The armed conflict in Luhansk and Donetsk oblasts where 70 percent of the nation’s coal is produced has put the nation’s capacity to generate electricity at risk.
Half
the Donbas region’s 115 coal have closed, leaving only 35 of the remaining
working, according to Maksym Volynets who heads the Independent Union of
Miners. Central in the region is Rinat Akhmetov’s energy holding DTEK, which
produces 30 percent of locally produced electricity.
Five
thermal electricity stations located near or within occupied territory in
Donbas are close to coal stocks, but several of these, like at battle-scarred
Slovyansk, Starobesheve and Shchastya, are so shot up that they are barely
functioning, according to Maksym Volynets of the Independent Union of Miners.
In
addition, whatever coal stocks there are cannot be shipped out of the region because
of the absence of rolling stock and damaged rail network. Komsomolets, a major
mine in Donbas belonging to DTEK, is especially under risk due to the ruined
transportation network. Moreover, Deputy Energy Minister Yuriy Zyukov reported
that separatists stole almost all of the dynamite used in coal extraction.
Accounting
for 42 percent of electricity produced at 14 thermal electricity stations (TES)
and almost 100 percent for heat, coal production declined 8.5 percent in the
first seven months, according to the State Statistics Committee, while the
Energy Ministry said steam coal output in August contracted 43 percent.
Nuclear
energy accounts for 43 percent electricity produced, and hydro-electric
stations account for 7 percent of voltage.
So
with a large chunk of the nation’s fuel resources now inaccessible within the
war-ravaged southeast, Prime Minister Arseniy Yatseniuk on Sept. 4 said the
government ordered 1 million tons of steam coal from South Africa to feed
state-owned TES.
As
of Sept. 1, the government stated that TES coal reserves had shrunk to just 3
million tons – about a month’s worth, thus necessitating imports. Under current
conditions, according to Volynets of the Independent Union of Miners, there’s
enough steam coal only until mid-November. The winter heating season begins on
Oct. 15, and meteorologists are predicting an unseasonably chilly winter, up to
2 degrees C below average.
In
a note to investors, Kyiv-based Dragon Capital estimates that Ukraine needs to
import 3-4 million tons of steam coal by the year end, which will cost
$300-$400 million, while the Minister of Economic Development and Trade says up
to 7 million tons is needed at a cost of $700 million.
However,
according the energy special Andriy Chubik of the think tank Strategy XXI, the
coal shortage should be brief. “Coal is a global commodity,” Chubik explains,
“and so upon demand it can be delivered within a month’s time lag.”
Should
thermal power plants not get enough coal during the winter, the electricity
market regulator will have little other option but to initiate rolling blackouts
– the usual policy in Ukraine’s rural regions in the 1990s, argues Dragon
Capital. Households will be cut off the power supply during the day in order to
cover the peak demand in the mornings and evenings.
During
the winter, coal power stations need as much as 5 million tons a month – almost
two times what is needed during the summer.
Ukraine
is used to being a net exporter of coal that has yearly surpluses. Akhmetov’s
DTEK, which normally has a contract to supply coal to four countries in Central
Europe, exported 10,000 megawatt hours in 2013.
No nuclear option
Some
place special hope with Ukraine’s nuclear plants. According to Olga Kosharna,
spokesperson for the Ukrainian Nuclear forum, an industry association, nuclear
stations could potentially provide up to 75 percent of the electricity that the
country needs. However, Maksym Zorin, assistant director at Ukrenergo, a
state-owned enterprise that manages the government’s energy assets, said that
nuclear power production can be increased by no more than 3 percent.
Yatsenyuk
on Sept. 3 mentioned that by the end of this year the government would “find a
partner to build new nuclear power blocks” in order to increase
electricity output. Yuriy Korolchuk, an analyst at the Institute of Energy
Strategy, estimates the price for constructing a single block is $3.8 billion.
Fortunately,
the state nuclear power company Energoatom reports that Ukraine’s plants have
enough fuel until at least July 2015.
Kyiv Post business journalist Evan Ostryzniuk
can be reached at [email protected].
