Full-scale nuclear underscores fragility of Ukraine’s energy sector in the face of Russian pressure

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KYIV – Since January 30, Ukraine’s 15 nuclear reactors have shut off power, marking the longest period of full use in the country’s history scarred by the Chernobyl disaster in the Soviet era.

However, it is hardly a moment of celebration.

Rather, it is a reflection of the country’s current energy crisis, driven by a combination of soaring global natural gas and coal prices, hostile relations with Russia and short-sighted domestic politics.

Ukraine’s nuclear power plants have historically produced most of its electricity, especially in the winter. But they still had spare capacity in case other sources – such as the country’s old coal-fired generators – were taken offline for repairs for an extended period.

Not now.

With nuclear power plants operating at full capacity, Ukraine hopes to get through the rest of the heating season without having to buy significant amounts of expensive gas and coal, which would put more pressure on an already tight state budget. .

Prices for such products are expected to gradually decline as the cold weather gives way in late March or early April, said Serhiy Dyachenko, head of the Bureau of Comprehensive Analysis and Forecasting, a Kyiv-based research firm.

With relatively warm temperatures so far, winter has been on Ukraine’s side.

Russia, however, is not.

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Moscow has cut Ukraine’s energy supply as it surrounds the country on three sides with troops and weapons in what many in the West fear could be a prelude to another invasion.

Analysts say any sabotage by Moscow could lead to blackouts in Ukraine and cuts in energy-intensive heavy industry, which could destabilize the country.

Andrian Prokip, an energy analyst at the Ukrainian Institute for the Future, currently likens Ukraine’s electricity industry to a car going on a long road trip without a spare tire in the trunk. “If you have a flat tire and you don’t have a spare tire, you’re in trouble,” he said.

Ukraine faced such a situation at the end of last month when two nuclear reactors had to be disconnected from the grid for almost two days due to technical problems.

As it has done regularly in the past in such cases, the country turned to Belarus for emergency imports.

Ukraine is still connected to the electricity grid shared by Russia and Belarus and can turn to them for immediate supply in the event of a shortage. Activating reserve nuclear capacity can take about a day.

This dependence on Belarus and Russia is now a serious handicap amid strained relations with these two neighbors, who are close military allies and have tightened ties since a disputed presidential election in 2020 and a crackdown. brutal dissent has further isolated the Belarusian autocrat Alyaksandr Lukashenka from the West. .

Russia currently has more than 100,000 combat-ready troops near Ukraine’s borders, including some just beyond the Ukraine-Belarus border. Citing intelligence, US officials said Russia was planning a possible new invasion of Ukraine, eight years after seizing Crimea and fomenting separatism in the east, where the ongoing war has killed more than 13,000 people since 2014.

In October, Russia canceled an electricity auction as the energy crisis began, a move some analysts saw as an attempt to pressure Ukraine, which had intended to buy electricity during the auction.

There is no guarantee that Belarus will continue to sell electricity to Ukraine in an emergency, says Volodymyr Omelchenko, head of energy programs at the Razumkov Center. Lukashenka has sharpened his rhetoric to Ukraine.

The Ukrainian government has publicly downplayed the importance of talking about an energy crisis because it has the threat of an imminent invasion. Following a Jan. 25 meeting of the National Security and Defense Council, President Volodymyr Zelenskiy’s deputy chief of staff, Rostyslav Shurma, said the current state of the energy industry was “absolutely stable and absolutely under control”.

No money, no coal

Ukraine has generated an average of around 30-40% of its electricity needs from thermal coal since 2014. That figure fell to 24% this winter amid a coal shortage that some analysts say has increased. self-inflicted, which led to the need to increase the production of nuclear power plants. .

The Ukrainian government capped electricity prices last year, cutting revenues from high-cost coal-fired power plants and limiting their ability to source dirty fuel ahead of the winter season, Omelchenko said.

Meanwhile, natural gas prices in Europe have started to rise amid tight supply as economies reopened in 2021 following pandemic-induced shutdowns, pushing power stations across the continent to s to supply coal as a cheaper alternative.

This, in turn, drove up coal prices. To make matters worse, Russia halted coal exports to Ukraine in November, forcing it to import from abroad at extraordinarily high prices.

Ukraine’s coal shortage has forced 19 thermal power plants to close temporarily this winter. The shortfall could force Ukraine to produce more electricity from gas, especially if some of the nuclear power plants have to shut down for an extended period.

European connection

Later this month, Ukraine is set to temporarily disconnect its electricity system from the grid with Russia and Belarus for at least three days as it tests a future connection to the European grid.

Ukraine plans to fully connect to the European electricity grid next year, as part of an effort to integrate its economy with European Union countries and reduce its dependence on Russia.

Prokip says this poses a short-term danger to Ukraine. “There is a risk that Russia will try to postpone the reconnection or maybe it will refuse. In this case, Ukraine’s electricity system should work without the possibility of importing supplies,” he said.

Belarus’ recent electricity imports were equivalent to the equivalent of a large nuclear reactor, he adds.

However, fears that Russia will not provide a thermal power plant located in the part of the eastern Luhansk region controlled by the Ukrainian government have not yet materialized.

The Luhansk plant normally runs on coal, which can only be supplied by rail from the part of the province controlled by Kremlin-backed forces. It can also run on more expensive natural gas brought in from territory controlled by the Ukrainian government.

Some analysts have said Russia may refuse to deliver coal to the plant in order to squeeze Ukraine’s natural gas reserves. In January, Russia sent coal that could run the plant for another month.

Expensive gas

Ukraine consumes about 30 billion cubic meters (bcm) of gas per year, mainly for heating and industrial purposes, although a small part is used to generate electricity. The country produces about two-thirds of its total gas needs, importing the rest.

Unlike coal, Ukraine has accumulated large gas reserves heading into the 2021-22 heating season. Still, it could be forced to buy more in the event of a long cold spell and a power shortage caused by a lack of coal imports, technical problems or sabotage, analysts said.

In the event of a power shortage, Ukraine can draw on its gas reserves to generate additional electricity. However, the country hopes to avoid drawing more from its stock market for natural gas this winter as prices hover near record highs. Analysts say the cost of importing an additional one billion cubic meters would cost more than $1 billion based on current prices.

Russia’s military buildup has pushed up Ukraine’s borrowing costs and effectively cut it off from bond markets, making it difficult for Kiev to fund spending.

If he can get to the end of March without gas imports and if there is no major military offensive, everything should be clear, says Prokip.

At that point, domestic gas demand falls to the level of domestic production, he explains.

Yevhen Solonyna reported from Kyiv; Washington’s Todd Prince


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