| 17 July 2024, Wednesday |

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

The largest private energy firm in Ukraine, according to CEO Maxim Timchenko, is prepared for another winter and Russian strikes, but more missile defense systems are needed for its power facilities to run securely.

Since Russia invaded the country in February 2022, thousands of diesel generators, miles of cables, and hundreds of transformers have been delivered by Europe, including former Soviet and communist countries, to help light and heat the nation throughout the bitterly cold winter months.

But the experience of the past 12 months has prompted Ukraine to seek more air defense 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 defense 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.”

Every one of DTEK’s 13 power stations, which supply energy to more than seven million Ukranian families, have come under fire from Russia, which has launched sustained attacks on the country’s power grid.

About 50% of the company’s capacity of 2.3 gigawatts has 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 thousand metric tons of coal from Poland, which could be increased to as much as 400 thousand 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 LNG DTEK, the largest private gas producer in the country, last year produced 2 bcm 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 Kiev, 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.

  • Reuters