January 4, 2013

Prospects of Production and Consumption of Electric Power in Ukraine

S. Dyachenko

The presented for the public discussion in 2013 Project of the renewal of energy strategy of Ukraine till 2013, caused a wide discussion around the prospects of the Ukrainian electric energy production. Among the main questions of this discussion are the forecasts of Ukraine’s needs in electric power and their cover.

 It is clear, that it is very difficult to observe this question without special researches, but keeping in mind the results of 2012, it is possible to concentrate on some important aspects.

1. The key index, at the base of which the needs of a national economy in electric power can be determined, is the meaning of the gross domestic product (GDP). For the forecasts according to the base scenario, the Project of Renewal suggests that the GDP will be increasing by 5 % annually.

But I think that in 2013 the dynamics of the economic growth of Ukraine will be much worse than the one suggested by the state budget. To begin with, due to the negative for the Ukrainian goods business conditions at the foreign markets and devaluation of the national currency (possibly the average annual rate will reach 8.8 hryvnas for 1 US dollar), will lead to increase of  natural gas and other goods of critical import prices in hryvna estimation. As a result, the deficit of “Naftogaz” will grow and so will do the price disproportions at the Ukrainian energy carriers markets. So, the planned raising of the tariffs for public utilities by 16% won’t be enough for bringing the prices up to the economically grounded level and for higher prices compensation to the population.

We should also remember that 2013 is the year of paying the outer debts - 6.7 billion US dollars. So, the mentioned above facts together with the indexes put into the state budget, give the reasons to think that the decrease of the GDP in 2013 in real prices will make 2.4%. Sadly, this won’t let finance the income part of the state budget, and its deficit will exceed the limiting level, having reached 6.7 billion US dollars.

 In 2014 the business conditions for Ukraine will improve, at the steel market in particular. Besides, thanks to the reduction of the prices in the currency expression, the competitiveness of the Ukrainian goods will increase. We may also expect the growth of the business activity, increasing of social payments, caused by the pre-election race. The devaluation will be moderate (the average annual rate will reach 9- 9.1 hryvnas for 1 US dollar), and the annual inflation will be around 4.5 %. On the ground of these indexes, a growth by 2.9 % of the GDP in real prices in Ukraine in 2014 may be forecasted, as well as a reduction of the state budget’s deficit.

So, as the facts testify, the real indexes of the economic development will differ significantly from those which were determined for the forecasts in the processes of renewal of the energy strategy. And, accordingly, the reliability of the given in the forecasts indexes of the demand and supply of the electric energy, will also decrease.

2. Forecasts of the production and consumption of electric energy should take into consideration the development policy. At the present moment two versions of the latter exist - with the prior development of regeneration energy one, and that of the balanced development of all types of generation.

The policy of prior development of the regeneration energy suggests that at making decisions concerning the energy system development, the regeneration energy has priority.

This is adopted de jure, and this is the policy the Government is leading de facto. For example, by the end of 2012, according to the preliminary estimations, the volume of the technical conditions for linking of the generating plants on the regeneration sources to the electric energy system, made more than 2 GW.

A balanced policy of the development suggests and ensures that all the types of generation develop proportionally, taking into consideration what is necessary for securing reliable and economically effective work of the energy system.

The scenario of the prior development of regeneration energy means that the fixed capacity of electric power stations will be larger by minimum 25%, which is explained by the greater needs in reservation. At this, in the structure of generating capacities, as compared with the balanced scenario, the share of heat and power stations will increase by at least 20%, as the reservation will be carried out mainly due to this type of generation. The prior development also means that need in the natural gas will grow (by 2030 - by 15-20 billion cubic meters), because the priority will be given to heat and power electric stations working on gas-like fuel, with better maneuverability characteristics as compared with those of coal CHP.

It should not be forgotten that the prior development of regeneration energy also means growing of electric energy prices, that also will hold back the development of the economy.

3. Taking into consideration the complex nature of the decisions which are taken in the energy system, and the long period of exploitation of its infrastructure (15 to 40 years for electric power stations and 40 to 75 years for transport networks), as well as the predictable growth of the demand for energy, it is important in the energy system to realize the role of the potential influence of the climate. At the present moment the main undoubted directions of such an influence are as follows:

    • changes of demands for warmth and cold depending on the change of temperature regimes. Not only the increase of temperature in general, but also increase of the amplitude of changes of temperature regimes, will cause an unusual, peak demand for energy;
    • сhange of the volume of precipitation, volumes of evaporation of water and speed of winds, as well as melting of snow as a result of climatic warming up, will significantly effect the level of water in hydro-technical structures, which can change the effectiveness of work of the hydrogeneration, both positively and negatively. Such changes can effect the work of nuclear power stations and heat and power stations, which need great volumes of water for their systems of cooling;
    • temperature increase and changes in the regimes of precipitation will influence the yield of plants from which the bio fuel is made (corn, sugar plants, etc). This also refers to the wood from which lots of energy is got in the developing countries;
    • the climatic changes can threat the key infrastructure of traditional oil and gas resources of energy. In the arctic zone such problems will appear when temperature increase will melt the permafrost. Sea drilling for oil and gas equipment and connected with it infrastructure, will suffer from climatic anomalies and storms.

Global warming

In many countries, like the USA, the RF, European countries, such forecasting is being carried out. In Ukraine such researches are only beginning.