Shortly after midnight on February 24 last year, Ukraine severed its last links to the Russian electricity grid as it switched to integration with the European transmission infrastructure.
A few hours after it unplugged from a system to which it had been connected since Soviet times, Russia launched its all-out invasion of Ukraine, a conflict now characterized by devastating airstrikes against its energy infrastructure.
As a result of the targeted missile attacks, 60% of the electricity generating and transmission capacity has been damaged, creating a shortfall that leaves millions of people in the dark on a regular basis.
At night, the deficit amounts to 1.5 gigawatts (GW). During the day, it can go up to 4.5GW, or just over 8% of the country’s pre-war installed capacity.
More traumatic are the human losses among power network personnel.
In the past year, DTEK, the largest private electricity generating company, lost 136 employees, 328 had been injured, 25 went missing, and four are held prisoner.
Other companies may have had similar losses, as engineers and technicians have routinely braved bullets and missiles to repair the damage and restore electricity to vulnerable consumers.
Despite the devastation, the Ukrainian energy infrastructure still functions, and its interconnection with the European grid has opened up an opportunity to import electricity from neighboring central European countries. Sometimes, imports are high enough to supply close to two million Ukrainian consumers.
In the longer term, and with an eye on a post-war period, Ukraine must rethink its energy system to respond both to security challenges and decarbonization goals fully aligned with those of the EU.
And for that reason, it needs to pursue three goals.
Firstly, increasing its interconnections with Europe should be a priority. Commercial cross-border capacity is now 700MW, but there are plans to increase it to 1,500MW with the synchronized European system, and add another 1,000MW of capacity on an isolated line to Poland.
The additional cross-border capacity offers backup supplies in case of extreme shortfalls caused by Russian airstrikes. In the future, it will also allow Ukraine and the region to save generation costs and benefit from each other’s supplies.
Secondly, Ukraine must capitalize on its renewable potential.
As early as 2015, the International Renewable Energy Agency (IRENA) estimated Ukraine’s total wind potential at 24GW or nearly half of Ukraine’s total installed capacity of 54.4GW prior to the start of the war.
Before the full-scale war, there were strong signs that Ukraine was leaping forward in terms of renewable investments, with wind and solar capacity soaring from 500MW in 2015 to 7,700MW in 2021.
By the end of October 2022, 90% of its wind and 50% of its solar capacity was destroyed or no longer in operation following Russia’s occupation of territories housing these installations.
Ukraine’s National Recovery Plan presented at Lugano last year estimates that $130bn could be allocated to develop green energy, aiming to construct up to 10GW of solar and wind capacity, additional renewable capacity for the production of clean hydrogen, and the construction of smart grids, all within a decade.
The plans are ambitious but do not fully account for Ukraine’s current challenges and opportunities.
While opportunities will be opening up to complement its existing nuclear fleet with large-scale wind and solar facilities, there is also a strong need to consider nimble off-the-grid resources such as self-generating and storage technology, and decentralized grids.
The damage inflicted on the Ukrainian grid by Russian airstrikes has exposed the vulnerabilities of centralized systems relying on large generating facilities and integrated grids.
A more decentralized ecosystem can minimize risks because even if it were to come under physical or cyber-attack, that damage would be localized and unlikely to impair the entire infrastructure.
Such a model presents not only greater security, but will also lead to more competition and implicitly lower costs for producers and consumers alike.
Ukraine’s other great potential lies in its vast tracts of farmland, which could be used to produce biomass and, ultimately, biomethane to replace natural gas.
Analysis predicted that Ukraine could replace at least a quarter of its pre-war annual gas consumption of 30bn cubic meters with biomethane by 2050.
The interest is very high, not least because, thanks to this vast agricultural resource, Ukraine can produce fuel at costs of on average €100 ($107) per thousand cubic meters, much cheaper than elsewhere in Europe.
All this depends on Ukraine’s ability to reach a third goal — the reform of its electricity and gas markets to allow proper price signals to emerge, establish fiscal incentives to attract investors, and consolidate institutions to ensure the implementation of the necessary governance rules.
The normal functioning of Ukraine’s energy markets was suspended when martial law was introduced a year ago, leaving little room for private companies to pursue investments.
Ukraine still faces major security risks, and the upcoming months may still prove very difficult, but the battle to rebuild its economy will be no less of a challenge, and preparations must start now.
Dr. Aura Sabadus is a senior energy journalist who writes about Eastern Europe, Turkey, and Ukraine for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. The views expressed here are her own.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.
