Ukraine’s power sector withstands winter challenges, but risks remain

Despite all concerns, attacks, and market issues such as debts, the current situation looks better than even the most optimistic forecasts made in the summer or autumn. In almost two months of winter, the scale of power outages has been minimal.

There are, of course, reasons for this.

On the one hand, the increased number of air defense systems has helped minimize losses from attacks. On the other hand, the weather has clearly been on Ukraine's side — most winter weeks have seen above-freezing temperatures, leading to lower electricity demand.

The fact that temperatures in January reached +8°C on some days has definitely contributed to the absence of scheduled power outages.

Over the past year, new gas and solar generation capacities have been installed, though this increase cannot be called a boom, despite significantly simplified conditions for connection and commissioning of new facilities. As I have previously mentioned, there are two key reasons for this: a lack of understanding of energy market business processes by non-core businesses and market distortions caused by debt.

Unfortunately, wind power generation, which has several advantages over gas and solar power, showed very little growth last year. In 2024, Ukraine installed up to 44.6 MW of wind power capacity, compared to 238 MW in 2023. Meanwhile, solar power capacity grew by approximately 800 MW last year. This increase was largely facilitated by the removal of VAT and import duties on solar panels and other energy equipment in the summer of 2024. However, there were challenges in introducing incentives for wind energy. Parliament is now preparing measures to address the slow pace of wind energy development.

The growth in gas-fired power generation has naturally led to an increase in gas consumption. In this context, the rise in gas production by Naftogaz companies is a positive development.

Last year, Naftogaz’s subsidiary, Ukrgazvydobuvannya, increased its commercial natural gas production by 5% to 13.9 billion cubic meters, up from 13.2 billion in 2023. The company commissioned 83 new wells, including 60 production wells and 23 exploratory wells.

Of course, the positive aspects of the first half of winter should not lead to complacency. Air defense systems remain insufficient to fully protect against attacks. Additionally, February — traditionally the coldest month of winter in Ukraine — could still bring a cold snap.

It is too early to relax. Let’s remember the beginning of 2024 when many believed, given the approaching end of winter and the absence of attacks, that the strikes had ceased. However, on March 22, 2024, a new large-scale attack campaign began, leading to prolonged outages.

Source

About the author: Andrian Prokip, energy analyst at the Ukrainian Institute for the Future.

The editorial team does not necessarily share the opinions expressed by blog authors.