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Here’s how Russia’s invasion of Ukraine is impacting renewable energy and the grid

While Ukraine is struggling to keep its plants running amid the continuing fights, Russian power-generating companies are bracing for the impact of unprecedented Western sanctions.

By Anonymous for Renewable Energy World

The Ukraine crisis promises to dramatically change the face of the renewable energy sector in the post-Soviet space. While Ukraine is struggling to keep its plants running amid the continuing fights, Russian power-generating companies are bracing for the impact of unprecedented Western sanctions.

The Russian invasion comes at a great cost for Ukraine’s economy, which is set for a 45% contraction in 2022. Before the current crisis, the share of renewables within the total energy mix was less than 5%. However, the Ukrainian government set a goal of sourcing 25% of its total energy mix from renewables by 2035. Now, the focus is shifted toward preserving the existing capacities.

“All renewable energy power plants located in the territory controlled by Ukraine are operated. Power plants in the liberated areas [in Kiev, Chernikiv and Summy regions], which have not suffered serious damage, are gradually resuming their work after repairs,” Oleksandr Kozakevych, chairman of the Renewable Energy Association of Ukraine told Renewable Energy World.


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On the other hand, the current conditions of the plants located in the territories occupied by Russian troops are largely unknown, as there is no physical access, no reliable communication, and it is impossible to assess the losses, Kozakevych said.

Over the past few years, Ukraine experienced a steady growth in the renewable energy sector output owing to a large inflow of private investments. Now, a lion’s share of money pumped into the industry over the past decade is jeopardized.

“In terms of investments into the renewable energy sector, it’s estimated that $9.2 billion-worth of installed capacity were threatened, $5.64 billion – under direct risk of demolishing or damaging and $3.5 billion under indirect risk of damaging,” Kozakevych said, explaining that the last category used to describe the situations when active fights are taking place in the neighboring regions.

The real challenge as of now it’s a technical audit of power plants – it’s rather impossible to check the technical state of particular objects due to the continuing Russian invasion, and occupation in Eastern and Southern Ukraine, the Renewable Energy Association of Ukraine reported.

Grid stability in the spotlight

Since the beginning of the fights, blackouts have become common in different parts of Ukraine, as the electricity grid is frequently being damaged. However, so far the Ukrainian authorities manage to have the power grid operating normally, as much as possible in the given circumstances.

“Damaged grid lines and substations are promptly repaired, sometimes the repair work has to be carried out under fire,” Kozakevich said, adding that Ukraine’s energy system operates stably, with a constant frequency in the network is maintained.

During the war, the Transmission System Operator (TSO) Ukrenergo restored 90% of the destroyed high-voltage grids in the occupied territories of Kyiv, Chernihiv, Sumy, as well as, where possible, in Kharkiv and Mykolaiv regions. So far, TSO has stopped all investment programs related to infrastructure upgrades, as all funds are directed to repair and restoration of war-damaged infrastructure.

Nevertheless, renewable energy plants operate in Ukraine with constant curtailments, Kozakevich said, explaining that this is primarily associated with demand issues.

Despite the damage to some thermal power plants and the fact that 43% of the installed capacity of nuclear generation is not controlled by Ukraine, since Zaporizhzhya nuclear power plant is occupied by Russia, there is a surplus of electricity in the system due to a slump in domestic consumption. Besides, renewable energy systems (RES) have experienced a drop in payments.

A missile strike on a solar plant in Ukraine's Kharkiv region left a large crater.

The plant manager wants to know why it was hit. There are "no military objects here," he says. pic.twitter.com/vUAPyW2HGz

— DW News (@dwnews) May 30, 2022
Financial side

At the end of March, RES payments were reduced to 15% of the feed-in-tariff for solar power plants and 16% for wind power plants due to lack of funds in the electricity market. Combined with downtime due to curtailments, “RES may be on the verge of bankruptcy,” Kozakevich said, adding that exports of green electricity to the EU, which is not yet operational, can, to some extent, remedy the situation.

“As the EU is reducing its dependence on Russian fossil fuels, Ukraine could become a supplier of carbon-neutral electricity to the EU,” he added.

Due to ad-hoc electricity market policy changes after February 24, the renewable energy sector is expected to lose 80% of its revenue – € 1.115 bln. 

“This [figure comes only from the] reduction in feed-in-tariff. Another side of the threat caused by the Russian invasion is loss of revenue due to halted production ordered by Ukrenergo in order to maintain the net’s technical security,” Kozakevich said.

Ukraine renewable energy companies are in negotiations with the Ukrainian government in order to maintain at least some negotiations aimed at finding a transparent consensus on the financial issues. Establishing electricity export to the European Union could be a meaningful solution.

“Ukraine’s electricity generating companies are very much interested in developing interconnecting capacities with Europe. As of now, it’s possible to earn some $150-200 million in electricity export revenues. But due to the fact that Ukraine still has a number of renewable energy generating capacities as well as other relatively competitive technology, the potential is estimated for at least $1.6-2.3 billion,” Kozakevich said.

Biting sanctions

Since early March, the Russian renewable energy sector has been hit by logistics chaos and huge uncertainty inflicted by Western sanctions.

“A strong rise in the cost of international cargo transportation due to the complexity of logistics chains, a price hike of raw materials and components, an increase in the cost of commissioning and installation works – these difficulties are faced all over the world,” Alexey Zhikharev, director of the Russia Renewable Energy Development Association (RREDA) told Renewable Energy World, adding that Russian renewable energy companies have to deal with far bigger issues.

“The Russian renewable energy industry is at greater risk: foreign suppliers refuse to fulfill previously signed contracts for the supply of technologies and equipment, and foreign companies refuse to send their employees to carry out installation works under the concluded contracts, which threatens to [undermine] not only components import but also the production of localized equipment and new facilities commissioning,” he added.

Since the beginning of the Ukraine crisis, the Russian economy experiences a mass exodus of Western businesses. At the time of writing, nearly 1,000 foreign companies suspended operations in Russia, according to a research by Yale University. Zhikharev admitted that large international players are leaving the Russian renewable energy market too, and besides there is a danger of unavailability of IT infrastructure based on foreign software.

Bracing for the unprecedented inflation in 2022 the Russian Central Bank has also sharply raised the key interest rate. This step entailed a dramatic increase in the cost of new loans, as well as the cost of servicing already taken loans. As explained by Zhikharev, the expensive money could cause the failure of some projects.

“Currently, the companies are doing serious work on re-building the supply chains, which, of course, will take some additional time,” Zhikharev said.

In addition, Russian investors mull the possibility of switching to some domestic components. This would require additional research and production tests, which may delay some projects.

Growth forecasts

However, there are hopes that the current crisis would not undermine the anticipated growth in power generating capacities in Russia.

“Despite the current situation, RREDA predicts an increase in the total capacity of renewable energy generation by 4 times by 2035 – up to 20 GW. Out of this amount, about 10 GW will come from wind generation and about 6 GW from solar power generation facilities,” Zhikharev said, adding that despite the suspension of new activities in Russia, international companies retain obligations to complete construction and commission already selected and launched projects.

Still, there is a general understanding that so far, dependence on imported technologies in the Russian renewable energy is significant. Switching to Russian technologies, where possible, would take from 6 months to 2 years, Zhikharev said.

Currently, Russia has its own production of renewable energy components. The main manufacturers of generating equipment for solar plants are Hevel Group, LLC, Solar Silicon Technologies, and HELIOS-Resource LLC. However, the industry needs state aid to smoothly push through the current crisis.

“All state support tools employed in the Russian renewable energy sector remain valid,” Zhikharev said, adding that the Russian government has already taken several important anti-sanction decisions.

For instance, renewable energy capacities approved under the government-run electricity provision agreement program were granted an additional non-penalty deferral, and the right to refuse to implement projects without penalties, Zhikharev said.

“At the moment, additional measures are being worked out called to address the problems of a sharp increase in the cost of bank loans in the wholesale market, and a price hike of a number of main components and equipment caused by the global crisis,” he added.


The author, Anonymous, is a trusted contributor to Renewable Energy World. His proximity to events in Ukraine, however, prompted him to ask for anonymity in writing this article.

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