The Ukrainian energy sector needs modernization and is facing several problems due to neglect over several years.
The Ukrainian Prime Minister Denys Shmyhal was recently on a working trip in the Ternopil region to visit a modernized boiler house with increased energy efficiency because it reduces the heat loss during transportation. At the meeting, Shmyhal said that the Parliament is working on more modernization in the sector.
“The boiler house produces and supplies thermal energy to more than a hundred apartment buildings, as well as schools, kindergartens, and hospitals. The reconstruction allowed to reduce the consumption of natural gas by 6%, electricity by 34% per month and reduce the impact of the cost of these energy sources on the value of the tariff for heat production,” said Denis Shmygal.
He pointed out that a new problem is expected to be launched next year to modernize the whole energy sector, including boiler houses. The goal is to reduce people’s utility bills, achieve energy independence from Russia and help with the reduction of CO2 emissions to help the climate.
The European Bank for Reconstruction and Development has helped modernize the boiler house in Ternopil, according to the government. Shmyhal said that the modernization of the sector would need such help, and he says that this project shows that the decentralization process in Ukraine is working.
Ukraine is in great need of reforms
It is unclear what parts of the energy sector the government is planning to modernize next year. Still, Ukraine is in great need of modernization, according to Olga Bielkova. She is director of government and international affairs at Ukraine’s gas transportation system operator GTSOU and a former member of the Ukrainian parliament. In Atlantic Council, she argues that the reforms are long overdue.
“In Ukraine, we have been debating the country’s energy future ever since independence. There has never been any shortage of ideas. Instead, Ukraine has lacked consistency of vision and continuity of implementation,” Bielkova wrote.
“We must seek to increase domestic production of natural gas, as the US has done while lowering the carbon intensity of our economy as per the Norwegian example. In combination, such measures could turn Ukraine into a gas exporter. However, we must also take a number of constraining factors into account such as time, investment capital, and technology transfer issues,” she argues.
The International Energy Security Index has Ukraine as one of the most vulnerable countries globally regarding energy security due to lack of energy efficiency. They point out that Ukraine has a long way to go to be energy secure.
Bielkova argues that building on the existing energy infrastructure such as nuclear, wind, solar, and other renewable energy sources is also essential.
Need to be part of EU energy net
Maxim Timchenko is CEO of Ukraine’s largest private energy company, DTEK, and he recently said that the most important thing for Ukraine is to connect to the EU energy system. Historically, Ukraine has been linked to the Russian energy system, but the Ukrainian government is changing that.
“Ukraine aspires to become a member of the EU, which in turn aims to achieve climate neutrality by 2050. The key condition for achieving this goal is the development of renewable energy, which requires innovation,” said Timchenko, “Achieving the decarbonisation goals requires attracting investments, which is impossible without creating transparent market conditions for development.”
Anders Åslund, an economist, working at the Atlantic Council, recently wrote that Ukrainian energy security is also a matter of national security.
“They (Ukraine) must liberate themselves from the Russian electricity zone as a matter of national security. Moscow dispatchers no longer control the work of Ukrainian power stations, but Ukraine’s grid is still technically connected with Russia and Belarus. If it needs to import electricity, it can only do so from Russia or Belarus,” he wrote, “Ukraine needs to switch from the former Soviet to the continental European grid. Therefore, it needs to synchronize its electricity transmission system with the European Union.”