Investments in new generation, reducing the vulnerability of the energy system and decarbonization: results of the Ukrainian Energy Security Dialogue 2023
The third annual international conference “Ukrainian Energy Security Dialogue” took place on December 12 in Kyiv. The key topic of the event in 2023 was the Resilience and Recovery of the Ukrainian energy sector. The conference was held under the patronage of the Ministry of Energy of Ukraine and with the financial support of the International Renaissance Foundation and the Konrad Adenauer Foundation (Ukraine).
During the welcome speech, the President of DiXi Group, Olena Pavlenko, noted:
“Our third Ukrainian Energy Security Dialogue, like the previous year, takes place against the backdrop of a war where energy is one of the targets. All stakeholders – the government, companies, donors, and civil society organizations – are working to keep light and warmth
for Ukrainians. That is why the topic of our conference this year is chosen very naturally – how to preserve resilience and security for the energy sector. We all need to coordinate to successfully get through the second war winter. Moving forward, we should channel our collective efforts so that the currently popular phrase ‘build back better’ becomes not just a beautiful slogan, but also a reality”.
The themes of resilience and recovery were dedicated to three panel discussions. During the first discussion ‘Import, Export, and Storage of Electrical Energy – Tools for Enhancing Energy System Resilience’ Volodymyr Kudrytskyi, CEO of Ukrenergo, emphasized that to solve the problem of electricity shortage, it is necessary to focus not only on repairing existing power units and strengthening the power system, but also on attracting investments to build new generation.
“We need to realize that it may be technically impossible to repair the repeatedly damaged and long outdated generation indefinitely. We need to focus our efforts in the medium term on attracting investments in the new generation,” said the CEO of Ukrenergo.
Dirk Buschle, Deputy Director of the Energy Community Secretariat, during his speech outlined further plans to support Ukraine’s energy system under the Ukraine Energy Support Fund. The total amount of donor commitments to this fund has almost reached €400 million. The amount of funds for which contracts have been signed and procurement has been completed is more than €100 million.
According to him, donors are now showing their determination to invest in renewable energy solutions. Such investments can go beyond repairing damaged facilities to include new solar power plants, the rapid creation of new projects, and possibly also utility scale energy storage.
Senior fellow at the Atlantic Council Global Energy Center, DiXi Group Supervisory Board member Alan Riley emphasized that the situation in Ukraine’s energy system in terms of power generation is worse than last winter. According to him, we need to work on increasing import capacities this heating season.
“We need to look at a kind of comprehensive strategy to substantially increase the power generation capacity, effectively to create a parallel power network which the russians don’t have so much oversight and vision of. This would involve significantly getting power generation assets, power turbines, gas power turbines, putting them across the network they could work in a distributive way in places where the russians wouldn’t expect them and in the way we would be able to effectively defend them”, the speaker emphasized.
During the second conference discussion, ‘Decarbonization as a Tool and Challenge for Resilience: Balancing the Future of the Energy System’, Deputy Minister of Energy of Ukraine Svitlana Grynchuk noted that modernization requires taking care of important areas, including decentralization of the energy sector and a corresponding reduction in its vulnerability to attacks, as well as increasing the flexibility of the energy system.
“Another goal we set for Ukraine’s energy sector as part of the European energy system is to achieve climate neutrality by 2050. And this cannot be achieved without developing clean, low-carbon energy. This means the development of green energy, distributed renewable generation, as well as the introduction of new nuclear technologies that will also maintain system stability and replace old carbon technologies”, summarized the Deputy Minister.
Deputy Minister of Economy Oleksii Sobolev emphasized that the Ministry is currently developing steps to increase the economic growth, and these steps are closely related to the functioning of the energy sector.
“We must give a clear signal that Ukraine is open to private investments. To achieve this, we need both new policies and new projects. This could involve the exploitation of oil and gas fields, or it could be ‘green’ initiatives, such as energy projects aimed at decarbonization. These investment projects should prove that Ukraine is a reliable partner for Europe in achieving the global goal of emissions reduction. For instance, our country can produce ‘green steel’ and export it, ” he stated.
Country Manager for Ukraine at the World Bank Gevorg Sargsyan reminded that the World Bank, the Government of Ukraine and its partners estimated that Ukraine’s recovery will cost about $411 billion as of February 24, 2023. According to him, this number is increasing across all sectors including energy.
“It is a staggering number. But the good news is that a recent report of IFC/World Bank shows that if proper reforms are implemented, most of energy sector needs can be met by the private sector, unlike many other sectors. According to the report, the reforms in these sectors could create the conditions for $36 billion in private-sector investment to meet RDNA2 needs while generating additional investment opportunities worth $132 billion”, he emphasized during the speech.
Gevorg Sargsyan also noted that an important element of energy recovery should be in fixing the economics and financial viability of the sector including pricing, tariffs, transit and interconnection fees.
In his turn, Torsten Woellert, Energy Adviser, EU Delegation to Ukraine, said that the Regulator’s work should be improved to ensure a quality recovery of the energy sector. In his opinion, investment decisions remain very risky not only because of the war, but also because of the unpredictability of regulatory risks. Another aspect is that Ukraine needs to agree on a reasonable, economically justified approach to addressing the issue of carbon pricing in connection with the full implementation of the Border Carbon Adjustment Mechanism (CBAM) in 2026.
The final part of the event was focused on the prospects for energy planning and other local activities during the panel ‘Local Generation for Stability Achievement – Opportunities and Regional Needs’.
Maryna Denysiuk, Senior Project Manager at the Reforms Delivery Office under the Cabinet of Ministers of Ukraine, spoke about the role of local communities in ensuring the resilience and restoration of the energy system.
“Local communities that formulate their own development and recovery strategy, identify priorities and a list of specific projects, including those using green technologies, will lay the foundation for attracting funding from partners and receive appropriate support at the state level,” the expert said.
Yurii Katsion, Deputy CEO in charge of Corporate Business OschadBank, emphasized that municipalities, in addition to private businesses, should play a major role in the development of decentralized generation.
“For municipalities, this area of development will solve four key tasks at once: uninterrupted energy supply for residents and social facilities, reduced costs for heat and electricity, improved local ecology, and the possibility of generating additional income. And OschadBank is ready to financially support such projects,” he said.
According to Janez Kopač, former Director of the Energy Community Secretariat, member of the Supervisory Board of DiXi Group, local strategies are important in strengthening the energy resilience of communities. Also, each community administration should have a separate energy manager, that is, someone who takes care of the implementation of the strategy.
Kurt Volker, an American diplomat, former US ambassador to NATO and special representative of the US State Department for Ukraine in 2017-2019 delivered the closing speech at the conference.
“I believe that energy could and should become a leading industry in Ukraine. This, in turn, will create opportunities for Ukraine’s integration into the EU. Ukraine is a fairly powerful supplier of energy compared to most European countries. It has a more favorable position among the countries with which it borders, and can independently take care of renewable energy. Of course, there are certain technical challenges such as infrastructure upgrades, energy storage systems, etc. But I think you will manage this. You have the ability to stimulate the production of energy that can be exported to the EU“, he emphasized.
Kurt Volker also assured that the American people will continue to support Ukraine in other priority areas, including military aid.
The information support of the event is provided by The American Chamber of Commerce in Ukraine, The World Bank, Energy Community, Oschadbank, U.S.-Ukraine Business Council (USUBC) and Ukrainian PR Army.
Media support was provided by Forbes Ukraine and Espreso TV.
