On December 12, Kyiv hosted the third annual international conference Ukrainian Energy Security Dialogue. The topic of the event in 2023 was the sustainability and recovery of the energy sector. The conference was organized by the DiXi Group think tank under the auspices of the Ministry of Energy of Ukraine and with the financial support of the International Renaissance Foundation and the Konrad Adenauer Foundation in Ukraine.
In her welcoming address, DiXi Group President Olena Pavlenko said:
“Our third Energy Security Dialogue, like last year’s, takes place against the backdrop of war, where energy is one of the targets. Everyone is working to keep light and heat on for Ukrainians – the government, companies, donors, and civil society organizations. That is why the topic of our conference this year was chosen very naturally – how to maintain the sustainability and security of the energy sector. We all need to coordinate to get through the second military winter successfully. And in the future, we need to direct our joint efforts so that the popular phrase “build back better” is not only a beautiful slogan but also comes true.”
Three panel discussions were devoted to the topic of resilience and recovery. During the discussion “Import, Export and Storage of Electricity – Tools for Strengthening the Resilience of the Power System,” Volodymyr Kudrytskyi, Chairman of the Board of Ukrenergo, emphasized that to solve the problem of electricity shortages, it is necessary to focus not only on repairing existing power units and strengthening the power system, but also on attracting investments to build new generation.
“We need to realize that it may be technically impossible to repair the repeatedly damaged and long outdated generation indefinitely. We need to focus our efforts in the medium term on attracting investments in the new generation,” said the CEO of Ukrenergo.
In his speech, Dirk Buschle, Deputy Director of the Energy Community Secretariat, outlined further plans to support Ukraine’s energy system under the Ukraine Energy Support Fund. As of the end of the year, the total amount of donor commitments to this fund reached almost EUR 400 million. The amount of funds for which contracts have been signed and procurement has been completed exceeds EUR 100 million.
According to him, donors are now showing their determination to invest in renewable energy solutions. Such investments can go beyond repairing damaged facilities to include new solar power plants, the rapid creation of new projects, and possibly also industrial-scale energy storage systems.
Alan Riley, a member of the DiXi Group Supervisory Board and Senior Fellow at the Global Energy Center at the Atlantic Council, emphasized that the situation in Ukraine’s energy system in terms of electricity production is worse than last winter. According to him, we need to work on increasing import capacity this winter.
“In the long term, we need to think through a comprehensive strategy to significantly increase electricity generation capacity, to actually create a parallel energy system that the Russians will not be so well aware of. This implies a significant increase in energy assets, in particular gas turbines, and their placement in sufficient numbers throughout the grid in places where the Russians do not expect them. So that they can work in a distributed manner and can be effectively protected,” the speaker emphasized.
During the second discussion of the conference, “Decarbonization as a tool and a challenge for sustainability: how to balance the future of the energy system,” Svitlana Hrynchuk, Deputy Minister of Energy of Ukraine, noted that modernization requires taking care of important areas, including decentralization of the energy sector and a corresponding reduction in its vulnerability to attacks, as well as increasing the flexibility of the energy system.
“Another goal we set for Ukraine’s energy sector as part of the European energy system is to achieve climate neutrality by 2050. This cannot be achieved without developing clean, low-carbon energy. This means the development of green energy, distributed renewable generation, as well as the introduction of new nuclear technologies that will also maintain system stability and replace old carbon technologies,” summarized the Deputy Energy Minister.
Oleksiy Sobolev, Deputy Minister of Economy, emphasized that the Ministry is currently working on the most important steps to be taken to accelerate economic growth, and these steps are closely related to the energy sector.
“We must clearly demonstrate the signal that Ukraine is open to private investment. To do this, we need both new policies and new projects. It can be oil and gas development, or it can be green initiatives. For example, energy projects aimed at decarbonization. Such investment projects should show that Ukraine is a reliable partner for Europe in achieving the global goal of reducing emissions. For example, our country can produce green steel and export it,” he said.
Yevhen Didichenko, co-investor and Chief Innovation Officer of KNESS Group, shared his vision of the necessary government support mechanisms for the development of clean energy. He emphasized that the main lever that affects the cost of energy is access to cheap capital. And by introducing state support in the form of annual balanced quotas for the development of renewable energy sources, maneuvering capacities and energy storage facilities, investors would have access, possibly on a competitive basis, to cheap debt capital.
Gevorg Sargsyan, Head of the World Bank Resident Representative Office in Ukraine, reminded that the World Bank and partners estimate that Ukraine’s recovery will cost about $411 billion. (as of February 24, 2023). According to him, this figure is growing in all sectors, including energy.
“This is a staggering figure. But the good news is that a recent IFC/World Bank report shows that with the right reforms, most of the energy needs can be met by the private sector, unlike many other sectors. According to the report, reforms in these sectors can create conditions for private sector investment of $36 billion to meet the needs of the RDNA2 (ed. Second Rapid Damage and Recovery Assessment), as well as create additional investment opportunities worth $132 billion,” he emphasized during his speech.
Gevorg Sargsyan also noted that an important element of energy recovery should be the establishment of liquidity in the sector, including pricing, tariff setting, transit and connection fees, etc.
In his turn, Torsten Wollert, Energy Adviser at the EU Delegation to Ukraine, said that the Regulator’s work should be improved to ensure a quality recovery of the energy sector. In his opinion, investment decisions remain very risky not only because of the war (because military risks can be taken into account, as some governments already do), but also because of the unpredictability of regulatory risks. Another aspect is that Ukraine should embark on the path of agreeing on an economically sound approach to addressing the issue of carbon pricing in connection with the full implementation of the Border Carbon Adjustment Mechanism (CBAM) in 2026.
A separate part of the event was focused on the prospects for energy planning and other local measures during the panel “Local Generation for Sustainability – Opportunities and Needs of Regions”.
Maryna Denysiuk, Head of the Restoration Department at the Reforms Delivery Office of the Cabinet of Ministers of Ukraine, spoke about the role of communities in ensuring the resilience and restoration of the energy system.
“Communities that formulate their own development and recovery strategy, identify priorities and a list of specific projects, including those using green technologies, will lay the foundation for attracting funding from partners and receive appropriate support at the state level,” the expert said.
Yuriy Katsiyon, Deputy Chairman of the Board of Oschadbank, emphasized that municipalities, in addition to private business, should play a major role in the development of decentralized generation.
“For municipalities, this area of development will solve four key tasks at once: uninterrupted energy supply for residents and social facilities, reduced costs for heat and electricity, improved local ecology, and the possibility of generating additional income. And Oschadbank is ready to financially support such projects,” he said.
According to Janez Kopač, former Director of the Energy Community Secretariat, member of the Supervisory Board of DiXi Group, it is important to have local strategies to strengthen the energy resilience of communities. In addition, each community administration should have a separate energy manager, that is, someone who takes care of the implementation of the strategy.
During the discussion, Viktoriia Pysmenna, General Counsel of Elementum Energy, shared her experience of investing in new facilities in Ukraine, particularly during the war. This year, the company completed the second stage of the Dniester Wind Farm (the first stage was commissioned in May 2021), which increased energy resilience in the region. In his turn, Maksym Syniavin, Deputy Mayor of Trostianets, spoke about increasing the city’s energy independence after de-occupation, including the installation of solar stations with the support of international partners to supply energy to the hospital. In the future, the city plans to install solar stations at other critical infrastructure facilities.
The closing remarks at the conference were delivered by U.S. diplomat Kurt Volker, former U.S. Permanent Representative to NATO and U.S. Special Representative for Ukraine. He emphasized that the United States will continue to support Ukraine’s energy sector.
“I believe that energy can and will become a leading industry in Ukraine. This, in turn, will create opportunities for Ukraine’s integration into the EU. Ukraine is a fairly powerful energy supplier compared to most European countries. It has a more favorable position among the countries with which it borders and can take care of renewable energy on its own. Of course, there are certain technical challenges, such as infrastructure upgrades, energy storage systems, etc. But I believe that you can do it. You have the capacity to stimulate energy production that can be exported to the EU,” he emphasized.
Kurt Volker also assured that the American people will continue to support Ukraine in other priority areas, including military assistance.
The media partners of the event are the American Chamber of Commerce in Ukraine, the World Bank, the Energy Community, Oschadbank, the U.S.-Ukraine Business Council (USUBC), and the Ukrainian PR Army. Media support was provided by Forbes Ukraine and Espresso TV.
