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Ukraine's energy sector: emergency state, rolling blackouts, and manipulations

Author : Ukrainska Pravda

17:39, 15 February 2017
Ukraine's energy sector: emergency state, rolling blackouts, and manipulations

Author : Ukrainska Pravda

For three years, Ukraine has depended on fuel supplies from the ATO zone, and the next 1.5 month, occupied Donbas is the only real option to get anthracite

17:39, 15 February 2017

Read the original text at epravda.com.ua.

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What happened?

Ukraine might declare a national emergency. Thus, previously, "Ukrenergo" (Energy Company of Ukraine) and Department of Energy have appealed to the Cabinet to introduce a state of emergency in the electricity market due to lack of coal. The issue to be considered by the government at the next meeting.

Related: Africa or America: Where would Ukraine purchase the coal?

State of emergency will allow the "Ukrenergo" manually restrict electricity power production of some stations and increase the production of some others.

Also, officials have to elaborate a plan and proposals of rolling blackouts. Previously, Minister of Energy and Mines Ihor Nasalyk have stated about rolling blackouts.

"These changeovers would undoubtedly cause rolling blackouts and the price of coal would increase twice," he said.

What kind of changeovers is Minister talking about?

January 25, campaign "The blockade of trade with the occupiers" began.

Related: Ukraine to depend on anthracite coal another two years

The activists, mostly former military and ATO members, blocked the railway line that connects Luhansk, Lysychansk, and Popasna at the section "Hirske-Zolote," and the "Svitlanov" station in order to stop the trade of illegal armed formations.

Later, on February 10, organizers blocked "Yasynuvataya-Kostiantynivka" railroad.

Why did they do it?

The purpose of the action is clear from its title: to stop trade with occupied territories. The main product that comes from Donbas temporarily occupied territories is coal, needed by the power generation facilities of the country.

Related: UkrEnergo: anthracite coal left only for 40 days

How much coal is exported from occupied Donbas?

From month to month, this figure may vary at times, and usually depends on two factors. First, changing consumption of coal thermal generation. Second, the capacity of transport infrastructure between Ukraine and the ATO area.

Given these nuances, the supply of thermal coal from the occupied parts of Donbas can be up to 10 million tons per year. During the month, around 800 thousand tons should be transferred from there.

Is it Ukraine’s only source of coal?

If we speak about anthracite group, then yes. Almost all of anthracite, required by the majority of Ukrainian thermal power plants, are located on the controlled territory. 99% of needs meet supply of coal exclusively from the ATO zone.

Related: Zasyadko coal mine: Seven largest tragedies

How much coal reserves do we have until the end of the heating season?

According to the "Ukrenergo," the average consumption of anthracite coal is about 30 thousand tons per day. In case of emergency, consumption can be reduced up to 20 thousand tons per day.

According to "Ukrenergo," in the morning of February 13, common stocks of anthracite coal at all thermal power plants accounted for 842 thousand tons. It is enough for 40 days.

Related: Zasyadko coal mine: 191 miners are evacuated

"Different stations have different coal reserves, and this amount ranges from 14 to 100 days, in terms of emergency state," said the head of "Ukrenergo" Vsevolod Kovalchuk.

But what if we run out of coal?

The biggest problem that can happen – rolling blackouts.

Speaking about areas, which may suffer from rolling blackouts, Prime Minister Groisman noted, "Today energy expert will reconsider this issue and give recommendations. We cannot delay before strategic reserves of coal are be reduced."

Related: The first batch of coal to alternate the Donbass coal will come to Ukraine on August, 20-21 - Nasalyk

Later it was reported that following the Anti- Crisis Staff, Kharkiv, Dnipropetrovsk, Kyiv, Chernihiv, Zaporizhia, Sumy and Cherkasy oblasts are instructed to hold a meetings of emergency headquarters.

Is there any alternative to the shutdown?

There are two options.

Related: Militants threaten to stop coal supplies

The first option is to consume more gas for production electricity in TPP. That is, in case of shortage of coal, Zaporizhia and Trypillia TPPs might run gas-and-oil-fired boiler blocks. Taking into account current gas prices, electricity produced from gas-and-oil-fired boilers would be extremely expensive.

The second option is to buy coal elsewhere.

What about the new tariffs and the formula "Rotterdam +", which was to make us independent from Donbas coal?

In March, the National Commission for Energy and Utilities (NCEU) has approved a new method for determining the wholesale market price of electricity - "Rotterdam +". This is the price at which power plants sell electricity market. It particularly takes into account the cost of coal.

Why "Rotterdam +"? Under the new method, the cost of coal in the process of electricity production is calculated as "cost of coal in the port of Rotterdam plus the shipping cost to Ukraine." By using this formula, consumers would pay a higher tariff for electricity.

Related: Coal stocks grow in Ukraine, - Energy Minister

What was it done? One of the key goals of innovation, NCEU head Dmytro Vovk believes, is ensuring the independence of coal supplies from temporarily uncontrolled territories. And now, ten months after elaborating the formula "Rotterdam +", our government claims that there is no alternative to coal supplies from occupied Donbas areas.

Andriy Gerus, Business-Council “The Price of the State”, Board member, noted that in 2016, all Ukrainian consumers paid some additional 10 billion UAH, following the "Rotterdam +". This money had to on measures of creating independence from ATO zone. And now, only the authorities know where these 10 billion UAH.

Related: Donbas conflict: Butivka coal mine shelled from mortars

For three years, Ukraine has been dependable on fuel supplies from the ATO zone, and the next month and a half occupied Donbas is the only real option to get coal supplies of the required mark.

So what should we do?

A good solution would be form coal reserves in preparation for the next heating season, buying imported fuel.

The government must begin to reequip TPPs from "A" anthracite to "G" anthracite. For instance, now "Centrenergo" completes re-equipment of Trypillia TPP to "G" anthracite.

Related: Nasalyk: Ukraine has enough coal and gas to go through heating season

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