Economic reasons for a green reconstruction programme for Ukraine

Ukraine faces massive reconstruction needs in the aftermath of the Russian invasion. A reconstruction programme should be focussed on low-carbon technologies taking into account the cost reduction of green technologies, Ukraine’s climate policy obligations and EU accession perspective, elevated global fossil energy prices and price volatility, as well as energy independence from Russia.

Investment needs for reaching the 2030 NDC targets: An explanatory note

Ukraine needs €47bn of additional investments to reach 2NDC emission targets. The €102bn figure often mentioned includes €55bn of regular investment unrelated to NDC. Ukraine’s investment need still is high, but not as high as often mentioned. Additionally, efforts must be undertaken to re-channel some of the €55bn into “green” projects. A carbon price would be a crucial instrument to achieve this.

The Ukrainian Housing and Utilities Subsidy (HUS): Targeting and Coverage

Summary: The Housing and Utilities Subsidy (HUS) is a social transfer meant to assist low-income individuals in the payment of housing and communal services. However, and despite its heavy weight on the government budget, many poor households are not awarded the HUS (only 50% of poor households received the HUS in 2018, and only 28%

Implementing the National Emissions Reduction Plan (NERP): How should Ukraine’s power plant park look like in 2033?

Ukraine risks significantly falling behind on implementing the National Emission Reduction Plan (NERP), a binding obligation towards the Energy Community (EnC). A debate about a possible revision of the NERP has started in Ukraine but so far focuses on relaxing the requirements of the NERP, including the deadlines already extended especially for Ukraine.

Energy Modeling Workshop

On June 29th and 30th, 60 Ukrainian participants from academia, the government, private companies and public energy agencies joined Low Carbon Ukraine and the Kyiv School of Energy Policy for a workshop on energy and electricity system modeling.

Rouven Stubbe, Georg Zachmann: Towards a green modernisation programme for Ukraine

Ukraine recently committed to carbon neutrality in 2060 and signalled support for the European Green Deal aiming for net zero emissions by 2050. On the course of its decarbonisation and the country’s path towards the EU, it will need to adopt the stricter environmental rules and standards introduced by the Green Deal. At the same time, it will need to restructure its coal sector, which is heavily subsidised, loss-making and environmentally harmful.

Adequacy of the electricity system development implied in the NDC2-draft

Ukraine’s draft 2nd NDC (NDC2) envisions an economy-wide reduction of emissions from ca. 340 MtCO2eq in 2018 to ca. 290 MtCO2eq in 2030. It projects that the electricity sector will ensure roughly 45% of the total projected emission reductions from now until 2030.

Policy Event “Reaching Ukraine’s energy and climate targets”

Our policy event “Reaching Ukraine’s energy and climate targets”, organized together with the NGO “DixiGroup” in Kyiv, was a complete success. 240 participants attended the meeting, and another 200+ visitors watched the livestreams.

Low-Carbon Transport Policies for Ukraine

Greenhouse gas emissions from transport have been slightly increasing since the year 2000. With the right policies, Ukraine can further decrease transport emissions and reach its mid-and long-term climate goals.

Towards a decarbonisation of Ukraine’s steel sector

This paper considers the potential for decarbonizing Ukraine’s steel sector and gives policy recommendations that take into account the challenging international environment Ukraine’s steel sector finds itself in.

A socially sustainable coal phase-out in Ukraine

A coal phase-out is an inevitable step for Ukraine on its decarbonization path. This paper proposes accompanying measures for the phase-out, aimed at dampening its negative impact.

Reforming Ukraine’s electricity market

We assess the recent market development after the first year of market opening, and address a number of issues that we deem critical for ensuring the development of a stable, transparent and competitive market.

A revision of Ukraine’s Carbon Tax

Ukraine’s current carbon tax is too low to effectively reduce emissions. We propose a carbon tax of EUR 39/t CO2 and discuss the implications.

Financing options for “green” policy measures

This paper proposes tailor-made green financing schemes consisting of public and private funding. We elaborate on certain financial instruments typical for green measures such as green bonds.

Energy Strategy 2035. Implementation progress Jun-Dec 2020

Renewable electricity generation has reached record level. A decline in nuclear output could be observed in May 2020 that was not justified by technical or economic reasons, lower electricity demand or RES deployment.

NPP Analysis – May 2020

NPP electricity generation in May was significantly below the economic efficient level. This cannot be explained by Covid-related demand decrease or a high RES generation share.

Regulating Curtailment

Curtailing and compensating RES can be cheaper than taking up 100% of RES electricity through investment into conventional plant park or transmission.

Seven months of market opening – stocktaking

Frequent changes to the legal framework fail to address the structural problems. Loopholes undermine the market and speed up debts’ accumulation. Extended data transparency is an upside of the reform.

Energy Strategy 2035. Implementation progress Nov 2019 – Feb 2020

Progress of Ukraine’s 2050 Green Energy Transition Concept. Legislative amendments to the electricity market. FIT restructuring issues. Signing of gas transit deal. Regulatory framework on energy storage. Carbon taxation.

Recommendations on energy storage

Ukraine’s electricity market does not need state support for energy storage projects. It needs a properly working electricity market aligned with the EU 4th Energy Package to boost the flexibility of the grid.

Electricity for all

Basic technological & economic features of electricity markets (in EU countries). Challenges in market development: new forms of trading, sector coupling and digitalisation.

LCU Workshop on energy markets held in Kyiv

On December 14th, 2019, LCU experts gave an introduction into aspects of energy and climate policies to a group of experts and parliamentarians, most of them members of the energy committee of the Ukrainian Verkhovna Rada. The aim was to provide newly elected MPs with fundamental expertise on the complex topic of electricity markets, to discuss specific challenges of integrating renewable energy sources into Ukraine‘s energy system, and to look into challenges of coal phase-out in Ukraine.

Renewable Energy in Ukraine

Further RES expansion is needed to replace the ageing power plant fleet and to sustain energy security. To account for a higher variability in the system, different instruments can be utilized.

RES quotas for 2020 – 2024

Different sets of RES quotas are analyzed. In the best-case scenario, 3 GW wind & solar are built and RES quotas set at 1.6 GW, enabling a RES share above 20% in 2025.

CO2 taxation in Ukraine

Tax revenues from a potential upstream carbon tax in Ukraine of 27UAH/t CO2 are estimated between UAH 5.6 and 6.1 bln. Price increases from taxation are strongest for coal (+3.5%-4.3%).

Energy Strategy 2035. Implementation progress Aug-Nov 2019

Progress on gas TSO unbundling and certification, corporatisation and certification of Ukrenergo, licensing in upstream sector. Analysis and recommendations on ESU action plan implementation.

Limiting the cost of feed-in-tariff subsidies

Assessment of feed-in-tariff, related expenditures for RES, current scheme of financing, impact on state budget and electricity prices. Analysis of risks of retroactive change in support scheme.

Russian Ukrainian Electricity Trade

Increasing electricity imports from Russia can help to improve competition, reduce prices and reduce emissions. But it should be regulated to minimize adverse effects.

Developments on the electricity market Sep 2019

Market power remains strong and starts exploiting balancing market. Changes to PSO does not help the competition. Prices in the IPS start to drop as nuclear power ramps up production.

Aspects of RES-support in Ukraine

The Ukrainian electricity system can absorb fluctuations of higher RES shares and support a further expansion with RES auctions.

Limiting the cost of feed-in-tariff subsidies

The rising cost of RE support pushes electricity prices beyond affordable level in Ukraine. Yet the revision of the established FIT scheme should be carefully designed and consider potential risks.

The Benefits of RES Curtailment in Ukraine

Analysis of curtailment as a flexibility option in the short and long run, including mitigation of the ‘green-coal paradox’ and comparison with hardware solutions. Overview of curtailment experiences across the world.

Developments on the electricity market Jul-Aug 2019

Prices are stable as the market shows no signs of effective competition. Increase of import to the BEI does not affect prices. Price caps are higher than the estimated marginal costs of coal generators.

Energy Strategy 2035. Implementation progress Apr-Jul 2019

Progress on ensuring of the NEURC’s independance, unbundling and PSO on gas market, and launching the NECP development process. Key priorities in energy policy for the new administration.

The first two weeks of market opening

Ukraine has finally opened its electricity market despite many concerns. Prices are high, some market segments do not work properly, and the smaller BEI trading zone is under the reign of monopoly.

Challenges of the Electricity Market Reform

Analysis of implementation challenges related to wholesale market reform, in particular preparation, coordination, issues of market design, concentration and liquidity.

Debts in the Ukrainian Electricity System

Accumulated debt poses a major obstacle on the way towards a new electricity market. A solution to this problem needs to be found before the new market design is introduced.

Energy Strategy 2035. Implementation progress Feb-Apr 2019

Developments on the law introducing RES-e auctions, launch of daily balancing on gas market and Naftogaz issues. Deep dives into the issue of debts in the Ukrainian electricity system and progress with electricity market reform.

RES auctions in Ukraine Quota Sizing

25% of electricity generation can come from Renewables in 2035 when annually installing around 500MW, what seems realistically as of today.

Local curtailment charges for RES

The concentration of wind and solar plants in high-yield regions increases balancing needs and grid constraints. We recommend introducing a transparent curtailment charge mechanism.

Energy and Climate Targets – An Overview

Key messages: Multitude of energy & climate obligations must be coordinatedRES share surpasses unambitious targetsDiffering indicators in national strategies – risk to cause confusionProgress in energy intensity – but still a long way aheadEmission targets are not ambitious

The Draft Law on Renewable Energy Sources

Recommendations: Dynamically adjusting FIT based on project duration. Incentives for a smart & grid-friendly location selection. FIT reduction in 2019 to contain costs.

Stabilizing the support for renewables

Ukraine is about to adopt changes to the RE support law and introduce auction-based remuneration scheme. But is it not too late? Will the conservative changes to FIT help to contain the expensive boom?

Energy Strategy 2035. Implementation progress Nov 18 – Jan 19

Changes in the environmental taxes and related challenges, new PSO rules on the gas market and supply billing issues. Deep dive into the draft law on new RES support scheme (auctions) and introduction to Ukraine’s National Energy and Climate Plan.

Balancing of fluctuating renewable power sources

Based on a LCU’s Optimised Dispatch Model (ODM), we assess that the current Ukrainian power system can balance fluctuations of up to 15 GW of wind and solar (in-depth analysis).

Location selection and wind solar mix

Wind and solar installations should be distributed over the country. Policy should strive for an optimal mix of wind and solar installations in order to reduce system cost.

Balancing Renewables in Ukraine

Based on a LCU’s Optimised Dispatch Model (ODM), we assess that the current Ukrainian power system can balance fluctuations of up to 15 GW of wind and solar (overview of results).