Сonnecting to European Power Grids: Five Benefits for Ukraine

Сonnecting to European Power Grids: Five Benefits for Ukraine

Experts about reform24 November 2017

Dmitry Malyar talks about the advantages for Ukraine of the synchronization of the Ukrainian and European power systems.

Сonnecting to European Power Grids: Five Benefits for Ukraine

Dmitry Malyar talks about the advantages for Ukraine of the synchronization of the Ukrainian and European power systems.

Ukraine has taken a step toward synchronization with the European ENTSO-E power system. DTEK and several other domestic energy companies have agreed to promote the integration of the Ukrainian and European power systems together. Within a month, the companies will develop an action plan and launch a joint project.

Currently, Ukraine is part of an energy system shared with Russia and Belarus, which has caused certain concern among the country's leadership. However, integrating into the European power system will not be simple. Individual power grids around the world are combined into large power systems, each of which works according to certain technical standards. 

Therefore, Ukrainian power engineers need to perform serious preliminary work to synchronize with ENTSO-E. On the one hand, this will entail high costs. According to experts, the project will cost a total of more than 10 billion hryvni, which will go toward the modernization of mains and power generation management systems.

On the other hand, the Ukrainian energy sector and consumers (the industry and the population) will get at least five important benefits. 

1. An important part of the project is to introduce a different organizational model of the power market. Administrative regulation of prices and generation volumes will be replaced by modern mechanisms such as exchanges, bilateral producer-consumer contracts, and online trading. Ukraine has already embarked on the path of change by initiating the reform of its power market. 

2. The unification of power systems will enable all Ukrainian producers to enter European markets, and European companies will be able to compete for Ukrainian consumers. There is no doubt that this prospect is of interest to all participants in this process. 

3. European players will come to the Ukrainian power market, increasing competition, which will lead to improved quality of service and increased certainty that customers are paying the market price. Each consumer will be able to visit the website of the exchange at any time and see the price of power for the next day at an hour-by-hour level of detail. 

Thanks to this possibility, washing machines in Europe request information about the current cost of electricity on the exchange and start washing when prices are low. For now, this is still science fiction for us. 

4. Energy companies will also see positive changes. Currently, an average of 50% of national generating capacity is being used, and Ukraine's main power grids, which were designed to maximize exports, are only 30-35% utilized. 

Just as Asia has become a manufacturing center for European companies, Ukraine can become a major energy producer in Europe alongside Germany and France. 

5. We have skilled specialists in the operation of existing and the construction of new power units. Today, their skills are not sufficiently in demand. Simultaneously, such synchronization could lead to the revival of the industry, which would spur the creation of a large number of jobs. 

This could happen in the near future, as synchronization is one of the priorities of the country's Energy Strategy. The first significant changes in the power market of Ukraine are supposed to take place by July 2019, and the full integration of power systems is planned for 2022. These are quite ambitious goals, but achieving them will make Ukraine's energy system genuinely European.