Results of the closed meeting of Energy Club members (14.04.22)
Colleagues, welcome!

On April 14 there was a closed meeting of the Energy Club. We talked about the security and stability of the energy sector of Ukraine during the war and its post-war reconstruction.
Main issues:
  • The state of Ukraine's energy system: problems and consequences
  • Pre-war challenges in post-war realities
  • Donor mobilization, the Energy Community has set up an Energy Infrastructure Restoration Fund for Ukraine destroyed by the Russian war, with donors mainly coming from EU member states
  • Restoring Ukraine's energy sector after the war
View a recording of the meeting (in Ukrainian)
Fragments of speeches by Energy Club Reception participants
Yuriy Bondarenko, Vice President of the National Committee of the International Council on Large Electric Systems "CIGRE-Ukraine", Honored Power Engineer of Ukraine
First of all, we need to invest in intellectual and innovative personnel potential. In my opinion, without engineers, without technocrats we won't be able to rebuild our country after the war. We need to support polytechnic institutes, industrial design institutes and formulate tasks to unite these institutions to develop concepts, solutions and master new standards.

Today, in my opinion, we need to form a state order for the development, creation and joint ventures, and the purchase of manufacturing licenses for industry, which would support the development of our energy industry. We need to finance not only the purchase of imported equipment, we, above all, need to support the financing of specialists to develop technical policies for both consumer and distribution networks, and for the energy system. And it needs to be done now.
Yuriy Boyko, Acting Minister of Energy (20.11.20-21.12.20)
Today we have to work in conditions of colossal damage of engineering networks, both distribution and main networks. Now 35% reduction in consumption in the energy system of Ukraine, including because of the colossal damage to the engineering networks. The payment level is tentatively about 60%, which means that we have 40% of the funds in the system. This leads to a catastrophic shortage of funds in the energy system, and in order to keep it solvent, it is necessary to look for ways to financially balance the work of the energy system.

We very much need external help for the key players in the market, we estimate its size at about 250-300 million dollars a month. And to solve the problem of financially balancing the sector, we see the opening of a large-scale export of electricity to neighboring countries as a logical step, since today there are all the prerequisites for that. This would ensure the inflow of liquidity into the energy system, which would guarantee its functioning without external borrowing.

I would like to urge the participants of today's meeting to participate in the discussion of the most effective method of restoring utility networks. The main idea is to restore the electrical part of the networks and not to use gas. In order to do this in the most efficient way possible, it is necessary to use scientific potential and the most competent and balanced approach to ensure that the solutions are comprehensive in nature and provide the optimal use of a limited resource.
Oleksandr Vizir, Advisor of the Energy Minister
In order to move on to tomorrow, we must, conditionally speaking, solve several current problems, which are both technical and financial in nature. I agree that we can and must rely on outside help. But I still focused as much as possible on the use of internal resources, because this is something we can 100% count on. There's a huge staffing problem for the energy industry today, and there's the problem of liquidity in the market.

I'm convinced that if we don't constantly monitor finances, current recovery funds and human resources, we'll have a hard time answering the question of what we're going to do tomorrow. The speed and quality of recovery and reconstruction of the country as a whole depends on the quality of these three resources.
Maksym Nemchynov, Advisor of the Energy Minister
First of all we must proceed from our own capabilities, from what we have. We must build our energy system and our approach to it taking into account the fact that for us Russia doesn't exist at all. We must focus in the future on what we have, what we are rich with, what we can develop and how we can make our energy system and our energy resources fully self-sufficient.

We have a fairly diverse energy mix, we don't have a critical dependence on any type of generation. We need to continue to have this diversity and interchangeability of generation to make our system more stable and more becoming. We need to focus on our strengths, develop them and take into account the weaknesses, so that they are completely leveled out in the future.

We need to involve our scientific potential. The Ministry of Energy can become a platform for organizing the work and we can count on the support of all our European colleagues because the support that we feel and receive from our partners is very valuable and significant. We don't just need to rebuild everything, but to build a much better, sustainable, and strong energy system and our country.
Ruslan Slobodian, Head of State Inspection of the Energy Supervision
The restoration of electric networks is a process that will take place in two stages. The first stage is happening right now and at this stage the main task is to resume power supply to consumers as soon as possible. But despite all our desire, unfortunately, at this stage it is not possible to build a qualitatively better grid.

Unfortunately, due to the hostilities, somewhere temporarily, and somewhere even stopped the production of electrical equipment, due to the lack or shortage of raw materials. Already now it is necessary to think about stimulating the production of electrical equipment in relatively peaceful areas.

In the short term, we must restore power supply to the territories that suffered from Russian aggression as soon as possible. And already after victory, we will think about development.
Mykhailo Ilnytskyy, Chairman of the Board of Chernihivoblenergo JSC
At the moment we can't resume power supply to the city normally. In fact, about 70% of consumers are connected, but unfortunately, the infrastructure is so damaged that we can't do it quickly. Also, rapid restoration is impossible because of destroyed bridges and mined territory. In addition to restoring power supply, we must fix all the damages, and that is what we are doing now together with the police and the administration.

Our electricity consumption has almost halved, and in different periods it has fallen by 80-90%, which has a significant impact on our finances. At the moment it is very difficult for us to plan our work in the power markets and it is very difficult to understand the volumes of purchases, we don't feel it and we often get into imbalances. It is very difficult to predict our RET amounts because we do not have access to meter readings, which also greatly affects our financial situation, because if you do not pay imbalances, pre-default levels appear immediately. And consumers are virtually non-paying for most of the region.

The transition to RAB-regulation in the post-war period is hurting us a little bit. We would like to think together with NERC how to settle this issue, because in fact our networks are damaged, we have to write off assets, etc. Also we need to reform the tariffs for 2022 because there was a completely different structure of our consumption and the tariffs were formed on the basis of other data. The situation is very difficult, but we are trying to get out of it.
Igor Dyrbavka, Chairman of the Board of JSC Sumyoblenergo
Indeed, in Sumy region almost all networks are plugged in now, but almost half is on the "rolls" and "rollovers", because half of the equipment that was on the substations was destroyed. Of course, today we need to think about tomorrow, and when replacing the damaged equipment we need to take into account that there has to be a slightly different structure of networks, different equipment, and for this we need to involve specialized institutions, etc. Our people worked really heroically all that time, sometimes we had to restore 3-4 times the same networks. Unfortunately, there were some accidents as well. But I'm sure that we'll succeed, and we'll put the energy industry on a higher tier than it was.
Yuriy Sklema, Commercial Director of "Lugansk Energy Association" LLC
As a result of the hostilities on our territory, which are still going on, there are big non-payments, for our company it is 100%, there is also a problem with data collection. Due to the fact that there are no payments, NPC "Ukrenergo" put us in default, almost immediately after that "Energoatom" stopped performing the SOA. Please consider a separate decree for the Luhansk region to ensure that the volumes entering the Luhansk region are recorded, but not counted in terms of money. At the moment we are trying to close March at least somehow thanks to the fact that the NPC extended our deadline for closing this month.

The biggest problem in restoring the networks is the lack of materials and funds to purchase them. Another problem is that the list of occupied cities is uncertain. So we can't determine where what electricity goes.
Vadym Danylkiv, Acting General Director of Mykolayivoblenergo JSC
The industry is almost completely stopped, the consumption of the population is partially left and the productive supply has fallen by 50%. There are no funds at the enterprise for any prospects, restoration and development. Neither will they appear after the end of hostilities, because it is unlikely that industry will recover so quickly. And the company will have enough money only for salaries and taxes. At the moment, the estimated damage in the places we have access to is 320 million. And in the future, we will face the problem of where to get the funds to restore power supply to the level it was before the war.

The right thing to do would be to make some kind of loan funds a source of restoration. And perhaps the help of our European and American friends was just so that the companies that found themselves in such a situation as ours could take advantage of some credit resources at low interest rates or no interest at all in order to at least restore the region's electricity supply to the pre-war level.
Ivan Grygoruk, Vice President of Energy Club
I support my colleagues in what I said earlier and that, despite the war, we must still look to the future. For us, the medium- and long-term perspective is really about restoring our entire energy system, which was damaged by the war. I believe that the lion's share of infrastructure restoration should be carried out at the expense of the government and specialized funds, because, despite the form of ownership of the DNO, this is a huge investment that private companies simply can't afford. Also, our line ministry should pay attention to the development and adaptation of IEC and European standards for the energy industry, because without their implementation, we will not be able to get quality assistance and modernize the energy system, which would correspond to international standards.

We and our colleagues have been talking about moving to a higher voltage level in distribution grids for a long time, and there really is a good chance to move to a higher voltage level in the post-war period during the reconstruction of the Ukrainian UES. The potential of our generation in the country is huge, but with the current and post-war state of the grids without modernization with the introduction of new standards and technologies, it will be impossible to use this potential. And it will be about restoring Ukraine's economy, where energy will play one of the main roles.

Also, we must not forget about the increase of commercial flows of electric energy that would give us a significant export potential with the countries of the European Union, we are talking about increasing the cross-section, that is, the construction of new interconnectors. This would also help in the export sense, because it's living money, and would play an important role in regulating the energy system, where it would ensure the stability and sustainability of the entire unified energy system.
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