Energy Strategy 2030 vs 2035. Why First Failed and Why Second Will Be Fulfilled?

Will it be possible to combine all types of energy generation, reduce the amount of harmful emissions into the atmosphere, improve energy efficiency and at the same time reduce tariffs for the public? Balancing on the brink of obligations to the EU and local realities, the development of renewable energy sources, the reduction of thermal power plants, support to nuclear power plants are the tasks for people who provide us with the possibility to watch TV series in the evenings in air-conditioned room.  

The prerequisites for the creation of a new Energy Strategy were the changes in the energy policy of the European Union, namely the creation of the Energy Union in Europe and the signing by Ukraine of the Memorandum on the Full Integration of Energy Markets of the EU and Ukraine, signing of the Paris Agreement on Climate Change, as well as the military aggression of the Russian Federation and occupation of part of Ukrainian territories by it. The new strategy shall take into account the best European achievements in the field of energy production, increase energy efficiency, decarbonize the energy sector that is to create conditions for the gradual reduction of the use of the standard fossil fuel, increase energy generation from renewable sources, and to confirm energy independence of Ukraine meaning the maximum possible use of its own energy resources. 

The main differences between the new strategy and the old strategy are the transfer from the energy sector model with predominating fossil fuel, inefficient electricity grids, non-transparent markets of natural gas and coal to a new model that offers equal opportunities for the development of all types of energy production. Increase of energy efficiency and use of energy from renewable and alternative energy sources are of particular importance.

The implementation of Energy Strategy 2035 is divided into three stages. Each stage has its own plan. Nataliia Boyko, Deputy Minister of Energy and Coal Industry of Ukraine for European Integration, Iryna Holovko, Head of Ekodia Department of Energy Policy, and Viktor Shenderovych, Expert on Nuclear Issues, explained what problems are associated with each of the stages and on the possibility to implement state plans for reforming the energy sector until 2035.

One of the main tasks of the new strategy at the first stage (until 2020) is the further diversification of nuclear fuel sources for NPPs and the solution of energy safety problems under the need to ensure state sovereignty. One of the objectives of this stage is to reduce the dependence of the energy sector of Ukraine on Russia. Is it possible to achieve the objectives in case of escalation of the conflict or a change of government? Nataliia Boyko believes that “In recent years, a very large amount of measures have been implemented to reduce the dependence of our energy sector on Russia, and this is one of the key elements in the current fight against the aggressor. Here, it is necessary to recall success of Ukraine in the diversification of natural gas supplies, which allowed us to increase our presence and cooperation in the EU gas markets; victory of Naftogaz of Ukraine in a dispute with Gazprom at the Arbitration Institute of the Stockholm Chamber of Commerce; the beginning of the restoration of own gas production in Ukraine; gradual refusal from deficit grades of anthracite coal and the transition from thermal power plants to gas group coal, and gradual transition to the use of Westinghouse nuclear fuel in nuclear generation, and many other issues. I am sure that I will not be mistaken if I say that much more has been done in this direction over the last 4-5 years than in the entire period of Ukraine’s independence. The further logic of changes envisages that energy safety and independence of Ukraine will be ensured in the conditions of renewed liberalized energy markets. In our opinion, despite the presence of some skepticism on this issue, energy security can be effectively ensured in a liberalized market. In particular, in this state of affairs, certain political factors of influence are leveled and corruption risks are reduced.

We did a great job to make sure that this process should be arranged according to EU legislation, which, in particular, will provide our country and EU partners with more advantages to prevent blackmail from the Russian Federation. Of course, the trends of recent years show that the number of challenges in energy security is growing. This can especially be seen in the attempts of Russia to deprive Ukraine of its transit potential by involving the construction of a new cross-border infrastructure bypassing Ukraine. The preservation of transit under such conditions is an important guarantee of limiting the influence of the aggressor in case of conflict escalation. Therefore, I hope that all subsequent governments of Ukraine will be consistent and no less effective in opposing Russia’s aggression towards the interests of Ukraine, on which our energy safety will depend in the long-term perspective. We will be able to achieve energy independence and security only if the government maintains our priorities in the energy sector”.

Iryna Holovko is sure that complete diversification and reducing of the dependence on Russia in the nuclear industry is impossible, since “there are only two producers of fuel for VVER-1000 in the world: TVEL in Russia and Westinghouse in the USA. Real diversification means the absence of the dependence on one producer by more than 30 % from the supplies, which is impossible to be reached in conditions when there are only two suppliers. We are currently speaking about the construction of our own nuclear fuel fabrication plant, which raises a number of questions regarding economic feasibility, because at present ten out of fifteen Ukrainian nuclear power plants have already expired their design lifetime, and even in case of successful long-term operation for another 10-20 years, by 2035 there will remain ten operating power units, and there will be only three operating power units by 2040. The construction of the plant and its licensing will take at least ten years. That is, when this plan can in theory produce fuel, there will already be a question of its payback given such a small demand and its reduction during the next ten years. In general, one can say that in the next ten years we will still be dependent on Russian nuclear fuel”.

One of the key tasks at the first stage of implementing the Energy Strategy is to study the possibilities of creating nuclear fuel fabrication plant in Ukraine. In May, the President of Ukraine signed a decree on the process of creating the nuclear fuel fabrication plant for national nuclear power plants, which means the beginning of specific activities in this direction. Is it technically possible in Ukraine and are there any sales markets for its selling other than our country?

Viktor Shenderovych explains that “The creation of the nuclear fabrication plant should not be unambiguously associated with the design lifetime of operating nuclear power plants, since after expiry of design operating lifetime taking into account the period of long-term operation, it is planned to replace them with new constructed power units. Currently, it is proposed to implement the option of creating such an enterprise without the participation of Russian companies. In fact, this enterprise will be a plant for fabricating nuclear fuel for nuclear power plants, because issues related to uranium enrichment at such an enterprise are not considered. The issue on receiving enriched uranium for the production of fuel assemblies will be discussed within special negotiations and contracts. However, there are still issues to be justified, including:

  • the economic efficiency of the enterprise based on the potentially required volume of nuclear fuel production. The level of such production is determined by the need for fuel considering the long-term development prospects for the period up to 2050 and beyond;
  • the need to consider the possible specific features of fuel assemblies in case of using different types of nuclear facilities, since currently the choice of a promising type of nuclear facilities is uncertain;
  • the absence (at least at the present time) of the possibility for selling produced fuel assemblies beyond the needs of Ukrainian NPPs”.

Nataliia Boyko claims that the production line for fuel assemblies made of stainless steel was commissioned in 2011 at the expense of the Energoatom Company: “Activities are underway between Westinghouse and Energoatom on transfer of technology and mastering of the production of finite elements. The company has already sent a package of documents for obtaining permission to construct a mechanical and engineering plant, reconstruction of production lines on the production of top and bottom end pieces of fuel assemblies to master the production of components of Westinghouse fuel assemblies in Yuzhnoukrainsk. The necessary equipment is being procured. The construction activities are planned to be started in 2019. The next step to strengthen cooperation of Ukraine and the USA in the nuclear sphere is to create a production (fabrication) cycle of fuel assemblies in Ukraine by 2025 using Westinghouse technologies in order to fully provide VVER-1000 of Ukrainian NPPs with national nuclear fuel. It is planned to produce fuel assemblies in the amount of 540 pieces per year. Such declared capacity should ensure annual requirements for nuclear fuel for Ukrainian NPPs with VVER-1000. The construction of the plant will contribute to the diversification of nuclear fuel supplies for nuclear power plants in full in order to increase the level of energy safety in the country, will reduce the cost of nuclear fuel and, as a result, reduce the fuel component of the cost of electricity production at Ukrainian nuclear power plants”.

Nataliia Boyko
Deputy Minister of Energy and Coal Industry
of Ukraine for European Integration

According to Nataliia Boyko, the decision on the feasibility of constructing national nuclear fuel fabrication plant “should be made not only based on its profitability, but also taking into account factors of energy safety of Ukraine. First, it is an issue of monopoly dependence on the Russian Federation. All the technical and economic indicators of the construction of the nuclear fuel fabrication plant will be specified in the feasibility study, which should provide the calculation of the economic feasibility of the project based on a comparative assessment of the costs and results, as well as the payback period of investments”.

The Strategy envisages that first there will be reforming of energy campaigns in accordance with Ukraine’s obligations within the Treaty on the Establishment of the Energy Community, the reduction of GDP energy intensity and the further development of renewable energy sources. Ecologist Iryna Holovko notes that in the future, energy from renewable energy sources can replace nuclear power capacities (more than 50 % of the total generation today): “We are talking about the gradual replacement of old Soviet energy capacities due to their lifetime exhaustion to renewable energy sources. It is clear that it is a long and complex process, but it is important that this process still be underway. According to world statistics, up to 70 % of all new generating capacities in 2017 are precisely renewable energy capacities. It is still much faster and cheaper than the construction of new nuclear power units, and much cleaner than new coal thermal power plants. By the way, an alternative scenario for the development of energy sector was developed for Ukraine. It was developed by the Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine. Using mathematical computer models, three scenarios for the development of the energy sector until 2050 were calculated. One of them envisages a complete refusal of nuclear energy by 2050. This modeling showed that 91 % of the total energy consumption in the country can be provided by renewable energy sources, and up to 42 % can be saved by increasing energy efficiency in all sectors of the economy. Moreover, after 2035, the costs of implementing such a scenario will be lower than for the basic scenario. First, it will be available due to savings on the purchase of fuel. All nuclear power plants and thermal power plants need fuel, which Ukraine mainly imports”.  

According to Viktor Shenderovych, “Prospects for renewable energy in Ukraine require a detailed justification taking into account technical and economic factors. The rational and economically balanced ratio of nuclear generation and generation of renewable energy allows solving the issues posed by the Paris Agreement. When considering the prospects of renewable energy, it is necessary to consider specific features of this energy type: production instability, low technical indicators and large volumes of necessary reserve capacities. They can be implemented either through special maneuvering units using fossil fuel or special high-power batteries. Therefore, the share of renewable energy in the energy balance of Ukraine for the future shall be justified in details. The available scenarios for the complete transition to renewable energy sources have a number of significant drawbacks, including the accounting of the above factors and input data that were used in the development of such scenarios. Such a modeling is highly controversial”.

Viktor Shenderovych
Expert on Nuclear Issues

One of the main problems in the development of the electric industry is the search for investments. The objective of the second stage is to implement investment attraction mechanisms for the implementation of the program for replacing capacities that should be decommissioned with a new energy infrastructure. These should be powerful investment funds, since the arrangement of financing of the construction of new nuclear power plants in Ukraine is a comprehensive task given that the estimated cost of building a new power unit today is about eight billion USD. “When we talk about critical infrastructure and important major projects of state companies, which are the basis for the development of the industry, it must be said that our Ministry cooperates with international financial organizations, in particular with the European Bank for Reconstruction and Development (EBRD), International Bank for Reconstruction and Development (IBRD) and the European Investment Bank (EIB). At present, a number of investment projects are underway in cooperation with the mentioned financial organizations, such as: remediation of hydroelectric power plants (EBRD, EIB); comprehensive (integrated) safety improvement program for Ukrainian NPPs; second project on electricity transfer of the IBRD; reconstruction, major repair and technical re-equipment of Urengoy-Pomary-Uzhhorod pipeline (EBRD, EIB). We are actively working on new projects and expanding of loan portfolios. Involvement of international financial organizations to financing energy projects is a clear indicator of the confidence of international partners”, Nataliia Boyko commented.

“Neither EBRD nor EIB do not and will not allocate funds for the construction of nuclear power plants. This is even indicated in their policies, in particular in the EBRD Energy Sector Strategy. At the same time, all of them are willing to invest money in renewable energy sources and energy efficiency improvement. One can just address the real portfolio of their projects on the official pages. Therefore, if we want to attract foreign investments to replace worn out generating capacities, we must rely on renewable energy sources”, Iryna Holovko said. Viktor Shenderovych considers investments in nuclear energy to be very real: “We need to look for mechanisms to attract investment to the nuclear industry itself”.

The implementation of the second stage of the Energy Strategy until 2025 envisages making a decision on the long-term operation of operating nuclear power plants, commissioning of new ones, design and construction of nuclear power units. This implies the resumption of the project on the construction of Khmelnitsky NPP (KhNPP) Unit 3 and Unit 4, which was terminated after the accident at Chornobyl NPP in 1986. Iryna Holovko tells about the appropriateness and reality of their completion: “It is important to take into account the real stage of construction to assess the project. Currently, there is a revised approved feasibility study that provides for the use of ŠKODA JS power facility owned by the United Machine-Building Plants controlled by Gazprombank (Russian Federation). A draft law is being prepared “On the Placement, Design and Construction of Khmelnitsky NPP Unit 3 and Unit 4”. The Verkhovna Rada should approve the relevant draft law to be able to proceed to the next stage of the design (the Ministry of Energy and Coal Industry of Ukraine developed a draft law of Ukraine “On the Placement, Design and Construction of Khmelnitsky NPP Unit 3 and Unit 4”, which has already been submitted for the consideration of the Government – editor’s note). A similar project has already been approved in 2012, but now you have to start all over again. In my opinion, it will be impossible to give a comprehensive reason for the construction for two reasons. First, there is a big problem with the supplier of equipment for VVER-1000: this can be only one of two companies controlled by Russia. The second problem is that Energoatom does not have sources for funding of these activities. As far as I know, currently there is no confirmed source of funding for this project. If Energoatom as a state company will take foreign loans for construction, they will be taken under state guarantees and, respectively, included in the electricity tariff together with interests. In any case, it is not Energoatom that will pay its money. It will be paid by the Ukrainian consumer. If there are delays and an increase in the cost estimate (and they will definitely be taking into account the trends in estimate growth during the construction of nuclear power plants in Europe by 2.5-3 times), the Ukrainian consumer will pay for this. Therefore, it is very likely that we as consumers will pay for the construction of something that probably never starts working for years. There are many questions including security. There is no final confirmation that the old structures at the site of Khmelnitsky NPP Unit 3 will withstand the construction and declared 50 years of reactor operation. The risks are very high, and we have not yet received convincing evidences for the safety of using these structures and compliance of the power unit design with state-of-the-art safety requirements for new nuclear power plants”.

Iryna Holovko
Head of Ekodia Department of Energy Policy

During the completion of KhNPP-3,4, it will be necessary to take into account new requirements of safety regulations and standards to design reactors, which have significantly changed over 30 years since the start of their construction. Viktor Shenderovych, for his part, explains: “The feasibility study developed in 2012 included a comprehensive study of the building structures of facilities important to safety, which showed the possibility for safe operation taking into account measures to restore or replace building components. No critical components or factors that affect the process of making decision on the use of these structures for the entire period of further operation for 100 years have been revealed. This was confirmed by an independent opinion of the State Enterprise “State Research Institute of Building Constructions”, which is the leading expert organization of the Ministry of Regional Development in the field of building structures.

Considering that survey of the structures was carried out before 2008, the construction design development provided for additional studies to define the effect of the period after 2008 on the conclusions regarding the state of structures and their durability. There is every reason to think that the conclusions will be positive. In case of the need to implement any local decisions, they will be developed and reflected in the design. Regarding safety, it is necessary to state that the design of KhNPP-3,4 will comply with all requirements of the regulatory framework, including nuclear and radiation safety, and main provisions of international documents (IAEA and WENRA). One can be sure that KhNPP-3,4 will have a safety level of advanced operating power units and small modular reactors of PWR type and this level will even higher compared to operating power units of Ukraine”.

The energy development program envisages preserving nuclear power as one of the main types of generation until 2035. However, in the period from 2030 to 2040, 12 out of 15 currently operating power units will have to be shut down, since their 30-year period of design operation and 20-year period of long-term operation will end. Based on this, it will be necessary to implement new capacities instead of decommissioned ones, as well as the construction of new power units. According to the National Energy Strategy until 2030, the decision on the need to construct additional power units should have been taken in 2013-2015.

“The long-term operation of power units is a widespread practice throughout the world: today, 298 nuclear reactors out of 454 ones have been in operation for more than 30 years, and 100 power units have been in operation for 40 years or more. Great Britain, Canada, Russia, the USA, France, Hungary and other countries already have practical experience. Ukraine is also included in this list. Currently, nine power units out of 15 operating power units are extended for long-term operation (Rivne NPP Units 1, 2, 3, South-Ukraine NPP Units 1, 2, Zaporizhzhya NPP Units 1, 2, 3, 4). It was the first long-term operation for all of these power units. Long-term operation of NPP units is performed in full compliance with international law and regulation, with strict observance of domestic legislation in the nuclear industry,- commented Nataliia Boyko,– The decision on long-term operation of power units is taken by the regulatory authority only if the safety level of the nuclear power unit is not lower than that established in the safety standards and rules”.

Viktor Shenderovych explained how realistic is the long-term operation of VVER-type power units for more than years taking into account safety issues: “According to the current regulations, periodic safety assessment of operating power units shall be performed every ten years. Therefore, permission to continue operation for most power units is issued until the next safety review that is for the period of the next ten years.

At the same time, the safety review report for all structures and components important to safety defines specific results of the technical state including the permissible life. The results of performed analysis show that there is technical confidence in the possibility for long-term operation in the beyond design period. A more thorough analysis can rise an issue on the long-term operation for more than 50 years. This may require the replacement of individual equipment that is not critical. It should be noted that the practice of long-term operation is widespread in the majority of countries operating VVER (i.e. similar to Ukrainian power units). The decisions are implemented on long-term operation of power units to 50 and 60 years. There is an issue of long-term operation of individual power units in the USA up to 80 years”. At the same time, the expert emphasizes that “long-term operation of operating power units does not eliminate the issue of their replacement, but only lays it aside in time”.

Provided this there is a need to choose the most effective type of reactor technology for Ukraine for the construction of new nuclear power units to replace the decommissioned NPP facilities. If Ukraine wants to remain nuclear generation, it is important to plan the construction of new power units today. However, this can be impossible due to lack of funds, since one modern power unit costs seven billion euros. According to Viktor Shenderovych, “solving of this issue requires obligatory focus on modern projects with a security level at least “3” and having reference. It is necessary to make a selection on the basis of a set of criteria and requirements, which should cover, in particular, the following issues: safety, technical indicators, environmental factors, delivery conditions, technology transfer conditions, etc. Such a number of criteria and conditions for application should be determined by the public administration body with the participation of the operating organization and approved by the SNRIU. It would be necessary to change the licensing conditions considering that the suppliers will offer technologies using a regulatory framework other than Ukrainian. In addition, it is obligatory to take into account the need to create the relevant infrastructure and define real and appropriate ways of contract activities for the creation of power units.

Taking into account the long cycle of creating nuclear power facilities, activities on the selection of appropriate technologies for future power units should be started immediately”.

One of such reactor technologies is already gradually approaching Ukraine. An Agreement on Cooperation between the Energoatom, SSTC NRS and Holtec International (USA) was signed in June. The objective of the Agreement is to create international consortium to facilitate the implementation of SMR-160 small modular reactors in Ukraine. The presence of a sufficient number of passive safety systems in these reactors will help to solve the main emergency problem that is the loss of ultimate heat sink from the core in the case of an accident. Will it be a panacea? What are the prospects for small modular reactors in Ukraine and how appropriate is it to build SMR? What are the main obstacles to replacing VVER with SMR in Ukraine?

Viktor Shenderovych notes the advantages and disadvantages of this reactor type:

“The interest in this type of reactor is mainly related to their features and application conditions:

  • the possibility of placement in the approximate vicinity of electric energy consumers;
  • absence of the need for a branched energy system, that is the possibility of placement in isolated regions;
  • modular (factory) production, which significantly increases the level of production and contributes to the reduction of construction time;
  • acceleration of the process of investment return as compared to large capacity installations.
  • potentially higher level of safety due to the use of lower coolant parameters, lower volume of nuclear material, maximum use of passive systems, including safety systems.

However, the conditions of Ukraine regarding the development of nuclear industry are characterized by the following features:

  • high level of installed capacity of nuclear power plants (~ 14 GW) and the need to replace the indicated capacity for the long-term period when decommissioning operating power units after their design lifetime extension;
  • branched energy system that covers all regions of the country;
  • significant difficulties with NPP siting based on objective factors (including unused land) and subjective factors (public attitude to nuclear power plants). Therefore, in the real conditions of Ukraine, the placement of new power units is essentially possible only on several new sites (this should be determined by the Site Cadaster) or on existing sites (taking into account their expansion or placement in close vicinity).

In these conditions, the attractiveness of small modular reactors (150-300 MW) is significantly lower. The feasibility of placing a large number of small modular reactors on one site to replace capacities of decommissioned power units is in doubt.

The issue of the justification for the use of small modular reactors and assessment of the possible extent of their applicability in the framework of the Energy Strategy requires, in my opinion, a feasibility study of using small modular reactors (regardless of their type and used technology) taking into account analysis of all factors including uncertainties. In case of a positive result, it is necessary to perform additional feasibility study with regard to selection of possible types of small modular reactors based on the information on the status of their development, technical indicators, economic indicators, safety level, etc”.

Iryna Holovko believes that replacement of VVER with SMR “is the vain hope of nuclear scientists. Not a single SMR-160 operates in the world and is licensed for industrial production. SMRs pose most of the same risks as large reactors, because there is still a risk of accidents, nuclear fuel is still used and radioactive waste is generated. However, SMRs do not have one advantage that still “keeps afloat” large nuclear generation, that is economies of scale. This is the lower cost per kilowatt produced due to the generation at large power plants”. Savings due to the possibility of closer proximity to the consumer also seem ghostly, because “it is almost impossible in Ukraine to convince the settled area that it will be safe to build a nuclear reactor there. Even a “small” one. People are now very sensitive to these issues even when the facilities are being constructed, which do not use radioactive materials”.

The third stage of the Energy Strategy is to ensure sustainable development (until 2035). It is planned to ensure the innovative development of the Energy Sector and improve energy efficiency. It is envisaged to reduce carbon emissions (decarbonization) and develop renewable energy sources as rapidly as possible. Development of hydroelectric power, wind energy and other renewable sources can contribute to solving the carbonation of the energy sector together with the unchanged position of Ukraine on the advisability of using nuclear energy. According to the Energy Strategy until 2035, it is assumed to continuously expand the use of all types of renewable energy, which will become one of the tools to ensure the energy safety of the state. The Energy Strategy predicts a share of renewable energy at least 25 % in 2035 and an increase in the share of solar power up to 10 % by 2035.

According to Viktor Shenderovych, Expert on Nuclear Issues, the drawbacks at such a fast growth rate of the share of renewable energy sources are “the instability of electricity production due to the energy of the sun and wind based on the physical nature of this type of energy and, correspondently, low efficiency and availability of sources. There is also a need for significant amount of backup capacities to ensure stable electricity production. The level of backup capacities can be 30-50 % of the installed capacity of solar power plants and wind power plants. It should also be noted that backup capacities should have high maneuverability.

In Ukraine, ensuring the required stability of the energy system is related to significant difficulties to the shortage of backup maneuvering capacities. With the growth of capacities of solar power plants and wind power plants, difficulties and problems of ensuring energy system stability will increase. The attractiveness of the construction of solar power plants and wind power plants currently is Ukraine is determined by the so-called “green” tariff (an economic mechanism aimed at encouraging the generation of renewable energy – editor’s note), which is several times higher than the established tariff for thermal sources. Compared with the tariff of nuclear power plants, the excess is by 7-10 times.

Based on this, it is clear that significant increase of solar power plant and wind power plant share in the energy supply of Ukraine, in addition to the technical difficulties mentioned above, will increase the cost of electricity for industry and the public”.

Irina Holovko, Head of Ekodia Department of Energy Policy, believes that the “Renewable energy should be the priority in further development of energy industry in Ukraine, because this is what is happening around the world. If you study the development of electric power in the world, you will see that the share of renewable energy (solar power plant and wind power plant) over the past 20 years has grown from zero to 10 % in 2017, and together with hydropower and bioenergy this already is 25 %. At the same time, the role of nuclear generation is constantly decreasing. Over the past 20 years, it reduced from 17.6 % to 10.5 %. Therefore, the share of nuclear energy in the world is quite small and it decreases, so replacing it in the future with safer sources does not seem such an impossible task. There are many reasons for the decline in the role of nuclear energy, but the financial component is not the least one. If we speak about the cost of new construction, capital costs, payback periods and the degree of financial risk, then nuclear energy is the most expensive technology. Renewable energy source begins to receive the tariff only after it has already been constructed, when the facility begins to produce electricity. The example of KhNPP-3,4 construction shows that we as consumers will start to pay ten years before these reactors can theoretically begin to produce electricity. That is, we will pay for something that has not yet been built and it is unknown whether something will be built one day.

Following the old procedure, the price for electricity from renewable energy sources was formed according to the Law “On the Green Tariff”. The tariff is tied to the euro, but the law provides for its gradual decrease every few years. A law has been passed on the so-called auctions for renewable energy sources. This means that now companies that intend to construct renewable power sources will proceed to the auction with their bids and, correspondently, those will win that offer the lowest price. The competition between such suppliers of renewable energy sources will be an incentive to reduce the cost of the green kilowatt. Besides, the cost of renewable energy technologies is significantly reduced over the years that is related with the improvement and cheapening of technology. For example, the cost of solar panels has reduced by 86 % in ten years.

Why is nuclear energy so much cheaper now? Not only because of the high “green tariff”, but also because the tariff for the “nuclear kilowatt” does not include all related costs. When the power unit completes its operation, it shall be decommissioned . According to our estimates, the tariff for electricity from nuclear power plants does not include the full cost of decommissioning of all operating NPPs. According to experience of other countries, such a cost can vary from 600 to 1320 million euro per one power unit and this money should be taken from somewhere. The Energoatom assigns a certain amount in compliance with requirements of current legislation, but this sum is absolutely insufficient to cover all decommissioning costs in the future. (Currently, the Energoatom actually covers compensation for the difference between the market price of electricity and the fixed tariff of renewable energy sources in the amount of 66 billion UAH per year – editor’s note).

The money in the Financial Reserve for Decommissioning is stored in UAH. Therefore, it is not at all protected from inflation, which is also a problem. For several years, the solution to this issue has been delays due to bureaucratic procedures. Everything is not easy with the construction of storage facilities, both temporary and those for the final disposal of radwaste. During all these years the disposal facility for vitrified waste resulting from the reprocessing of nuclear fuel currently stored in Russia and that should be returned to Ukraine in the coming years has not been constructed. The money for all the expenses related to the solution of radwaste problem and decommissioning of operating nuclear power plants should be collected (through the tariff) during the remaining time of their operation. The fact that all these costs are not included into the tariff for electricity from NPPs is actually a form of nuclear energy subsidizing and transfer of huge costs to the next generation.

Currently, the Ukrainian government should do everything possible so that the financing of the construction of disposal facilities for high-level radioactive waste and protection of the Financial Reserve for Decommissioning funds from inflation really begin to be addressed”.

Nataliia Boyko explained what additional conditions are planned to be created in order to achieve the planned level of energy production from renewable energy, taking into account its share of 6 % today: “The system of financing energy generation from renewable energy sources is envisaged for a more objective selection of green tariff recipients, which will be based on the most optimal offers. I am sure that this will have a direct effect on the implementation of new innovative technologies in the sphere of energy generation from renewable energy sources, which will be aimed at maximizing the generation efficiency.

However, one should remember that the rapid development of renewable energy sources could also result in new challenges for energy systems including those related to their balancing, while this is also a challenge for the Unified Energy System of Ukraine (UES of Ukraine). Recent years have shown the rapid interest of investors in the field of renewable energy sources in Ukraine. As a result, today we are already approaching the ultimate capabilities of the Ukrainian Unified Energy System to accept power generation from renewable energy sources. According to the data of the Ukrenerho Company, the maximum installed capacity of the solar power plants and wind power plants, which can be accepted by the UES of Ukraine, is 3,000 MW. With an increase in this indicator, problems in functioning are possible. This indicator can be reached in the nearest future. However, there is a plan how to transfer these challenges into new “windows of opportunities” that will improve the functioning of the Energy Sector of Ukraine and allow implementation of new technologies. In particular, this will make it possible to upgrade balancing generation technologies to more environmentally safe ones, to install high-speed reserve power plants, for example gas generator plants. Certain negotiations on these projects have already been underway with foreign investors. It is also very important to introduce a new electricity market. In addition to new approaches to balancing the market and responsibility for the balance, this will provide more opportunities for the implementation of new technologies that affect regulation of the demand. In particular, we have already begun preparations for planning the implementation of the smart grids system in Ukraine.

The beginning of activities to introduce quality regional planning of energy development is of a great importance in this context. Thus, significant problems with balancing arise because most of the new capacities are concentrated only in selected regions, in particular, in the southern region. This aspect means a great burden in some parts of the UES of Ukraine and less development of other renewable energy sources. Rational planning of regional development, in particular, accounting of special nature, needs and problems of specific regions make it possible to avoid some problems related to the increase in the share of generation from renewable energy sources. In general, the increase of generation from renewable energy sources is an integral part of modern energy development. Like any innovation, this may bring certain difficulties at the initial stage of implementation. However, solving of these problems will only lead to greater development of Ukrainian energy sector in the future”.

Viktor Shenderovych explains that “there is less than half a million euros needed for decommissioning according to Energoatom estimate. Future decommissioning will be carried out at the expense of a special fund, which is regularly replenished by Energoatom. An important issue is the use of this fund solely for its intended purpose”.

All the above plans for reforming the energy sector of Ukraine in the next 25 years can only work if energy efficiency of Ukrainian production is increased, as well as improvement of conscious energy saving among citizens.

“This issue is directly related to the structural changes that are required to implement the Energy Strategy of Ukraine. Perhaps, the formulation of this task will cause many associations with some “Soviet approaches”, in particular, it implies state intervention in the formation of “citizens’ consciousness”. However, we would like to focus on other things. Formulation of this task envisaged very profound changes in the energy sector of Ukraine, which, in turn, will change citizen’s views on consumption. This relates to the more deliberate planning of consumption, taking into account the whole spectrum of proposals in the energy markets (for example, gas or electricity) and the emergence of new saving technologies along with new energy management systems, etc. Why, then, such points should be mentioned in the strategy, if the changes in consumer awareness are to be a logical consequence of reforming the energy sector? The thing is that the role of the state in such issues should still be visible. Long delay in reforming energy have led to a lack of confidence on the part of citizens and firm old consumer habits. The state should help spreading the new approached to consumption sometimes with its own example and sometimes with the support of educational activities and work with the public. This is also one of the elements of coordination of the energy and climate policy of the state. We need to ensure quality communications and feedback of the public to reach this goal. International cooperation and the dissemination of information on international experience in this issue will be an important element of these issues. In general, we hope that consumers will begin to perceive energy conservation not only as a means of saving their own funds, but also as an opportunity to “be in trend” and in line with modern eco-friendly fashion”, Nataliia Boyko explained.

We are actively working to achieve these goals, including activities with international financial institutions and we are following all trends to improve efficiency directly in the energy sphere, in particular by promoting cogeneration. We revise a number of approaches to government support taking into account the focus on energy efficiency of projects. This also concerns the renewal of legislation on green bids in the field of renewable energy sources. On the other hand, reducing the energy intensity of Ukraine’s GDP will depend on the development of many other areas that are major consumers of energy, such as industry, agriculture, transport, etc. The development of the National Energy and Climate Plan by 2030 will also help us to achieve this goal. According to EU legal requirements, such a Plan should take into account not only targets in the energy sphere. In my opinion, major investments in energy efficiency in all areas of production will become really possible with the overall development of competition capabilities in most markets of Ukraine. Then the efficiency of production, in particular, in terms of energy consumption, will become an obligatory condition for the activities of major players. That is why it is impossible to take measures and reach indicators envisaged by the Energy Strategy without comprehensive reforms of Ukraine’s economy and its modernization. Correspondently, meeting of these goals will require consistent years of work”.

The issue of energy efficiency is not so much energy as industry and housing, and it must be reflected in the sectoral programs of related sectors of the economy.

Iryna Holovko offers the government to pay attention to the developed alternative energy strategy: “Based on these data, the government can develop an appropriate strategy. Of course, solely modeling is not a strategic plan. However, it seems to me that the scenario of Ukrainian scientists has more details on the indicators and all the necessary steps that need to be taken. They may be taken into account in the next revision of the Energy Strategy of Ukraine. The next revision of the Strategy should be based on real calculations of economic feasibility and on real numbers and steps that should be taken in each sector: in industry, transport, utilities, services”.

The previous Energy Strategy until 2030 was adopted in 2006 by the government of Yurii Yekhanurov and further almost every government (in 2008, 2013) made significant changes, so little of planned things from it were implemented. Nataliia Boyko considers that: “The previous revision of the Energy Strategy until 2030 had some advantages, however it paid little attention to the formation of the comprehensive vision of agreed actions necessary not only to achieve certain goals within the industry, but also for significant transformation of energy taking into account climate change, national security of the state, development and integration of individual energy markets into EU, transformation of citizens’ awareness and consumer habits, etc. In the process of document development, we did our best to apply advanced practices and paid much attention to international obligations of Ukraine and strategic national interests. Therefore, the current revision of the Energy Strategy considered these drawbacks by providing a clear and realistic view of the changes required. As a result, we would like not only to achieve certain figures, but first of all we would like to overcome future challenges and ensure transfer of energy industry in Ukraine to the principles of sustainable development”. Editorail Board