Ukraine must transform the energy sector for the next heating season

Despite the blockade of coal supplies from Donbass for Ukrainian thermal power plants (TPPs), the country managed to avoid large-scale blackouts. In addition, Ukraine managed to increase its electricity generation by 2.1 percent on an annualized basis in January-April, according to Interfax-Ukraine. This was mainly due to the use of nuclear energy, warm weather and reduced industrial consumption. Before the next heating season, which starts in October, Ukraine intends to replace high-quality anthracite from Donbass with imported coal, as well as convert its thermal power plants to use alternative fuels.

Ukraine was not plunged into darkness due to a combination of factors. February and March were unusually warm, and in April the district heating was already turned off. The industry also consumed less energy, since the blockade of Donbass affects not only the production of electricity, but also the output of metallurgy and mechanical engineering products. For example, after rising last year and January, steel production plunged at an annualized rate of 4.3 percent in February and 2.2 percent in March.

In addition, thermal capacity was partially replaced by nuclear power, so that the share of nuclear power plants in electricity production increased from 52 percent in 2016 to 57 percent in January-April. However, Ukraine will not be able to continue to rely on nuclear reactors for as long as necessary, as they will have to close for scheduled maintenance later this year. At the same time, domestic energy consumption is likely to grow.

To remedy this situation, Ukraine plans to increase coal imports by adapting the TPP to use lower quality G-class coal, which is mined outside the occupied areas and can be easily imported instead of anthracite. The Ukrainian government does not want to increase imports of coal from Russia, so Prime Minister Volodymyr Groisman offered to buy coal from the United States, South Africa and Australia. However, this can be too expensive considering the shipping costs.