Energy Strategy 2035: How Ukrainians Will Be Living in 18 Years
We'll be driving electric vehicles and selling our own gas
We'll be driving electric vehicles and selling our own gas
When we talk about the future, issues like colonizing Mars, the technological singularity, AI, and other fantastical things often come up. However, these are the dreams and predictions of visionary techno-utopians, while states tend to think in more materialistic and realistic terms. This is perfectly understandable: no one knows how long we'll have to wait for the promised magic and telepathy, but people who need heat, light, and hot water are already among us.
Segodnya analyzed the government's Energy Strategy and learned how Ukrainians will be living in 2035.
Three stages: smart grids and new fuel
The Energy Strategy is divided into three main stages: In 2017-2020, the sector will be reformed, and then (2020-2025) optimized, and innovations implemented, after which (2025-2035) sustainable development will be achieved. Concurrently, by 2035, GDP energy intensity is supposed to fall by more than half, which is a rather ambitious goal.
At the first stage, it will be necessary to implement all necessary changes to legislation and the operations of relevant authorities in order to get integrated into the European energy system, in terms of both electricity and gas. In the near future, a normally functioning coal market should appear, and some wells will be eliminated and abandoned. Naturally, at the same time, the best global practices will be employed to mitigate the consequences for the population. Eleven percent of electricity in Ukraine will come from renewable sources.
The second stage is even more interesting, when the technical integration of Ukraine and Europe will take place. All investments in emission reduction will start to pay off. As regards heating, the performance of existing centralized systems needs to be improved, but at the local level, new ones will be created, taking into account the fuel available in the regions, its logistics, and the development of infrastructure.
According to Konstantin Ushchapovsky, the advisor to the minister of energy, the reform will simplify relations between industry enterprises and consumers. And it will be possible for us to influence the production, distribution, and consumption of energy in the same way as is done in Europe, where customers select their suppliers and force them to compete and improve the quality of their services.
"We ourselves will be able to manage demand for resources: choosing a supplier, planning expenses, and, given minor investments, performing the role of consumer/regulator, thereby significantly reducing our own expenses on purchases of electricity. Most importantly, payments for electricity will depend directly on the quality of services provided by suppliers. Payment will guarantee the uninterrupted supply of electricity," the official says.
After 2020, all gas will be Ukrainian, and exports will begin thanks to increased production.
Executive Director of the Association of Gas Producers of Ukraine Roman Opimakh believes that gas independence requires the authorities to take certain steps as early as this year. "The expected increase in gas production, according to the adopted Concept for the Development of the Industry, is impossible without a revision of the tax policy, particularly the introduction of incentive taxation for new wells in the amount of 12%. The second issue pertains to licenses. The authority that issues and extends licenses is undergoing a change of management. Local boards, for their part, are delaying the approval of licenses for producing companies. For example, in the past year and a half, in Poltava, they approved only one out of more than 80 licenses," says Ushchapovsky.
Gas, it's true, will never be cheap again, but the government optimistically promises to improve the standard of living by that time to such an extent that the population won't even notice. Renewable energy is actively developing, electric grids are becoming smart, electric transport is developing (though the country itself is supposed to be producing at least 50% of its gasoline).
At the obvious third stage, some generating facilities will become thoroughly obsolete and be replaced with new, more innovative, and, most importantly, environmentally friendly ones. By this time, developers will not be able to build a plain old house, as construction standards will demand energy efficiency. Gas production will increase, and the Cabinet of Ministers has huge plans for the continental shelf (including Crimea). Now, the most interesting part: by this time, 25% of all energy will be green.
Like every program document, the new strategy expects Ukrainians themselves to change, as well. Energy management will appear, and people will start to take care of valuable resources. The following steps will promote these changes: goods will have to be labeled according to consumption level, and naturally, we'll choose the ones that "eat up" the fewest resources. There will be modular boiler rooms in homes, and solar panels will be installed on roofs, providing 5% of all the energy consumed by the population. Subsidies will become targeted and, eventually, minimized.
Individual energy sources will appear, providing 5% of all the electricity consumed by the population
More Gas and RES
According to the government, the provisions of the Strategy are completely feasible. With respect to gas, Ukrgazodobycha plans to increase production to 15.2 bcm this year and to 20 bcm by 2020. Private companies are also keeping pace. This year, the largest of them — Neftegazodobycha — will attain 1.6 bcm. The company once drilled the deepest well in Europe (6750 m). With regard to Black Sea gas, the current situation is more complicated: Foreign giants like Shell and Chevron don't really like what's happening in the industry (the fiscal regime is changing, and officers of the Security Service of Ukraine and the Prosecutor General's Office often visit the market players), so they're not particularly enthusiastic. There are some issues with onshore production, too: the largest Yuzovskaya deposit (Donetsk and Kharkov Oblasts) might go to an unknown company.
Renewable energy (RES) is supposed to jump from 2 to 25%. Currently, DTEK provides two thirds of total wind energy. According to Alexander Selischev, DTEK's director of strategy and business development, this year, the Botiyevskaya wind power plant (Zaporozhskaya Oblast) will produce approximately 636 million kWh, and the Trifanovskaya solar power plant, which was commissioned this summer in the Kherson Oblast, will add another 4 million. "Solar and wind energy will develop rapidly. This is an important part of the Ukrainian energy sector development strategy and the strategy of our company. Next year, the construction of another wind station with a capacity of 200 MW will begin in the Zaporozhskaya Oblast, and new projects in the area of solar energy are being prepared. Western investors are showing interest in this market in Ukraine. With successful electricity market reform, the achievement of many goals envisaged in the Energy Strategy seems feasible," Selischev said.
The state's work in this field must also be taken into account. "There's an ambitious high-capacity Chernobyl Solar project, there are a number of other projects," Deputy Energy Minister Nataliya Boyko told us. "Just recently, a meeting was held with a company that wants to launch a 500-MW facility in the Zaporozhskaya Oblast, and they've already obtained preliminary approval for financing. Right now, those who obtain approvals and project documentation and want to invest in green generation will automatically get a high green tariff, the highest in Europe."
In the near future, Boyko said, a mechanism for auction systems will be developed to enable the allocation of areas according to the needs of given regions.
"Small roof-mounted panels, which will make citizens more disciplined in terms of consumption, and larger ones, which will enable qualitative changes, are equally important," Boyko said. "I'm optimistic about the entire country, and each region is potentially attractive to investors. For example, Norwegians positively assess the development of small hydro energy facilities, and many countries are well-disposed to major solar and wind projects. Biogas has always been an interesting issue, especially in view of the closed cycles of agroholdings and small towns." There are also plans for Crimea: the Cabinet of Ministers wants to return it and is working to this end at international courts and the UN. Gas projects in other areas of the Black Sea, which will attract investors and prove that the region's dynamics differ from what is happening on the peninsula, will help with this.