Norway said it has already decided that 120 million kroner out of 1.1 billion kroner will be used for repairs in Kharkiv region, which has been particularly hard hit by Russian attacks recently.
Norway will provide 1.1 billion kroner ($103 million) to Ukraine to repair the country’s energy infrastructure and ensure the country’s power supply before next winter, the country announced on Sunday, June 16. “Russia is conducting massive, systematic attacks to paralyze the energy system, but Ukrainians are working day and night to provide electricity to the population,” Prime Minister Jonas Gara Storé said in a statement.
According to new estimates, more than 50% of Ukraine’s power generation capacity has been destroyed, the government said. “We are in close dialog with Ukraine on how it can make the most efficient use of these funds. The Ukrainians themselves understand what is needed best,” Støre said, adding that it is important to start repairing the infrastructure before the onset of winter.
Norway said that it has already decided that 120 million kroner will be spent on repairs in the Kharkiv region, which has been particularly hard hit by Russian attacks recently. The solar panels will be installed in seven maternity hospitals and operating rooms in the Kharkiv region, Støre said in a statement released during his participation in the Ukraine peace summit in Switzerland.
Norway has allocated 2.1 billion kroner to the Ukrainian energy sector in 2022, and 1.9 billion kroner last year. The Scandinavian country has pledged 75 billion kroner in military and civilian aid to Ukraine for the five-year period 2023-2027, with funds to be allocated each year according to Ukraine’s needs.
Ukraine is asking its European partners to maximize their assistance in increasing electricity imports to 2.3 GW from 1.7 GW today, First Vice Prime Minister and Minister of Economy Yulia Svyrydenko has said.
“We need a political and technical decision to increase electricity imports to 2.3 GW,” she said at the Ukraine Recovery Conference (URC-2024) in Berlin on Tuesday.
Svyrydenko noted that the energy issue will be the main topic during the two days of the conference, as Russia has already destroyed half of Ukraine’s generating capacity, or about 9 GW, which is enough to provide electricity to 11 million German citizens.
According to her, in addition to increased imports, the three other priorities in this area are rapid restoration where physically possible, the commissioning of up to 1 GW of capacity this year and another 4 GW over the next two years, and loans.
“We desperately need equipment from your decommissioned power plants and direct financial support,” the First Deputy Prime Minister said.
She added that European, especially German, companies are global technological leaders in this field, and the first contracts will be signed at this conference, but more active participation of international financial organizations and expert credit agencies around the world is needed.
Svyrydenko emphasized that the second key task is to ensure reliable air defense.
“We see a direct dependence of economic recovery on the quality of air defense. Thanks to the protection of our ports, we were able to increase exports to 13 million tons of cargo (per month). This is almost the pre-war level,” the First Deputy Prime Minister explained.
Speaking about reforms, Svyrydenko noted that replacing the word “reforms” with the word “recovery” in the title of the conference after the start of the full-scale invasion means recognizing that the reforms combined in the reform matrix are necessary but not sufficient to accelerate economic growth.
“The analysis shows that reforms alone are not enough for economic growth, the only factor that can stimulate long-term growth is investment, it is private sector participation.
If Ukraine wants to have a chance to catch up with the EU countries in terms of GDP, we need investments or technology transfer in the amount of $10 to $13 billion a year over the next 10 years. We need investors to come to Ukraine now, and not wait until the war is over, because this is a prerequisite for rapid economic growth and future victory,” the First Deputy Prime Minister summarized.
The Cabinet of Ministers of Ukraine has set from June 1, 2024 the electricity tariff for the population at the rate of 4.32 UAH/kWh with VAT, which is 64% higher than the current tariff of 2.64 UAH/kWh with VAT.
This was announced by the first deputy head of the energy Committee of the Verkhovna Rada Oleksiy Kucherenko.
“4.32 is a single price. For electric heating – up to 2000 kWh at the old price in the heating period, in the summer as for everyone,” he wrote in his Facebook on Friday.
On Monday, the electricity consumption limits in Kyiv will be enough to cover 81% of the capital’s needs, DTEK said in an update on stabilization blackouts for May 27.
“Kyiv, Kyiv region, Odesa, Donetsk, and Dnipro regions: as instructed by Ukrenergo, the outage schedules will be in effect from 06:00 to 24:00,” the company said in a statement posted on its Telegram channel.
It also emphasizes: “Kyiv. The limits set by Ukrenergo will be enough for an average of 81% of the capital’s needs.”
As reported earlier, on Monday, May 27, blackout schedules will be reintroduced for household and industrial consumers in all regions of Ukraine.
The National Bank of Ukraine (NBU), taking into account Russia’s recent terrorist attacks on energy infrastructure, has included in its macroeconomic forecast an average electricity deficit of about 5% in 2024-2025, while estimating electricity imports at $0.8 billion in 2024 and $0.6 billion in 2025.
“If there are no new significant destructions, the NBU estimates that the electricity deficit, even taking into account imports and partial restoration/installation of new generating capacities, will be 5-7% on average in the second to fourth quarters of 2024,” the NBU said in its April inflation report, which was recently released.
This means restrictions on consumption for both households and industry. Due to uneven consumption throughout the day during peak hours, the deficit may reach 25-30% and be higher in energy-deficient regions, the National Bank explained.
“The deficit will persist in 2025 (an average of 7% in the first quarter and 3% by the end of the year),” its experts believe.
According to the report, a significant electricity deficit is likely to occur in the second quarter of 2024 due to a decrease in floods and the need to repair nuclear power units. In the future, the electricity deficit may increase with increased consumption in the summer and during the heating season.
The NBU reminded that the integration of Ukraine’s power system with the European one allows for the import of 1.7 GW of capacity (as authorized by ENTSO-E), which is used to compensate for temporary shortages of generating capacity during peak consumption hours and to balance the power system. However, due to significant fluctuations in consumption, in particular in neighboring countries, the import capacity is likely to be less than the maximum volume. In addition, import coverage is limited due to imbalances in the grid, including low transmission capacity in some regions due to significant damage.
It is pointed out that the risk of increased Russian attacks on energy infrastructure remains high for both production and distribution capacities. In the event of further damage, GDP growth will be lower than in the baseline scenario (3% in 2024 and 5.3% in 2025), and price increases will be higher due to higher costs resulting from the use of more expensive energy sources.
“However, the level of readiness of businesses and households for potential electricity outages is higher than in 2022-2023, which will limit the negative impact of the electricity shortage on the economy,” the NBU said.
JSC Energy Company of Ukraine (ECU) is increasing electricity imports from the EU to compensate for losses in the Ukrainian power grid due to hostile attacks. Starting from mid-March, the daily volume of imports by the state-owned trader has increased by an average of 2 times.
The company continues to import electricity from Slovakia and Romania, and in March it also started supplying electricity from Hungary. Today, the company is the second largest importer of electricity in Ukraine.
“Over the past two years, Ukraine, together with the EU, has significantly increased its technical and organizational capabilities for electricity imports, which now plays a crucial role in the stable energy supply of consumers,” said Vitaliy Butenko, CEO of the Energy Company of Ukraine. “Given the continuing massive attacks on energy facilities, the Government of Ukraine continues to actively cooperate with European partners to obtain additional import opportunities.
Reference
Energy Company of Ukraine (ECU) is a national energy trading company that offers comprehensive solutions for the purchase, sale and management of energy resources. The company was established in 2022 without attracting or transferring state assets or property. Revenues are generated by high-tech trading products and instruments.
The company is one of the TOP-5 traders in Ukraine in terms of electricity sales, a leader in cross-border energy trading, and a TOP-2 trader of green electricity.
The company established the first state-owned balancing group of electricity market participants, which is now the second largest in Ukraine. The company’s customers generate 10% of Ukraine’s GDP. The company is 100% owned by the state.
