Ukraine faces winter power shortfall of one-third of peak demand, IEA says

By Nina Chestney

LONDON (Reuters) -Ukraine's electricity supply shortfall could reach 6 gigawatts this winter, about a third of expected peak demand, amid Russian attacks on energy infrastructure and the expiry of a gas supply contract, the International Energy Agency said in a report.

Since Russia's full-scale invasion in February 2022, Ukraine's energy system has been targeted by Russian attacks, resulting in rolling blackouts and limited electricity supply to some regions for hours each day.

Russia stepped up attacks in March in what Kyiv said looked like a concerted effort to degrade the system before winter, when temperatures often fall bellow -10 degrees Celsius (14 degrees Fahrenheit).

The European Union on Thursday offered to help, saying a fuel power plant was being dismantled in Lithuania to be rebuilt in Ukraine with the aim of restoring 2.5 GW of capacity. Electricity exports will also be increased, it said.

This summer, when electricity demand is usually lower than winter, Ukraine's generation capacity fell by more than 2 GW below peak demand of 12 GW, the International Energy Agency (IEA) report said. This winter, peak electricity demand could increase to 18.5 GW, it said.

Even when the country's nuclear plants return from maintenance outages and with electricity imports of 1.7 GW from European neighbouring countries, Ukraine's supply deficit could reach 6 GW, the equivalent of peak annual demand in Denmark, the report said.

"Further attacks on infrastructure, unforeseen equipment failures and missed maintenance cycles add further risks," the report said.

Ukraine used around 18 GW of power last winter, including imports, official data showed. It was producing 13 GW last March, an industry source said.

The energy ministry on Thursday said the country had lost 9 GW of generating capacity this year as a result of more than 1,000 Russian strikes. Ukraine has also attacked energy infrastructure in Russia but on a smaller scale, mainly focusing on oil refineries.

GAS DEAL EXPIRES

Ukraine could meet its gas demand needs from domestic production and storage under normal circumstances, but a colder than average winter would increase the need for imports.

A possible decrease in coal supply could also force Ukrainian thermal power plants to switch to gas. Most coal mines are located close to the front lines in Ukraine's east.

A gas supply transit deal with Russia's Gazprom is due to expire at the end of this year and Ukraine has said it does not wish to extend it. Additional gas supply would have to come from central and eastern Europe.

Another risk is disruption to gas and electricity supply in neighbouring Moldova. Although Moldova no longer relies directly on Russian gas to meet demand on the territory it controls, it receives around two-thirds of its electricity from a power plant in the breakaway, Russian-backed region of Transnistria.

Transmission capacity with continental Europe is shared between Ukraine and Moldova. If there are shortages in Moldova, the two countries need to agree to the distribution of imports, the report said.

To help Ukraine's energy security this winter, the IEA said that repair and construction work must be done to protect assets against further attacks, especially at network substations near nuclear plants.

Domestic energy saving measures, the delivery of more small combined heat and power units to the worst-hit areas, and better transmission of electricity imports were needed.

Ukraine will also need around 0.6 billion cubic metres (bcm) of gas imports in September and October to reach its gas storage target before Nov. 1.

(Reporting by Nina Chestney; additional reporting by Pavel Polityuk in KyivEditing by Mark Potter and Conor Humphries)