobyl NPP Exclusion Zone to receive firefighting equipment for 1.1 million EUR as humanitarian aid has also been simplified. With the support of UNDP, a Coordination Center for Environmental Damage Assessment (CCEDA) will be established, with 6.7 million USD allocated. The Ukraine Energy Support Fund received 151 million EUR in donations, about 138 million EUR has been allocated for the needs of affected companies.

— Ukraine needs additional supplies of high-voltage equipment. The Minister Halushchenko called for the creation of a common European reserve of emergency equipment to enable fast response in the event of new massive missile strikes. “We have a particularly high need for high-voltage equipment, including transformers, gas-fired distributed generation, and other power equipment”, so the Deputy Minister Yaroslav Demchenkov. In general, during the war, according to the CEO Ukrenergo, 60-70% of all damage was caused to high-voltage substations. “Most of the nodal main substations were damaged at least once, some of them – 20 times. All major power plants were also damaged”, so Kudrytskyi. The government announced the goal to strengthen the protection of power distribution systems and generation facilities with shelter, anti-aircraft and anti-missile defense systems.

Ukrenergo’s CEO Volodymyr Kudrytskyi estimates that the operator lost about 30% of its revenue (15-17 billion UAH) as a result of the invasion. The Ministry of Economy estimates the GDP growth at 1% and the inflation rate to reach 24% by the end of 2023. The main difference between the current macroeconomic forecast and the one used for the preparation of the state budget is the duration of military operations.

— Naftogaz continues trying to restructure its debt. Naftogaz plans to make a new proposal to Eurobond holders on restructuring payments – the CEO Oleksii Chernyshov.

— In 2022, subsidies for maintaining regulated energy prices for households reached 400 billion UAH – media citing the Prime Minister Shmyhal. In particular, Energoatom and Ukrhydroenergo paid 107 billion UAH, Naftogaz – more than 200 billion UAH, district heating companies and local authorities compensated another 100 billion UAH.

— The Regulator announces that Ukraine will refuse from the PSO mechanism “under favorable conditions”. During a visit to the Austrian regulator E-Control, the NEURC Chair Kostyantyn Ushchapovskyi said that, as soon as the situation allows, public service obligations (PSO) as a tool will be lifted. Meanwhile, the Regulator indicated a positive trend in DSOs’ compliance with the requirements on schedules of power outages and proper informing about interruptions in electricity supply.

— Plans for the development of distributed generation are shared in a generalized way. According to the Minister Herman Halushchenko, projects to construct small gas-fired power generation are implemented, and active development of RES is expected. State programs are planned to provide incentives to backup power systems for critical infrastructure and households, which include the installation of solar panels or wind turbines with energy storage and suitable hybrid inverters. Ukrenergo identified the most appropriate locations for new generation facilities. According the CEO Kudrytskyi, old coal-fired power plants should be replaced with a mix of new ones (nuclear, wind and solar, and energy storage systems).

— According to Ukrenergo’s estimates, electricity produced by RES installations accounts for about 5% of the total balance. According to the CEO Volodymyr Kudrytskyi, 90% of the wind potential is unavailable, as many wind farms remain in the occupied area close to the Sea of Azov. More than 50% of solar capacities remain in controlled territories, so it is likely that solar generation will take a greater role in the spring. 

— The United Arab Emirates will join the program to exchange incandescent lamps to LED lamps. UAE has offered to supply Ukraine with 5 million such lamps, the first shipment to arrive soon. For a month of the EU-supported program, over 2 million Ukrainians exchanged 10 million incandescent lamps for the same number of LED lamps.

— Ukraine formally implemented the EU recommendation on anti-corruption institutions. The government approved the 2023-2025 State Anti-Corruption Program and appointed Semen Kryvonos as the Director of the National Anti-Corruption Bureau. According to the Prime Minister Denys Shmyhal, Ukraine has fulfilled all seven recommendations identified when it was granted EU candidate status.

— Law enforcement agencies have exposed a number of schemes in the field of gas and oil products trade. The Security Service, together with the Economic Security Bureau, discovered a scheme to misappropriate industrial volumes of gas. The Security Service also prevented illegal sale of 16,000 tons of fuel (800 million UAH), illegally taken from Ukrnafta and Ukrtatnafta by the previous management.

— Ukrnafta has signed a contract with PKN Orlen to import oil products. The company’s CEO Serhii Koretskyi also said that negotiations are underway on oil exports, as it is necessary to free up space in underground storage facilities for newly produced oil.

Meanwhile, the Specialized Anti-Corruption Prosecutor’s Office has asked the High Anti-Corruption Court to change the preventive measure for the former CEO of Naftogaz Andrii Kobolyev by increasing the bail to 365 million UAH. The suspect managed to collect and pay approximately half of the 229 million UAH bail set before. To remind, Kobolyev is suspected of illegally receiving a bonus in a much higher amount than allowed by law.

 

Our platforms

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Independent energy educational center

http://eiti.org.ua/

National website of Extractive Industries Transparensy Initiative in Ukraine 

http://ua-energy.org/

Information and analitical website “Ukrainian Energy UA-Energy.org” is unique   platform to inform

Our platforms

https://ksep.energy/en/

Independent energy educational center

http://eiti.org.ua/

National website of Extractive Industries Transparensy Initiative in Ukraine 

http://ua-energy.org/

Information and analitical website “Ukrainian Energy UA-Energy.org” is unique   platform to inform