Rolling blackouts, rate hikes, and energy sector’s future — expert interview

Dnipro HPP
Dnipro HPP

Oleksandr Kharchenko, Director of the Energy Industry Research Center (EIR Center), spoke in an interview with NV Radio on June 2 about the impact of Russian air strikes on the Dnipro Hydroelectric Power Plant (HPP), the winter season for Ukraine’s energy industry, and rising electricity prices for households.

NV: We had a very difficult situation even before the latest Russian strikes. How bad has it gotten? Two HPPs and other facilities were attacked this weekend.

Kharchenko: There was quite a lot [of damage done] both yesterday and the day before yesterday. And, unfortunately, there’s additional damage to the power grid that makes the situation very difficult tactically. Certain critical issues will be fixed quite quickly, i.e. we should get out of the emergency shutdown mode within two or three days at the most. But in general, the situation with the lack of generation capacity won’t be improved by this.

Electricity generation, unfortunately, has been significantly affected, and it’s impossible to restore it quickly. We have what we have. And we’ll definitely have the same situation for another two or two and a half years.

NV: Zaporizhzhya regional governor Ivan Fedorov says the Dnipro HPP building is in critical condition. Does that mean it’s likely to collapse? Is the dam in good condition, with just the generator room being significantly damaged?

Kharchenko: I can hardly comment on the officials’ tantrums. Therefore, it’s better for you to contact Mr. Fedorov for what exactly he wanted to say.

I understand the dam is absolutely fine as a hydroengineering facility. Power generation at the facility is another matter.

I won’t give details because I’m certain that giving such details is wrong. Moreover, I believe the governor said too much and, in particular, things that shouldn’t have been said in any case. Let those who are responsible for information policy at the state level be cautious, because we can’t give too much information to the enemy about what exactly they succeeded or failed to do.

NV: Do you think this is just hysteria?

Kharchenko: Honestly, I can’t put it any other way. I spoke with people at the facility. And such comments that were in the official field, I can’t describe as anything else than hysteria.

Read also: Ukrainians face more power outages as Russia continues to hammer Ukraine's energy grid

NV: The government raised electricity rates for households by over 60% amid these Russian attacks, to UAH 4.32/kWh ($0.11/kWh). How would you describe the expected effectiveness of these measures?

Kharchenko: I criticized the preparation of this decision as much as I could. And it has been adopted in the worst possible version.

The money will go to two companies: 15% will go to Ukrhydroenergo [hydroelectric operator], and I have no objections there — Ukrhydroenergo needs money for repairs. But 85% will go to Energoatom [nuclear energy operator]. And to be honest, this is just some kind of delusion, because Energoatom hasn’t been affected and there are no objects that need to be restored. Pardon my language, this is flushing money down the toilet, imitating the construction of new nuclear reactors, which, even under an ideal situation, may appear no earlier than in 10-15 years.

This is their normal construction period. The last reactors of this type were built in the United States, one over 17 years and the other over 21 years. They were completed a month ago and cost $15 billion each.

Accordingly, I cannot support what Energoatom is doing in any way. I believe this is explicitly harmful to the state’s interests in terms of energy security. And what the Energy Ministry is doing and saying publicly is just an outright lie.

NV: We can read a lot of indignation on social media that everything will go, they say, to enrich oligarchs, owners of various power plants…

Kharchenko: This won’t enrich the oligarchs. They won’t get anything out of it, of that people may rest assured. Everything will be poured into Energoatom.

And then we have to ask the question, when will the corruption in Energoatom finally be stopped? Because when you read the analysis of think tanks on corruption in state-owned companies, Energoatom is a leader in that regard.

The second [question]: when will the money for the construction of nebulous nuclear reactors, which won’t contribute anything to the Ukrainian power grid in the coming years, be diverted?

Read also: How Ukraine will cope with electricity shortages this summer — analysis

NV: Commenting on this situation, Energy Ministry adviser Lana Zerkal said Ukraine’s budget has UAH 200 million ($4.9 million) from the World Bank to conduct urgent repairs before this winter. The partners could increase this amount by UAH 300 million ($7.4 million) if Ukraine applies for a low-interest loan, she said. But the government didn’t ask for that, and instead increased tariffs. How do you comment?

Kharchenko: I won’t comment in any way. I have no information about money from donors to support us in the winter season. Moreover, even with the most efficient work, winter will be here by the time they allocate money, so I wouldn’t rely too much on international partners now.

They simply have neither mechanisms, nor technical understanding of what or how to do. And they’re afraid of energy issues. Just because not energy specialists are dealing with Ukraine’s support, but diplomats who don’t understand at all what should be done technically and how. There’s no single policy from the Ukrainian side that would say we’re doing this and this. Because the Energy Ministry is building new reactors with Energoatom, while more sane people are saying that we urgently need combustion gas piston and gas turbine generation, which must be installed right now within a year or two, as soon as possible to overcome the shortage. But these people aren’t heard because of the ministry’s stance.

And the result is that international donors say: “We won’t give anything, we’ll wait until they figure out what they need.”

NV: The heating season is just around the corner, but Ukrainian officials avoid communicating how challenging it will be.

Kharchenko: Everyone understands what’s coming perfectly, they just don’t want to say. Look, it’s all calculated. It’s clear what we can repair by winter, at least theoretically. The numbers are clear. It’s not clear what the consequences of additional attacks will be, that’s the uncertainty. And it’s not quite clear, for several facilities, whether they could be repaired or not, which will depend on how quickly certain equipment will be delivered. And that is yet to be determined definitively.

But in general, I can assure you 100% that rolling blackouts will take place, at least three to four hours a day. That’s the ideal scenario. Kyiv needs to prepare for seven to eight hours a day, and it could be worse.

Read also: Energy Ministry warns Ukrainians of rolling blackouts this evening

NV: All experts say July will be the most difficult month for Ukraine. It will be a stress test, a dress rehearsal before winter. That is, can rolling blackouts for seven to eight hours take place in July as well?

Kharchenko: There’s a certain document, which is a state secret — Energatom’s reactor maintenance schedule. The worst month, in terms of the amount available in the generation system, will be either July or August. But this is a state secret, so of course no one will tell you exactly.

But it’s known that rolling blackouts will take place in July and August, as well as in the winter. That much is a given.

NV: What would you advise city dwellers regarding heating and water supply?

Kharchenko: They’ll have heating, and critical infrastructure will remain powered in large cities. Many people are working on it now. Unfortunately, they’re insufficiently coordinated by the government. Unfortunately, the government remains largely disengaged on this matter.

But from the mayors’ work, from what’s happening in the regions, I see how everyone is preparing for winter. And they’re preparing correctly, for a very difficult and very critical winter. They’re preparing heating systems, using generators to power water pumps. Many mayors are engaged in this. I don’t know if all of them because I just don’t have information on all of them. But a lot of work is currently being done in this regard, particularly in Kyiv. That’s why I’m not worried about the cities. I’m sure they’ll have critical infrastructure operational, both heating and water supply.

Here I advise all residents to find out how the heating and water supply works in their buildings. If these are indoor pumps, they should provide them with backup generators, that is not expensive. But it will make life much better for you in the winter. Because the situation may happen when the heating and the water supply works in the city, the water flows, the sewage works, but there’s no heating in the house because the pumps are unpowered. There’s no water in the house because the pumps don’t work. Residents must take care of this themselves now.

NV: I’ve already seen calls for people to walk more and avoid using air conditioning to ease the strain on the power grid.

Kharchenko: You know, of course, any reduction in consumption will make [the situation] easier. But to be honest, I think the increase in tariffs will provide the most relief. I hope people will finally start really thinking about saving electricity, and not just making calls about it.

Of course, the format chosen is very unfortunate. It doesn’t allow people to maneuver, optimize their energy consumption and minimize the overall bill through energy efficiency. A lot of things are done wrong. But it’s better than nothing. I’m sure many people will think about what they spend electricity on once they see their new bills.

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