Why Ukraine Has Not Created Enough New Generation: Expert Named Main Obstacles

The expert named the key problems of this year’s preparation for the heating season. It refers to state-level measures that the government has repeated throughout all years of full-scale war, despite their low effectiveness.

The situation can change only if the government starts honestly talking with society about the risks and makes decisions that have been postponed for years. These decisions are unpopular, so they are pushed from year to year. This is written by Maria Tsaturyan, analyst and head of communications at the Ukraine Facility Platform, in the article “The Enchanted Circle of the Fifth Winter: Why We Are Losing the Energy Battle with Russia.”

Mistakes

First, the government again focused on countering Russian terror. It worked several years ago, but now it is ineffective. Yes, the emphasis again was on restoring old large power plants: Energy Minister Denys Shmyhal reported in September about a record 4,8 GW of renewed capacity. But stopping their operation is possible with the very first series of massive missile strikes.

Second, resources were invested in shelters at energy facilities that no longer meet current military threats. According to the minister, about 200 shelters have been built for high-voltage autotransformers, which are certainly needed. However the Russians already bypass this protection, dozens of drones destroying the rest of the critical equipment of high-voltage substations essential to the energy system.

Third, responsibility was shifted to communities, which actually do not have the capacity to effectively implement resilience plans.

“Their implementation in autumn was deemed unsatisfactory by Prime Minister Serhiy Korotskyi. Meanwhile, the government relied on the resilience of the energy system and lulled society with the same communication that ‘the hardest winter awaits us, but we will cope,’” the author emphasizes.

What to do

The author notes that if the enemy systematically disables large power plants and makes entire regions hostages of the backbone network, generation must be decentralized and dependence on backbone infrastructure reduced: dispersed across communities and brought closer to consumers.

Hundreds of small facilities (5–10 MW each) in and around communities can at least partly power critical infrastructure during peak winter demand, and disabling all of them is much harder than taking out one large TPP or substation of Ukrenergo. Moreover, a small installation can be built or repaired in a few months, whereas some blocks of large TPPs cannot be returned to operation even in half a year.

“This is exactly what the government has not done: not created conditions for business and communities to jointly build a new decentralized generation. Why? Because it requires the government and parliament to make a series of systematic decisions that reduce politically motivated manual control by the state over energy.” — the analyst emphasizes.

First, what needs to be done is to create conditions for private investment in generation. This requires unpopular regulatory decisions that have been postponed for years. The most important of them is to resolve the debt crisis in the energy market, the volume of which already exceeds 2 billion euros: stop accumulating new debts and force those who set tariffs below cost to cover the difference. While debts grow, investors will not trust that they will be paid, and will build generation only for themselves.

Second, fulfill the obligations that Ukraine has already taken on within European integration: independent corporate governance of state energy companies, independent sector regulator NKREKP, market integration with the EU and a gradual move away from manual price regulation.

“These reforms deprive the state of the ability to manually distribute money and access to the market, and thus weaken the system in the long term. Yet almost a year after the corruption scandal known as 'Mindichgate', investors still do not see the promised changes,” the author adds.

You can read other articles by Maria Tsaturyan at the link.