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Ukraine

Energy storage regulation in Ukraine

Table of contents
  1. What electricity storage projects have been commissioned in your jurisdiction to date?
  2. What electricity storage projects are anticipated in your jurisdiction in coming years?
  3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?
  4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.
  5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage
Ukraine

1. What electricity storage projects have been commissioned in your jurisdiction to date?

Hydropower is the only large-scale and cost-efficient storage technology available in Ukraine today. Pumped storage hydro power plants with reservoirs are still the only technology offering economically viable large-scale energy storage in Ukraine. Further development of pumped storage will play a major role in securing system stability in the future.

Currently the following pumped storage projects are operating in Ukraine

Plant

Capacity (MW)

Kyivska Pumped Storage Power Plant (Open-loop pumped hydro storage) 


Operator: state (hydro power) company “Ukrhydroenergo” 


Kyivska PSPP and Kyivska Hydro Power Plant at Dnieper river are two integrated power plants. Water sent from the upper reservoir generates electricity with three 33.3 MW conventional hydroelectric generators and three 45 MW reversible pump-generators. The first PSPP generator was commissioned in 1970, the last in 1972.

135

Tashlykska Pumped Storage Power Plant (Open-loop pumped hydro storage) 


Operator: state (nuclear power) company “Energoatom” 


Tashlykska PSPP on the Southern Bug River is a part of the South-Ukrainian Power Complex (which also includes the South Ukrainian Nuclear Power Plant and Oleksandrivska Hydro Power Plant) which was designed to cover peak loads in the southwestern part of the Power System of Ukraine. It also provides the reliable basic operation mode of South-Ukrainian NPP. The first unit was commissioned in December 2006, the second in August 2007. Works on the commissioning of the third unit and completion of the first stage of Tashlyk PSP are in progress at the moment.

320 (to be further increased up to 900)

2. What electricity storage projects are anticipated in your jurisdiction in coming years?

Pumped storage can and should be further developed in Ukraine as there is still significant potential to be optimised and developed. In order to benefit from Ukraine’s remaining pumped storage potential, existing plants will have to be optimised and new ones will have to be built. 

Plant

Capacity (MW)

Dniester Pumped Storage Power Plant (Open-loop pumped hydro storage) 


Operator: Ukrhydroenergo 


The Dniester PSPP uses the Dniester River 8 km northeast of Sokyriany in Chernivtsi Oblast. Currently, two of the planned seven generators are operational. In December 2015 the third generator was launched in a test mode, it is to be commissioned in 2016.

750 (to be further increased up to 2,268) 

Kanivska Pumped Storage Power Plant (Open-loop pumped hydro storage) 


Operator: Ukrhydroenergo 


Construction of Kanivska PSPP on the Dnieper River started in 1984. Due to a lack of financing and the collapse of the Soviet Union in 1991, construction was terminated. In 2013 the construction project was adapted to the Power System of Ukraine and re-approved. 
In the Ukrainian “Energy Strategy through 2030” Kanivska PSPP plays a significant role for load shifting in order to provide sufficient electric energy during peak hours. Concerns have been raised that the operation of the Kaniv PSP will have a negative impact on the river reservoir.

1,000

3. Is there any specific legislation/regulation or programme that relates to energy storage in your jurisdiction?

Ukrainian law does not provide for any specific regulations or programmes related to energy storage projects in general or to pumped storage hydro power plants in particular.

Development of the new projects is funded out of the operators’ investment programmes. Such programmes (both for Ukrhydroenergo and Energoatom) are adopted by the state regulator (as funded mostly from the income generated by the operators and debt funds obtained from the World Bank).

Currently the tariffs for electricity produced by pumped storage projects are established by the state regulator according to the relevant methodology. The tariffs are double rated and include the rate for electricity produced by the power plant (per 1kWh, established on an annual basis) and the rate for the installed capacity (per 1 MW, updated quarterly).

4. Please give examples of challenges facing energy storage projects in your jurisdiction and how current projects have overcome these challenges.

There are a number of challenges for development of the energy storage projects in Ukraine, including:

  • Single-buyer model of the electricity market in Ukraine and overregulation. Under the current market structure, the electricity generated by power plants is traded through the mandatory pool – the Wholesale Electricity Market of Ukraine (“WEM”), operated by the state company “Energorynok”, which off-takes the electricity produced in the country. The price formation is mostly regulated (a non-transparent bidding mechanism is applied only to thermal power plants). However, the situation is changing and the new liberalised electricity market is to be implemented from 1 July 2017 (as envisaged by the Law on Electricity Market). The new model introduces direct electricity sales, market-driven prices and should significantly enhance competition at the market.
  • Absence of the effective market of ancillary services. Pumped storage has the potential to bring added value through ancillary services. However, a lack of the national energy policy has a significant impact on the value of such services, including those related to energy storage. Currently in Ukraine only two services may be traded at the market for ancillary services: (i) supplementary regulation (to be ensured by hydro power plants under the regulated prices) and (ii) tertiary regulation (to be ensured primarily by thermal power plants on a competitive basis). Starting from 1 July 2017 the following ancillary services may also be traded at the market (however, it is still not clear how prices and/or tariffs for such services will be calculated):
    • services for primary, supplementary and tertiary regulation to accumulate a reserve of the demand management capacity;
    • services for accumulating reserves of the new and/or reconstructed generation capacities;
    • services for regulation of voltage and reactive power;
    • services for resuming operation of the Unified Power System of Ukraine after system collapses;
    • any other services as may be provided by the market rules and necessary for load frequency control, maintenance of the balance of voltage and power in the Unified Power System, quality of the supplied electricity.
  • Absence of the consistent national policy and effective programs for the energy storage projects. Another significant challenge facing the energy storage project developers is absence of the adequate legal mechanisms which would ensure successful implementation of the energy storage projects in Ukraine by private investors. It is worth noting that in the absence of detailed revenue structures, the existing pumped storage projects in Ukraine are developed exclusively by the state companies. The new national policy should include financial incentives and guarantees to provide certainty in the long-term revenue for the investors, as currently very few financial institutions are willing to finance these types of long-lead projects.

5. What are the main entities in the electricity sector and what are their roles or expected roles in relation to energy storage

The Ministry of Energy and Coal Industry is in charge of developing the energy sector’s strategy and its regulatory framework. The Ministry is also responsible for maintaining the integrity and reliability of the energy system. It participates in the forecasting and scheduling of power generation and develops and implements investment policy in the industry.

The National Commission on State Regulation of the Energy Sector and Municipal Services is the energy industry regulator. The Regulator has several roles, including:

  • issuance of the licences for power generation and supply;
  • setting tariffs for electricity sold from pumped storage to Energorynok; and
  • approval of the investment programmes for Ukrhydroenergo and Energoatom.

Ukrenergo is a state company, which is managed by the Ministry of Energy and the Coal Industry. Ukrenergo is an operator of the Unified Energy System of Ukraine and is responsible for its stable functioning, power transmission via high-voltage power lines within the territory of Ukraine. Ukrenergo also is responsible for cross-border electricity transmission and synchronous interconnection of the Ukrainian power system with the Russian and Moldavian energy systems and maintenance of the so-called Burshtyn Island, which is synchronised with the UCTE European power grid.

Ukrhydroenergo is a state-owned company, an operator of the seven hydro power projects and three pumped storage projects in Ukraine.

Energoatom is a state-owned operator of four nuclear power projects in Ukraine, which also owns and operates 13 pumped storage project as a part of its nuclear power complex.