Volodymyr Zelensky’s promise to get a million additional kilowatts of new distributed power generation by the end of the year simply showed the depth of the warm bath in which the Presidential Office in general and him personally are kept.
It will be quite good if by spring — taking into account municipal and industrial aspects — we reach 250–300 MW of new power capacity. And for this we will have to try hard.
When Denys Shmyhal, who is quite competent in the energy sector, told us almost the same thing... well, the man ended up remaining prime minister. And Yuliia Svyrydenko, who diligently turned a blind eye to the nuclear scam being promoted, remained a promising candidate.
There is a million and then there is a million
Strictly speaking, no one promised a million kilowatts originally. The Strategy for the Development of Distributed Generation for the Period until 2035, adopted in the summer, vaguely says about “construction and/or deployment of the maximum possible installed capacity of distributed generation facilities and achievement of up to 1 GW of additional generating capacity.” A couple or three hundred megawatts will be quite as much as “up to a million,” especially if the construction that has started is taken into account.
By the way, the second stage of 2025–2026 with the announced volume of 4 million kW of distributed generation is also about “construction and/or placement of facilities.” All in all, it reminds us of Hodja Nasreddin’s parable: it’s either the donkey dies or the padishah perishes.
Stories that “distributed generation” is about bringing in a couple of containers and plugging them in are greatly exaggerated, as two years have shown. The commissioning cycle for a 6–8 MW plant is about a year. Maybe more. Sometimes even two years are not enough. Especially if you have to do it almost from scratch in conditions of lack of money, experience and personnel.
But our officials do not need to be taught to write plans about planting apple trees on Mars in 2050 and cutting ribbons at the start of anything. But as for how many of them will profit from it, it depends.
At the same time it has been announced that the construction will be carried out under the careful guidance of officials known for their almost legendary incorruptibility and ability to redistribute flows correctly. In reality, according to the legend, there are such people.
However, there is but a small problem: there is nothing to redistribute. The strategy says very vaguely about the sources of its financing: “The volume of financial, material, technical and labor resources necessary for the implementation of the Strategy... is carried out at the expense of international technical assistance and international organizations.” As well as “other sources not prohibited by law.”
We can confidently say that international organizations will not give money for a million kilowatts, let alone five. We will have to look for “other sources.”
The Energoatom state nuclear enterprise and the Ministry of Energy have already solemnly promised to spend the funds from the increase in tariffs to the population in such a way that for the coming winters there will be no even zero useful effect from them — only resource costs.
That leaves business, but it needs incentives and guarantees that it will not be habitually screwed over in the event of changes at the top. The demands, of course, are impudent, but there is not much choice. The system is in terrible disrepair because of Russians, and it is already clear that there will be no full return to the situation before the great war, when almost all the electricity was produced by large power plants. What is needed is smaller and more flexible power plants. Roughly speaking, instead of one unit for 300 we need 30 for 10, and with the final price of electricity “not for all the money in the world.” The task is really still the same.
In August, Ukrenergo — the state-owned electricity transmission system operator — made the first such steps by holding a couple of auctions. The management of Ukrenergo had a bad reputation in Kyiv (and not only the Presidential Office), as it brazenly did not share with the right people, and a good reputation with business — strictly for the same reason. With Volodymyr Kudrytskyi eventually having been dismissed from Ukrenergo, now the market is waiting for attempts to get the right people on the board for proper redistribution and splitting of money flows. The West, however, has indicated in no obscure terms that it will give money for carving up — even to the right people — in an extremely dosed and controlled manner.
However, two auctions for the purchase of balancing power capacities were held even before his resignation. The need for them is very high because after a series of strikes at hydroelectric power plants, which in many ways helped to regulate, it is difficult to get quick reserves available. In the first auction, Ukrenergo bought services to purchase 99 MW of frequency support reserves (FSR) for five years to ensure stable operation of the power system. Its winners have until October next year to build battery systems or electrical installations of rapid response (we are talking about 15 seconds). The auction was successful, the supply exceeded the demand many times, the price of the service was strongly knocked down from the initial one and almost all the winners contributed financial guarantees.
The second auction for the provision of automatic frequency restoration reserve (AFR) was much more difficult. The response time there is longer, up to 15 minutes, but the volume of services is much higher. Just for a million kilowatts. At the close of the auction, there were not enough people willing to get involved. Half of the million — it was divided into two types of additional services — was bought in total. In total, plans were made to commission four dozen new power facilities (with the total capacity of sold services being about 600 MW). In October, another auction will be attempted, putting the unsold part up for sale. At the same time, the market reaction to personnel changes will be checked.
On the whole, it turned out well, but the auction showed once again that there is no queue of those eager to invest in Ukraine. They need guarantees and predictability beyond the level of “you won't be betrayed here.” Among the winners are mostly Ukrainian companies. Large Western businesses were sluggishly interested: the lots are too small and the risks of building in a country at war are too great. They will take a look. But medium-sized companies can be said to have stolen the thunder.
But almost all the main things are ahead. Even if the same 5 million kW of new generation is commissioned, it will not solve all the problems. Let us remind you that about 9 million kW have been damaged. And the attacks continue.
The Cabinet of Ministers has assessed the situation as of mid-summer: “The energy sector has become one of the main targets owing to its strategic importance for the economy and life support of the population. No energy system in the world has been subjected to such attacks.... The currently available capacity of thermal power plants and combined heat and power plants is less than 20% of their capacity at the beginning of the full-scale armed aggression of the Russian Federation against Ukraine, and the share of available capacity of hydroelectric power plants and hydro storage power plants has decreased by 50%.”
“Ukrenergo has made calculations of what needs to be done in the next few years. The figures there are quite different than in the glorious Strategy for Development, cultivation of suckers and announcements, aka Energy Strategy-2050. However, no one believed in the reality of the objectives of that megaprogram. The goal was (unsuccessfully) to download money from sponsors and to argue (partially successful) redistribution of part of financial flows in favor of their structures.
Ukrenergo does not promise tens of millions of kilowatts of new capacities. There is no gigantomania there either. Steam-gas and gas piston plants are 5 MW each, solar power and biofuel — 10 MW, wind — 50 MW. Battery systems as 8–40 MW with up to four hours of run time. There's also estimates on running in-house generation of up to 10 MW. Gigantomania in war only makes the job of enemy missilemen easier.
As a matter of fact, of the five points, three — gas, solar and wind — are pure business of entrepreneurs. Some sort of incentive will be needed on the biomass startup in a limited way. No, there won't be fantastic amounts of incremental generation there. It all adds up to about 30–35 billion kWh, about a third of current generation. And the main thing is that it is possible to actually (albeit with great effort) find money for the bulk of it. And no, this will be done not only and not so much by our government agencies. It’s not much, but the realism (and flexibility) of such plans is much higher. It is also worth remembering that a 20% shortage in the energy system means a 12-hour shutdown for the population.
All this will not be able to fundamentally change the situation this winter. When DTEK says that it will have to rely on itself, this is the truth. Now it's more about repairing old equipment and air defense, which can never be enough.
In the summer, the project of installing three floating Turkish energy ships in the ports of Odessa region surfaced again. It’s capacity is about 375–500 MW. One million kilowatts will become closer. The work is already underway (the Cabinet of Ministers has adopted a separate decree), so we can count that in the million. It remains to be seen whether they will be able to put it into operation this year. However, there is still a lot of work on the ground, and the distribution is rather tentative. Hope is mostly pinned on that the Turks will not be shot at by Russians. There will also be a question of gas: the Russians are clearly trying to extinguish the gas transportation system by strikes on underground gas storage facilities. But here an idea should be conveyed to them that fly-in blasts and broken stations or oil refineries with tankers do not happen only in Ukraine.
In general, there is a lot of work. We'll have more time for the winter of 2025/2026... if, of course, we do not drown in a new wave of projects and attempts to profit on the money streams. The situation when they are removed with the motivation “effective, but not shared with whom it is necessary”... is hardly inspiring.
At the moment the government promises that “the implementation of the first and second stages of this Strategy will be carried out through the implementation of measures defined by the operational plan of measures for the implementation of the Strategy for the Development of Distributed Generation in 2024–2026. The implementation of the third stage (from 2027) will be carried out through the implementation of measures defined by the operational plans of measures for the implementation of this Strategy.”
The strategy is defined by the strategy, that's it. It can be even shorter: “The war will reveal what the plan is.”