Business offers the government an emergency response to ensure the resilience of Ukraine’s energy system
To the President of Ukraine
To the Prime Minister of Ukraine
Chairman of the Verkhovna Rada of Ukraine
Chairman of the Parliamentary Committee on Energy
and Housing and Communal Services
Regarding the situation in the energy sector of Ukraine
The Ukrainian Business Council, which includes 116 business associations from all sectors of the economy, presents its compliments and addresses you with the following:
As a result of massive attacks and constant shelling by the Russian Federation on the energy infrastructure, a catastrophic situation with energy security has developed. As of May 2024, the loss of generating capacities in the power system amounted to more than 8 GW (over 40%), most of which is due to shunting generation facilities (TPPs and HPPs).
This causes significant losses to Ukrainian entrepreneurs and citizens, especially the manufacturing sector, and the impact of the outages on the Ukrainian economy is extremely negative.
In this regard, the issue of prompt measures to balance the energy system is becoming acute. In addition, in the context of the ongoing military aggression of the Russian Federation, the trunk and distribution networks are under the threat of further shelling and systemic damage. With each such shelling, the reliability, flexibility and other important performance indicators of the power system deteriorate, threatening to imbalance. Keeping the balance in such a system is becoming increasingly difficult. And any emergency situation can turn into a blackout.
All of this means that the centralized model of the power system has exhausted itself, as it remains a convenient target for enemy systemic attacks with all the consequences. The existing energy system needs to be transformed with the development of decentralized systems that include low-capacity distributed generation facilities (up to 20 MW each).
Given the stochastic nature of RES generation and the existing shortage of maneuvering capacities in the power system, further development of the RES sector requires solutions to ensure sufficient balancing capacities.
It is critically important at this time to implement a set of measures to ensure the sustainability of Ukraine’s energy system, in particular:
- As soon as possible, provide ultra-simplified rules for connecting any generation to both businesses and citizens, provide for a simplified procedure for connecting to gas and electricity networks adapted to the conditions of the post-war period, regulating this issue at the level of the NEURC bylaws. The development of distributed generation (generating units of up to 20 MW) should also be prioritized, as it is in line with the transformation task. Revise and simplify the license conditions and issuance of licenses for the storage of fuel for own consumption.
- As soon as possible, but no longer than one month, establish a 0% duty and VAT rate on the import, manufacture and sale of all energy equipment during martial law, and minimize all customs procedures. We propose to establish such rates for both generating equipment (generators, solar panels, wind turbines, etc.) and devices for energy storage and conversion (charging stations, power banks, lithium cells, inverters, etc.).
- Immediately ensure the intensive and balanced development of renewable energy sources – at the level of bylaws regulating the electricity market – to provide for the connection of stochastic generation facilities, including solar and wind power plants that are connected for the purpose of further selling the generated energy to the market, with the requirement to ensure a minimum technically sound level of balancing capacities for the own generation of such facilities. Simplify the procedure for allocating land for the purpose of building solar and wind power plants.
- Expand loan programs for the purchase of energy equipment by citizens and businesses, and attract financial resources from the EU and the US to reduce the cost of loans.
- To develop the energy storage sector and bioenergy generation facilities (CHP, TPP, biogas complexes), urgently remove bureaucratic obstacles and implement measures that will unblock Ukrainian and foreign investment in this sector.
- Stimulate the development of microgrids and local energy communities – expand the criteria for classifying systems to become small distribution systems and make appropriate amendments to the Law of Ukraine “On the Electricity Market,” in particular Article 49. Provide for simplified conditions for the regulation of small distribution systems based on a differential approach – depending on compliance with various criteria defined by law.
- Immediately remove any prohibitions for communities to invest in energy generating and balancing capacities, and encourage communities to become energy independent, following the example of Khmelnytskyi and Zhytomyr.
- Within a few months, provide state funding for subsidies to insure against military risks for investors and owners who install generation facilities, including distributed low-capacity generation.
- Intensify efforts to expand trade between Ukraine and the continental European region in electricity in accordance with ENTSO-E requirements and natural gas in accordance with ENTSO-G requirements. To this end, continue measures to gradually increase the capacity of interconnectors.
- Resume the reform of corporatization of state-owned companies in the energy sector, promote the development of oil and gas and critical minerals projects by reviewing the existing conditions for participation in auctions and amend the legislation to increase the interest of both Ukrainian and international investors. Simplify public-private partnerships in energy supply as much as possible
- Immediately provide 100% of end users with metering of all types of energy, primarily in pursuance of the Law of Ukraine “On Commercial Metering of Heat and Water Supply”, and all houses and buildings connected to district heating networks should be equipped with individual heating stations;
Ukrainian business calls on the authorities to discuss energy security issues with the participation of representatives of the Cabinet of Ministers, the Verkhovna Rada, the Presidential Administration, think tanks, and leading business associations, to create a working group to respond to the problems and implement the measures outlined in the appeal as soon as possible.
Sincerely yours
Members of the Ukrainian Business Council
