FINAL Ukrainian Weekly [Stakhiv, Aug 14, 2014] Ukraine’s Energy Security – Part II In the previous column, I covered Ukraine’s energy crisis and unhealthy dependence on Russian natural gas, noting that Ukraine has yet to effectively exploit its 400 years of shale gas reserves. Ukraine has other sources of energy that it has developed over the past 50 years, and continues to do so in order to maintain its diverse energy portfolio. However, because of its dire economic situation, there is an ever- growing gap between energy supplies and consumer and industrial demands, since it cannot readily fund expensive conventional energy sources such as hydroelectric power and nuclear energy. Ukraine’ energy strategy is based on producing half its energy needs via nuclear power over the next 25 years. One of the big problems with Ukraine’s nuclear energy strategy, which has been continuously updated over the past decade, is that it is highly dependent on Russian nuclear reactor technology, fuel processing and maintenance services. Uranium concentrate and zirconium alloy is mined in Ukraine, but is sent to Russia for fuel fabrication and enrichment. The nuclear fuel produced from these Ukrainian components in Russia, then returns to Ukrainian nuclear power plants (NPPs). Before we begin, a brief review of the bewildering array of electricity units and figures is needed. One megawatt (MW) of power generation is equivalent to one million watts, or 1,000 kilowatts (kW). A kilowatt-hour (kWh) is the amount of energy equivalent to a steady production of power of 1 kilowatt running for 1 hour. So a 100-watt bulb that burns for 10 hours consumes 1,000 watts, or 1 kilowatt (kW). Similarly, ten 100-watt bulbs burning for 1 hour will consume 1 kilowatt-hour (kWh) of electricity. Ukraine has four nuclear power plant facilities, housing 15 reactor units. Khmelnitsky generates 2,000 MW; Rivne generates 2800 MW; Zaporizhiye 6,000 MW and Yuzhnoukrayinsk on the Buh R., generates 3,000 MW, for a total capacity of 13,800 MW. Ukraine has plans for adding another 11 reactor units at these stations, replacing the 4,000 MW lost due to closing the Chornobyl site. Compare this to France, with a nuclear capacity of 63,000 MW, which generates 75% of its electricity via 58 nuclear reactors at 20 sites scattered throughout the country. Russia has an installed NPP capacity of 25,000 MW In 2004 Ukraine commissioned two large new reactors. The government plans to maintain its nuclear share in electricity production, which accounts for 50% of all electricity production, to 2030. This will involve substantial investment and expensive technologies from western countries, if Ukraine wants to join the EU, because Russian nuclear technology is not considered as reliable. In mid-2011, Ukraine’s energy strategy to 2030 was updated, and in the electricity sector nuclear powers role was emphasized, with improved safety and increased domestic fuel fabrication. In mid-2012 the policy was again updated, and 5000 to 7000 MW of new nuclear capacity was proposed by 2030, which will cost more than $25 billion. In 1990, Ukraine’s electricity generation was 296 billion kWh, while by 2013, electricity demand had fallen to 190 billion kWh. Electricity demand is forecast to increase back to 1990 levels, to 300 billion kWh per year by 2020, and 420 billion kWh by 2030. This is wholly unrealistic without a major expansion of shale gas production, for Ukraine can no longer depend on a steady flow of Russian natural gas. So, government policy is to continue supplying half of this projected increase in energy demand with stepped-up nuclear power development. The new government, formed in 2014 has confirmed these targets, and said that Ukraine aims to integrate with the European power grid and gas network to make the country part of the European energy market by 2017. What is potentially problematic, though, if the EU chooses to accept Ukraine sometime in the future, is its reliance on an older generation Russian nuclear reactor design, which is considered less reliable than contemporary designs. When Slovakia, Bulgaria and Lithuania joined the EU, one of the conditions was that they close their Soviet-era nuclear reactors – the same design as those in Ukraine. Another historically important energy source has been hydroelectric power. Hydropower , however, currently represents only a small part of Ukraine’s total energy resources. The U.S. Energy Administration reports that in 2012, Ukraine generated a total of 185 billion (kWh) of electricity, with nuclear accounting for roughly half of the total electric power supply. Fossil fuel sources (mostly coal, 46%) and hydropower (6%) generate the remainder of Ukraines electric power, with marginal contributions by solar and wind generation. On Dec 22, 2009, Prime Minister Yulia Tymoshenko pressed the start button on the first turbine unit of Europe’s largest pumped storage hydroelectric power plant (HPP), which is located on the Dneister River, just north of the Moldovan border. On Dec 25, 2013, President Yanukovych launched the second of seven planned generating units of this hydropower plant, scheduled for completion in 2017. Pumped storage is a rather simple form of hydropower generation. Essentially it functions like a large battery, which is ‘charged’ by storing water at a greater height, which is then released back to the stream below, generating electricity during times of peak energy demand. For the HPP, water is first pumped up from the Dneister R., about 150 meters (~500 feet) above, to a plateau where a storage reservoir has been built, using hydroelectric energy generated during times when power demand is lower and inexpensive (usually at night). It is then released back to the river during the period of peak energy needs (winter heating and summer cooling). In order to even out the flows in the river and reduce the damaging effects of such high flow surge variability on the river ecology, the water is pumped from and discharged to a smaller ‘buffering reservoir’ built on the main stem of the Dneister R, below the plateau. But the reservoirs on the Ukrainian part of the Dneister also serve an even more important function, benefitting mostly the downstream part in Moldova. Those reservoirs prevented catastrophic flooding and damage downstream in Moldova, during the great flood of 2008, and again in 2010 and 2012. The Dniester HPP station is one of the largest pumped storage electric power plants in the world. With its full complement of 7 pump-turbines, the Dniester HPP will be able to generate 2268 MW of electric power. For comparison, the world’s largest pumped storage reservoir is on the border of Virginia and West Virginia, and is rated at 3,000 MW. To put all this in context, Ukraine has a series of six very large reservoirs and pumped storage facilities on the Dnipro R., stretching from Kyiv, through Kaniv, Kremenchuk and Khakhovka. Kakhovka is the largest reservoir in the system, stretching some 225 kilometers, with a width of about 20 kilometers. Until the Crimean occupation, 80% of Crimea’s water resources needs were supplied from the Kakhovka reservoir through a 200km long canal. That reservoir, as with all the others on the Dnipro R., is very shallow, averaging only 8.5m depth (~30 feet). As a consequence, all the hydropower facilities on the Dnipro produce less than 4000MW of power. How is Ukraine to extricate itself from its largely self-inflicted energy problems? In the most recent International Energy Agency Report on Ukraine (2012), a comprehensive program of reforms was presented to move Ukraine out of its dependency on Russian gas, and to increase self-sufficiency and energy security. It noted that Ukraine’s economy remains one of the most energy-intensive in the region, despite progress in energy efficiency in the industry sector and closure of some of the most energy intensive industries in the 1990s. Still, it takes more than three times the energy for Ukraine to produce the same unit of economic output as the average EU country. There is still a great deal of room for increased efficiencies. Ukraine formally became a member of the EU Energy Community Treaty in September 2010 with the signature of a protocol that outlined the timetable for the implementation of many reforms. The changes sought for would require a major revamping of Ukraine’s energy policy framework. This would include: (1) progressively removing subsidies for gas consumption in households and district heating systems and move to market-based prices; (2) institute a tariff system that is consumption-based and reflects full costs, which would attract investments to modernize aging facilities and increase efficiency; (3) design and implement an effective regulatory framework that increases competition in Ukraine’s state-based companies that manage oil, gas and electricity sectors and makes it more attractive to investors; (4) Improving the investment climate, i.e. good business practices that include transparency, accountability, contract law and price regulation, is a necessary framework condition for attracting investment. There is much to be done to bolster Ukraine’s energy security. President Poroshenko, as a businessman, understands these needs. Though, it’s not clear that the Parliament is ready to implement the full suite of reforms that are required to put Ukraine on its path to energy security.
Posted on: Sat, 16 Aug 2014 23:02:02 +0000
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