Wednesday, February 21, 2024

Ukraine’s power plants need missile defence ahead of winter, DTEK CEO says

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Ukraine’s largest private energy company DTEK is ready for another winter and Russian attacks, but its power plants need more missile defence systems to operate safely, Chief Executive Officer Maxim Timchenko told Reuters.

Since Russia’s February 2022 invasion, Europe, including members of the Soviet Union and the ex-Communist bloc, have supplied hundreds of transformers, miles of cables and thousands of diesel generators needed to light and heat the country in winter, when temperatures fall well below freezing.

But the experience of the past 12 months has prompted Ukraine to seek more air defence systems to protect its critical infrastructure.

“We need more Patriots, more IRIS systems. We cannot protect ourselves against ballistic missiles if we don’t have air defence systems,” Timchenko told Reuters in an interview in Warsaw.

“I know that our president and our government have been doing everything that they can to bring the message that we need this equipment to protect our energy system.”

In the first 10 months of this year DTEK’s power plants produced enough electricity to meet the demand of around 4.1 million households.

Every one of DTEK’s 13 power stations has come under fire from Russia, which has launched sustained attacks on the country’s power grid. In recent weeks alone, Russia has attacked Ukrainian energy infrastructure with different weapons 60 times.

In total, 13 of DTEK’s power units, with total capacity of 2.3 gigawatts, have been damaged, destroyed, or occupied, causing blackouts, Timchenko said.

Since April, DTEK has managed to bring back eight out of 13 power units, two are under repair, while two coal-fired plants that were mothballed are also set to work during the winter.

The company will have brought all of its lost capacity back into operation, Timchenko said.

DTEK has also secured enough coal and gas to feed its power plants, including 280,000 metric tons of coal from Poland, which could be increased to as much as 400,000 tons.

“Coal from Poland is more expensive than the fuel that could be sourced in Amsterdam but it’s definitely less expensive than in Ukraine,” he added. BETTING ON LNGDTEK, the largest private gas producer in the country, last year produced 2 billion cubic metres of gas, or about 10% of Ukraine’s total consumption. Gas usage has fallen by 30-35% since the start of the war, but the company has managed production to maintain a balance between supply and demand, Timchenko said.

The company’s trading arm, D.Trading is now exploring opportunities in the liquefied gas trading business, betting on expectations that LNG will play a crucial market role after Europe reduced supplies of pipeline gas from Russia.

Last summer, several traders opted for storing gas in Ukraine to profit from the summer-winter spread. In September, spot gas in the TTF Dutch gas futures market traded at about 30 euros ($32.96) per megawatt-hour, while forward prices for the first quarter of 2024 stood at 49 euros.

The move was a sign that the trading community had trust in Ukraine, Timchenko said. Stored gas can only be treated as a contingency reserve in case of destruction of infrastructure and, as of today, Ukraine has met its entire winter demand with gas produced in the country.

Meanwhile, D.Trading is expanding in Europe. The company is trading energy from Kyiv, Zagreb, Poland, Switzerland and Amsterdam and is now looking to develop transition products, such as emissions trading, Timchenko said.

“I think that we’ve doubled our trading team over the past 12 months, we have about 100 people working in trading and analytics today,” Timchenko said.

Grid synchronisation

DTEK is also working with the European Network of Transmission System Operators for Electricity (ENTSOE) to expand power transit capacity with neighbouring grids in Europe.

At present, transmission lines allow Ukraine to export as much as 2,000 megawatts of power daily, but in practice exports are usually only around 350-400 megawatts, due in part to insufficient connections and regulatory issues. Imports amount to about 1.3 gigawatts.

Regulation guiding joint auctions for power capacity at its borders is needed, Timchenko said.

“We hope that it can be done during the next year,” he added.

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