Currently, the Ministry of Energy and Coal Industry of Ukraine intends to authorise the signing of a contract for the construction of Ukraine-EU energy bridge, which is going to extend the Burshtyn TPP island.
This project was approved back in 2015 by the Cabinet of Ministers of Ukraine (Ordinance of 15.06.2015 No. 671-p) to expand the opportunities for electricity exports from Ukraine to Europe. The project intends to designate the second unit of the Khmelnytska NPP with the capacity of 1000MW along with the 750kV OHL Khmelnytska NPP-Rzeszow to export electricity to Poland. The energy bridge will be constructed by a private investor through a public-private partnership.
Once completed, all electricity produced by the second power unit of the Khmelnitska NPP will be sold to a single private company at a predetermined price for further export to EU countries for 20 years straight. We should emphasise that in today’s circumstances the extension of the Burshtyn TPP island by building the Ukraine-EU energy bridge is impractical economically as well as in the context of integration of the Ukrainian grid into continental Europe (ENTSO- E).
Electricity market reform and integration of the Ukrainian grid into ENTSO-E strive to unite the European and Ukrainian electricity markets on the principles of transparency, free competition, profitability and political impartiality. At the same time, even successfully implemented, the Ukraine-EU energy project will keep Ukraine’s energy market isolated from the European electricity market and will not provide conditions for competition in the domestic market. After all, it will open only one possibility – to export electricity from a single unit of Khmelnytska NPP for a single private company.
The Ukraine-EU energy bridge project also has such downsides:
- safe operation of the second unit of the Khmelnytska NPP has not been proven in terms of self-supply and dynamic stability;
- any possibility of using the electricity of the Khmelnytska NPP’s Unit 2 for Ukraine (in view of a 20-year direct export contract) is lost, if Energoatom is to sell 90% of electricity in the domestic market at regulated capped prices: 75% — to the Guaranteed Buyer for the needs of the population, another 15% — to buy losses of transmission system operators and distribution system operators. Exporting electricity from other NPPs is not even considered;
- Restricted generation by other units of Rivnenska NPP and Khmelnytska NPP for the needs of Ukraine non-transparent pricing for the electricity that a private company will buy out from a state-owned Energoatom for 20 years into the future;
- After all, the price must be set in advance for the entire duration of the contract;
- Safe separation of Unit 2 at the Khmelnytska NPP from the Ukrainian IPS has not been investigated;
- The project has not been cleared with ENTSO-E and PSE, Poland’s TSO. There is no study of its impact on the operation of the ENTSO-E grid.
At the same time, the only possibility to noticeably boost competition and to admit European players to the Ukrainian market within a short time, i.e. before the full synchronisation with ENTSO-E, is to build a 600MW DC link on the border of the IPS of Ukraine and the Burshtyn energy island (SS 750kV Zakhidnoukrainska).
This project could be implemented in 2.5 years with estimated cost of up to $150 million. In the meantime, the expected economic effect for the IPS of Ukraine from the DC link in the first year of operation could amount to $ 150 million.
Therefore, this project can pay off even before fully synchronisation with ENTSO-E. The construction of the DC link does not mean that Ukrenergo as a TSO abandons plans to fully synchronise the Ukrainian power grid with the European one. On the contrary, the implementation of this project will greatly facilitate the uniting of the grids and significantly increase the level of operational security of the Ukrainian IPS. It will, for example, provide additional reserve for of frequency and capacity regulation, ability of voltage regulation, eliminate circular flows from EU countries through Ukraine. It will also give Ukraine’s power system an independent source of power in the event of a systemic accident by backing up own needs of Khmelnytska NPP, Rivnenska NPP and other nuclear and thermal power plants. For these reasons, DC links are widely used within the continental European grid.