The Prime Minister of Ukraine Denis Shmygal and Acting Minister of Energy and Environmental Protection of Ukraine Olga Buslavets held the first meeting of the Anti-Crisis Energy Headquarters. The headquarters included more than 30 representatives of interested CEBs, energy generating companies, the coal industry, trade unions, and MPs. Opening the meeting, the Prime Minister said:
“We have to balance the market, we have to ensure the stability of the energy industry. Our task today is to provide jobs. We talked a lot about the promise of creating 500,000 jobs, but we faced the challenge of losing existing jobs in the energy and coal industries. ”
Olga Buslavets noted that the energy sector today is in a systemic crisis, which is manifested in physical and financial imbalances. Physical imbalances arose, in particular, due to: a decrease in electricity consumption since October last year due to the warm winter and quarantine measures; imports of electricity from Belarus and Russia, supplies of which amounted to approximately 5 billion hryvnias; accumulation in the warehouses of mines and thermal power plants of excessive amounts of coal, for which there is no demand; growth of generation from RES with an unguaranteed schedule of electricity production, which creates significant risks for the operation of the energy system.
“One of our key challenges, which should have been the focus of last year, is the rapid uncontrolled increase in renewable energy capacity under the outdated feed-in tariff model. Unfortunately, time was lost, and over the past year this capacity has almost tripled. Rapid growth continued this year. The high “feed-in” tariff creates a significant financial burden on the electricity market. In addition, it is a non-guaranteed production, which is very difficult to regulate in the system, “she stressed.
The financial imbalance arose due to excess electricity and artificial administrative restrictions, which distorted pricing in the electricity market and caused unprofitable operation of energy generating enterprises. As a result, it led to the fact that SE “Guaranteed Buyer” owed the company with RES 7.5 billion hryvnias, “Energoatom” – 4 billion. In turn, “Guaranteed Buyer” and NPP did not receive from “Ukrenergo” 11.1 billion hryvnias , and Ukrenergo from consumers and electricity suppliers – 5.3 billion hryvnias. TPPs ended the last 6 months with losses of 3.1 billion hryvnias, and hydroelectric power plants did not receive 0.65 billion hryvnias from Ukrenergo and Guaranteed Buyer.
To remedy the situation, the Ministry of Energy and Environmental Protection has already approved a new Electricity Forecast Balance for 2020 and has developed a number of further steps. “We need to understand that the energy sector has a multiplier effect on many industries. Energy is the basic industry and the foundation of the national economy, “Buslavets stressed.
Among the next steps initiated by the Ministry of Energy are the conclusion of a memorandum with investors on reducing the “feed-in tariff”, stopping the construction of new solar and wind generating capacity under the “feed-in” tariff system and the transition to a competitive support system (auctions). In addition, in order to increase the flexibility of the power system and increase, including the share of generation by nuclear power plants, it is planned to give the transmission system operator the right to free restrictions on “green” generation for a certain number of hours. At the same time, the terms of the restructuring, as well as the duration of such restrictions, will be agreed with investors to avoid the risks of arbitrage.
“I want you to understand that there really is a problem. But I want to emphasize that I have always supported the development of renewable energy in the discussions at the Verkhovna Rada committee of the previous convocation, when we discussed the introduction of “green” auctions. But in a way that will make it cheaper for our consumers and safer for the power system. As it is done in many other countries of the world, which are significantly ahead of us in this direction, “- said Acting Minister.
Next steps include reviewing Ukraine’s fuel balance based on an updated electricity balance to determine the amount of coal actually needed by TPPs. The fuel balance is planned for 2-5 years, so that long-term programs for the development of the coal industry can be developed. It is also planned to remove administrative restrictions on the electricity market so that producers do not suffer losses due to distorted prices, to improve the JI system with the prospect of transition to a European model of population support.
Among the urgent measures is the adoption of three bills that will repay the debt to Energoatom and Ukrhydroenergo in the amount of 12 billion hryvnias, which was formed in the old market model, to direct 700 million hryvnias of released funds to repay Ukrenergo’s debts to RES and NPPs, and also – to allocate 200 million euros for safety measures for the operation of nuclear power units.
In addition, it is planned to revise the financial plans of state-owned companies and others