INTERVIEW: Ukraine's DTEK targets recovery of 25% of lost thermal power generation by Oct

Ukrainian power provider DTEK is targeting recovery of 25% of its lost thermal power generation by October, CEO Maxim Timchenko said June 21, on the sidelines of the Ukraine Recovery Conference in London.

Ukraine's power network has suffered significant damage since Russia invaded Ukraine in February, 2022. Ukrainian operators have also lost control of facilities located in territories now occupied by Russian troops.

DTEK estimates that around 50% of Ukrainian power generation capacity was either occupied or damaged.

"We are very active in repair work and bringing new equipment, so that out of 50% lost, 25% will be returned. We need to finalize that by October, to be ready for the winter season," Timchenko said.

Ukraine's lost capacity includes the Zaporizhia nuclear power station, which accounted for around 40% of total nuclear capacity. DTEK itself lost about 50% of thermal power generation capacity.

DTEK aims to bring 1.4GW of capacity back onstream which will cost an estimated $150 million. It is aiming to secure the funding from one of Ukraine's state-owned banks by early July, Timchenko said.

Companies including DTEK were in London to seek Western government support and private sector investment in Ukraine's reconstruction.

Timchenko said that this will take some time due to concerns about security in Ukraine, which could be improved by not only ending the war, but also introducing a mechanism of war risk insurance.

He also called for the Ukrainian government to change restrictions on capital in and outflows and improve the regulatory environment.

"I wouldn't advise investors to wait until all these conditions are in place. We can do preparation work now, so that when other conditions are fulfilled, they can start," he said.

The invasion of Ukraine has accelerated Ukraine's integration into European power infrastructure. In March 2022 the Ukrainian electricity grid was synchronized with the Continental European Grid. It is now importing and exporting power to Europe.

Timchenko said that in some hours Ukraine imports 200-300 MW/day of power, at other times it exports up to 500 MW/day.

"These aren't huge volumes, we don't have too much excess capacity due to summertime because half of the nuclear power units are under repair. As soon as we get full capacity of nuclear back we can increase exports," he said.

Ukraine supplies power to and receives power from Poland, Hungary, Slovakia, Moldova and Romania.

Green transition

DTEK sees green energy playing a key role in reconstructing Ukraine, as well as increasing its capacity to export energy to Europe.

"I think that for the whole country, the whole economy it can become a driving force for development. Ukraine has enormous potential for building renewables -- solar and wind and biofuels. We also have many years of experience in nuclear, which should be treated as clean energy as well," Timchenko said.

Officials from Ukraine, Europe and the US called for green energy to be a key component in recovery investment during the conference opening June 21.

DTEK has been increasing investment in green energy since 2014 when Russia-backed separatists took control of areas of the Donbas, leading to DTEK losing control of several production assets.

"Our response was to build more renewables. We have invested more than Eur1.5 billion since 2014 to build more renewables," Timchenko said. DTEK estimates that half of its renewables capacity is now in occupied territory.

New projects include a 114-MW wind farm commissioned during the conflict.

Ukraine is also working towards aligning its carbon certification processes with the EU to achieve its plans for exports of green power, steel and fertilizers. Timchenko does not see the EU's carbon border adjustment mechanism (CBAM) as a risk to these plans, and said it will accelerate the green transition process.

"At the same time, I think there should be some period of time when there are special terms on CBAM for Ukraine. You cannot make this massive green transition in one or even five years, it will take some time," he said.

Gas export potential

DTEK plans to increase gas production and exports. In 2022 its gas output was 2 Bcm.

"Ukraine has great potential to increase gas production. I think with current technologies Ukraine can become a net exporter in gas," Timchenko said. A significant fall of industrial and power consumption is freeing up volumes for export, he added.

Small volumes of Russian gas continue to flow through Ukraine to Europe, despite sanctions and counter sanctions leading to suspension of most supplies after the invasion began.

Analysts see risks to these flows, from both attacks or further sanctions. The contract under which these supplies are carried out also expires at the end of 2024, with no clarity on whether it will be further extended.

Timchenko said whether the contract is extended or not, it will not affect the company's plans to increase gas production.

Ukraine is also an option for gas storage for EU countries looking to maximize volumes ahead of the winter. It has a total storage capacity of 30 Bcm, at least 10 Bcm of which can be used for European volumes.

"European companies are already using this gas storage to top up. We will be much, much more prepared for the next winter season for emergency situations and another winter energy war," Timchenko said.

The EU set up a joint gas purchasing scheme earlier this year. Timchenko said that this includes Ukraine.

"Since quite a high level of European capacity is already filled, Ukraine can be a good solution now. We see, especially from trading houses, that they are using this opportunity to bring more gas to Ukrainian storage," he said.