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Energy crisis in Ukraine: How to deal with lack of coal?

Author : Olha Buslavets

Source : www.facebook.com

October is traditionally a month when everything secret in the energy sector becomes clear in Ukraine. It seems that the main principles of power system management - "happy-go-lucky attitude" and "will decide by itself" - turned out to be ineffective.
10:59, 3 November 2021

Ukrainian coal
Open source

Coal reserves are decreasing

At the beginning of the month, there were 851,000 tons of coal in warehouses, at the end – 648,000 tons.

Over the month, stocks in warehouses of Ukrainian thermal power plants and thermal power plants decreased by 203 thousand tons. That's minus 24%!

Last year, at the beginning of November, this figure was 2.6 million tons, in 2019 - 1.8 million tons, in 2018 - 1.9 million tons.

At the end of the month, it became known about the termination of coal supplies from the Russian Federation, which reduces coal supplies to Ukraine by 300-400 thousand tons per month. For many companies, the supply of coal from the Russian Federation was the only possible supply channel, taking into account the fact that the current prices for electricity cover only the cost of such coal. Anthracite power units of the Tsentrenergo TPP, Slovyanska TPP, Luhanska TPP, and Chernihivska TPP, Darnytska TPP (Euro-Reconstruction) in Kyiv were at risk of shutdown.

Related: Belarus says electricity supplies to Ukraine started as part of emergency assistance

Import of electricity. Will foreign countries help us?

Everything seemed to be going according to plan when Energoatom won 885 MW of crossings with Belarus for 14,5 million USD. But neither on November 1 nor on November 2, the import of electricity from Belarus was not started.

Most likely, the import from Belarus will take place next week under the auspices of private companies with the purchase of the intersection from Energoatom at a price close to 0. Another everyday fiasco. The expected volume is 400 MW.

It is unnecessary to discuss the topic of importing electricity from the Russian Federation against the background of the gas and coal blockade. The hopes of Ukrainian top officials that Moscow would run to earn a penny in Ukraine, neglecting the game of big politics, did not come true.

Why didn't TPP and CHPP buy enough coal?

In the 1-2nd quarter of 2021, TPP and CHPP operated at a deep loss. The heads of state and private companies pushed the thresholds of the regulator with proposals for bringing the rules and pricing plans to the European format and described the risks of price regulatory spin-off of generating companies.

At the end of July, the regulator began to liberalize prices. But in the global market, the rate of change exceeded the dynamics of the regulator's decisions.

As a result, prices on the wholesale electricity market in the UES of Ukraine in the second half of the year against the first half of the year increased by 49%.

Related: Russia ceases to supply steam coal for Ukraine since November 1

Given that the prices for gas are 3 times, for coking gas - 2.2 times, and the spot prices for electricity in Eastern Europe are 197 EUR / MWh (October), which is 2.4 times higher than the prices of the UPS of Ukraine.

It turned out that at current electricity prices, the option of gas production is not available (last year, Kyiv CHP-5 and CHP-6 and Kharkiv CHP-5 carried the load on average 1200 MW), and the global coal market is available only to those who are consciously ready to incur losses.

As a result, as of November 1, 7931 MW of capacities in the IES of Ukraine declare lack of fuel.

What's next?

It is obvious that the only scenario for the independent balanced operation of the power system is the mixed production of electricity from coal and gas. It is necessary to establish pricelists in such a way that the Kyiv and Kharkiv CHPPs have the opportunity to generate electricity. The state-owned GC "Centrenergo", which is critically short of coal, should switch to burning a mixture of coal and gas.

Related: Imports of 560 thousand tons of coal expected in November, - Energy Ministry

Ukrainian coal should cost as much as imported coal. Otherwise, coal will be mined anywhere, but not in Ukraine.

And finally, the reduction of debts on the electricity market:

  • The wage debt to the miners of state mines is 76 million USD.
  • Debts of Ukrenergo to participants in the balancing market – 800 million USD.
  • Debts of the Guaranteed Buyer to renewable energy sources are 1 billion USD, and to nuclear power plants and hydroelectric power plants – 150 million USD.
  • Ukrenergo's debt to the guaranteed buyer is 1,2 billion USD.

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