Energy sector of Ukraine: overview of the situation on 14 March 2022
The actual state of the unified power system of Ukraine
As of 14 March 2022, Ukrainian TSO – Ukrenergo informs:
- electricity generation fully covers consumption needs; no limitations to electricity consumption are required;
- the frequency in the network is maintained at the level of 50 Hz;
- all types of power generation are operational, including nuclear, thermal and hydroelectric power plants;
- although the staff of energy companies makes every effort to repair damages, more than 979,500 consumers still do not have electricity supply due to hostilities.
The actual situation in the gas sector
As of 14 March 2022, the Gas Transmission System Operator (the GTSO) informs:
- 37 out of 1,389 gas distribution stations (GDSs) remain shut down. The Kramatorsk-Donetsk-Mariupol gas transmission pipeline, which transports gas to the settlements of Donetsk and Zaporizhzhya regions, remains damaged;
- more than 264,000 consumers are left without gas supply due to hostilities;
- Popasna GDS was launched, reconnecting more than 20,000 residents in the Luhansk region to gas supply;
- as a result of hostilities, Rubizhne GDS (Luhansk region), Bashtanka GDS and Pribuzke GDS (Mykolaiv region) were shut down;
- as a result of shelling in the Kharkiv region, the Volokhiv Yar GDS was stopped. The gas is supplied through an alternative route.
On 10 March 2022, Russian armed forces tried to enter the territory and interfere in the operation of the compressor stations Novopskov (Luhansk region) and Kupyansk (Kharkiv region). Interference in the technological processes of the GTSO poses significant risks to the safety of continuous gas transportation to consumers in Ukraine and Europe. It can lead to a technological disaster in the region.
The underground gas storage network facilities are operating in standard mode, except for the Krasnopopivsky underground gas storage facility in the Luhansk region (stopped due to hostilities near the facility).
The Shebelinsky oil refinery has been stopped for more than two weeks due to the threat of shelling.
The actual state of nuclear facilities in Ukraine
On 14 March 2022, Russian occupants once again damaged a high-voltage power line providing electricity for Chornobyl nuclear power plant (NPP) and Slavutych city. Yesterday, Ukrenergo’s repair crew attempted to restore the electricity supply to the Chornobyl NPP and Slavutych. It should be noted that the functioning of Chornobyl NPP’s cooling systems for spent nuclear fuel heavily depends on a stable electricity supply.
Energoatom refuses to purchase Russian nuclear fuel. The company will continue to buy nuclear fuel from Westinghouse and accelerate work on the creation of fuel assemblies in Ukraine based on Westinghouse technology.
On 10 March 2022, the Verkhovna Rada’s Committee on Energy, Housing and Utilities Services approved an appeal to the parliaments of all foreign countries, the European Parliament and international parliamentary assemblies calling for action against the Russian nuclear security threat. The document calls for urgent measures to ensure security at nuclear facilities in Ukraine, including enforcing a no-fly zone in Ukraine, recognizing Russian hostile actions as nuclear terrorism, requiring immediate ceasefire and banning Russian troops from approaching Ukrainian nuclear facilities closer than 30 km, conducting necessary monitoring and control measures, suspending access of Russia to the intellectual and technological resources of the International Atomic Energy Agency and severing liaisons with Russian citizens in the UN nuclear energy structures.
The actual state of renewables in Ukraine
The Ukrainian Wind Energy Association reports that due to the military aggression of the Russian Federation, two-thirds of wind generation was stopped. As of 9 March 2022, the total capacity of stopped wind power plants amounted to 1162.5 MW. For comparison – at the end of 2021, the total wind generation capacity in Ukraine was 1673 MW.
Urging the international community to take action
On 10 March 2022, the Verkhovna Rada’s Committee on Energy, Housing and Utilities Services approved an appeal to the parliaments of all foreign countries, the European Parliament and international parliamentary assemblies on the need to impose trade restrictions in the energy sector against the Russian Federation. The document contains a request for a complete trade embargo on Russian oil and gas.
On 9 March 2022, the Ukrainian electricity Market Operator (operator of the day-ahead and intraday markets) called on energy Market Operators in the European Union to stop access to trade of Russian participants and related companies, to suspend clearing services of their over-the-counter transactions. The Ukrainian Market Operator also urged energy traders to stop cooperation with Russia.
On 8 March 2022, Ukrainian energy companies DTEK and Naftogaz signed an open joint address to energy industry forums and international energy associations urging them to immediately halt Russian companies’ membership.
Regulatory changes
On 11 March 2022, the Cabinet of Ministers of Ukraine (hereinafter – CMU) registered a draft law that proposes amendments to the Tax Code of Ukraine in order to reduce the cost of petroleum products by:
- abolishing the excise tax on gasoline, heavy distillates and liquefied gas;
- reducing the value-added tax on crude petroleum products, gasoline, heavy distillates and liquefied gas from 20% to 7%.
Two alternative draft laws were registered (7137-1 and 7137-2), which contain significant differences from the CMU’s draft.
The CMU adopted a decision to impose special obligations on:
- Naftogaz Trading LLC regarding natural gas supply to 12 thermal power plants at a fixed price by 30 April 2022. The price is set at UAH 7080 per 1000 cubic meters (including VAT);
- the supplier of the “last resort” is obliged to supply gas to non-household consumers, which ensure the defence capabilities of the state and buy/sell gas from/to GTS Operator for physical balancing of the GTS under special conditions performed in the CMU decision.
Under special obligations, Naftogaz has started supplying gas at a fixed price to 3 out of 12 thermal power plants.
Information contained in this article is for general informational purposes only, does not constitute legal or any other professional advice and should not be relied upon as a substitute for specific professional advice adapted to the specific circumstances.
Authors: Maryna Hritsyshyna, Nataliia Hutarevych, Sergiy Bovkunovych
