Authorization
On 05 August 2024, the national transmission system operator NPC “Ukrenergo” held a forum “Decentralized Generation: New Opportunities for Business and Communities.” The event brought together representatives from industry authorities, businesses, relevant associations, the public, analytical centers, and other stakeholders. The UWEA was represented by the Chairman of the Board Andriy Konechenkov, Deputy Chairman for Small and Medium Wind Generation and CEO of Gresa Group Mykola Savchuk, along with representatives from other UWEA member companies.
The forum garnered significant public attention not only due to the importance of its theme but also because of Ukrenergo’s official announcement of its readiness to conduct the first long-term auctions for the procurement of ancillary services to balance the power system. According to the Chairman of the TSO’s Board, Volodymyr Kudrytskyi, the first auctions are scheduled for 15 and 22 August, at which Ukrenergo plans to purchase services for various types of reserves, signing contracts with auction winners for five years, with a one-year deferment of service provision.
“On the auction of August 15, a demand of 99 MW will be announced. We will be purchasing primary regulation services. Mainly, energy storage systems—very fast and highly maneuverable installations capable of executing dispatcher commands within 15 seconds—will be able to participate in this auction. The second auction will take place on August 22. It is larger in scale, where we will purchase 1000 MW: 579 MW for load services, meaning the capability of new power plants to support the energy system by increasing their output, and 421 MW for symmetric reserves. Gas-piston, gas-turbine units, and biomass power plants will be able to participate in this auction. These are power plants that can unload and load upon the dispatcher’s command within 15 minutes,” noted Volodymyr Kudrytskyi.
Importantly, auction winners will receive a fixed contract in euros with the possibility of service provision deferment for one year. That is, winners will have until September 2025 to build a power plant or installation capable of balancing the energy system. Moreover, the cost offered by Ukrenergo will be significantly higher than what European energy system operators pay.
NPC “Ukrenergo” believes these auctions will be a revolutionary step in developing distributed generation in Ukraine and compensating for the lost capacities due to numerous russian attacks on the energy system. According to the national TSO, for stable operation in the coming years, the national energy system needs to add:
+4 GW of new wind power capacities;
+3.8 GW of solar power capacities;
+1.4 GW of gas power capacities;
+1.1 GW of new biomass power capacities;
+0.8 GW of energy storage capacities.
However, according to Ukrenergo’s calculations, implementing these plans will require attracting around 12-13 billion EUR, which will be impossible without private investments. Therefore, there is a need to create a favorable regulatory environment and economic preconditions. Andriy Konechenkov emphasized this during the Q&A session as well: “UWEA is ready to participate in implementing these ambitious plans and provide its proposals to improve the existing legislative and regulatory framework in Ukraine. Specifically, for actively increasing renewable energy capacities and effectively applying recently adopted support mechanisms in market conditions, UWEA proposes establishing a fund to guarantee the minimum price of electricity under power purchase agreements and minimize market risks for investors in Ukraine.” Additionally, the UWEA Chairman highlighted the need for broader interaction with locals in the regions. “Unfortunately, today we face a situation where new renewable energy projects are being blocked in the regions by locals. Therefore, we need to work with people, explain and communicate,” said Andriy Konechenkov.
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