UKRAINE POWER MARKET OUTLOOK TO 2030, UPDATE 2014 MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

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1 REFERENCE CODE GDPE0760ICR PUBLICATION DATE JANUARY 2015 UKRAINE POWER MARKET OUTLOOK TO 2030, UPDATE 2014 MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

2 Executive Summary Thermal Power Dominates Ukraine s Power Mix Ukraine derives most of its electricity from coal. In 2013, thermal power capacity from coal accounted for XX% of cumulative installed capacity, followed by nuclear power with XX%, gas-based thermal power with XX% and large hydropower plants, including pumped-storage plants, with XX%. Renewable technologies, including onshore wind, solar Photovoltaic (PV), small hydro, biomass, and biogas, accounted for the remaining XX%. Power Market, Ukraine, Cumulative Installed Capacity by Fuel Type (%), 2013 Power Market, Ukraine, Annual Power Consumption and Generation (TWh), Annual power consumption and generation (TWh) Annual power consumption Annual power generation Source: GlobalData, Power Database [Accessed on: December 1, 2014] Hydro including pumped storage Other renewables Ukraine not Deterred from a Nuclear-Based Future by Chernobyl Gas (thermal) Nuclear Coal (thermal) Source: GlobalData, Power Database [Accessed on: December 1, 2014] Continued Growth in Electricity Consumption and Generation Electricity consumption and generation increased between 2000 and Consumption grew from XX Terawatt hours (TWh) in 2000 to XX TWh in 2013, at a Compound Annual Growth Rate (CAGR) of XX%, while generation increased from XX TWh in 2000 to XX TWh in 2013 at a CAGR of XX%. The development of the nuclear power industry in Ukraine started with the commissioning of the first unit of the Chernobyl Nuclear Power Plant (NPP) in However, this plant was the site of a major disaster in 1986, which affected the former Soviet Union and much of Europe. Following the Fukushima disaster in 2011, a number of European nations, led by Germany, decided to close down their nuclear power generation units, concluding that nuclear power was inherently dangerous and that sufficient electricity could be generated from other sources. Ukraine, which was at the core of the disaster in 1986, has not yet followed suit. Nuclear power currently accounts for XX% annual power generation, and the government wants to increase this to XX%. 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Ukraine, Power Market, Snapshot Ukraine, Power Market, Macroeconomic Factors Ukraine, Power Market, Supply Security Ukraine, Power Market, Generation Infrastructure Ukraine, Power Market, Transmission Infrastructure Ukraine, Power Market, Opportunities Ukraine, Power Market, Challenges Ukraine, Power Market, Market Analysis Ukraine, Power Market, Supply Structure Ukraine, Power Market, Key Market Players Financial Performance Key Financial Ratios and Inference Ukraine, Power Market, Financial Deals Deal Volume and Value Analysis, Deals by Type, Deals by Technology, 2013 November

4 Table of Contents 4.4 Ukraine, Power Market, Demand Structure Power Consumption by Sector, Ukraine, Power Market, Regulatory Scenario Ukraine, Power Market, Key Electricity Policies Market Liberalization Law on Alternative Energy Sources Feed-in Tariff Program/Green Tariff Law Nuclear Policy Energy Efficiency Ukraine, Power Market, Foreign Investment Scenario Ukraine, Power Market, Capacity and Generation Overview Ukraine, Power Market, Cumulative Installed Capacity by Fuel Type, Ukraine, Power Market, Cumulative Installed Capacity and Annual Power Generation, Cumulative Installed Thermal Capacity and Annual Thermal Power Generation, Cumulative Installed Hydropower Capacity and Annual Hydropower Generation, Cumulative Installed Nuclear Capacity and Annual Nuclear Power Generation, Cumulative Installed Renewable Capacity and Annual Renewable Power Generation, Ukraine, Power Market, Transmission and Distribution Overview Ukraine, Power Market, Transmission Overview

5 Table of Contents 7.2 Ukraine, Power Market, Distribution Overview Ukraine, Power Market, Grid Interconnection Electricity Import and Export Trends, Ukraine, Power Market, Electricity Trading Ukraine, Power Market, Competitive Landscape: Snapshot of Leading Power Generation Companies Key Company in the Ukraine Power Market NNEGC Energoatom Company Overview Business Description SWOT Profile Overview Key Company in the Ukraine Power Market Energy Company of Ukraine Company Overview Business Description SWOT Profile Key Company in the Ukrainian Power Market DTEK Company Overview Business Description SWOT Overview Appendix Market Definitions Power Installed Capacity

6 Table of Contents Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Primary Research and Analysis Secondary research and analysis Disclaimer

7 Table of Contents 1.1 List of Tables Table 1: Power Market, Ukraine, GDP ($bn), Population (million), and Annual Power Consumption (TWh), Table 2: Power Market, Ukraine, Market Share of Power Generation Companies by Capacity (%), Table 3: Power Market, Ukraine, Deals by Technology (%), 2013 November Table 4: Power Market, Ukraine, Annual Power Consumption (TWh), Table 5: Power Market, Ukraine, Power Consumption by Sector (%), Table 6: Power Market, Ukraine, Minimum Green Tariff Rates ( /kwh) and ($/kwh), Table 7: National Economy, Ukraine, Foreign Direct Investment ($bn), Table 8: Power Market, Ukraine, Cumulative Installed Capacity by Fuel Type (%), Table 9: Power Market, Ukraine, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 10: Power Market, Ukraine, Leading Active Thermal Power Plants, Table 11: Power Market, Ukraine, Leading Upcoming Thermal Power Plants, Table 12: Power Market, Ukraine, Cumulative Thermal Installed Capacity (GW) and Annual Thermal Power Generation (TWh), Table 13: Power Market, Ukraine, Leading Active Hydropower Plants, Table 14: Power Market, Ukraine, Leading Upcoming Hydropower Plants, Table 15: Power Market, Ukraine, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Table 16: Power Market, Ukraine, Leading Active Nuclear Reactors, Table 17: Power Market, Ukraine, Leading Upcoming Nuclear Reactors, Table 18: Power Market, Ukraine, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Power Generation (TWh), Table 19: Power Market, Ukraine, Leading Active Renewable Power Plants, Table 20: Power Market, Ukraine, Leading Upcoming Renewable Power Plants,

8 Table of Contents Table 21: Power Market, Ukraine, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Table 22: Power Market, Ukraine, Transmission Line Length (Ckm), Table 23: Power Market, Ukraine, Distribution Line Length (Ckm), Table 24: Power Market, Ukraine, Annual Import and Export of Electricity (TWh), Table 25: Power Market, Ukraine, NNEGC Energoatom SWOT Profile, Table 26: Power Market, Ukraine, Energy Company of Ukraine SWOT Profile, Table 27: Power Market, Ukraine, DTEK, SWOT Profile, Table 28: Abbreviations

9 Table of Contents 1.2 List of Figures Figure 1: Power Market, Ukraine, GDP ($bn), Population (million), and Annual Power Consumption (TWh), Figure 2: Power Market, Ukraine, Market Share of Power Generation Companies by Capacity (%), Figure 3: Power Market, Ukraine, Deal Value ($bn) and Number of Deals, 2004 November Figure 4: Power Market, Ukraine, Deals by Technology (%), 2013 November Figure 5: Power Market, Ukraine, Annual Power Consumption (TWh), Figure 6: Power Market, Ukraine, Power Consumption by Sector (%), Figure 7: Power Market, Ukraine, Cumulative Installed Capacity by Fuel Type (%), Figure 8: Power Market, Ukraine, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Figure 9: Power Market, Ukraine, Cumulative Thermal Installed Capacity (GW) and Annual Thermal Power Generation (TWh), Figure 10: Power Market, Ukraine, Cumulative Installed Hydro Capacity (GW) and Annual Hydropower Generation (TWh), Figure 11: Power Market, Ukraine, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Generation (TWh), Figure 12: Power Market, Ukraine, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Figure 13: Power Market, Ukraine, Annual Import and Export of Electricity (TWh),

10 Introduction 2 Introduction Ukraine, which is an emerging economy, registered major economic decline during the 1990s after the break-up of the Union of Soviet Socialist Republics (USSR), but has shown substantial growth since Its strategic location between Eastern Europe, Russia, Central Asia, and the Middle East means that it has substantial opportunities for trade and investment. Ukraine possesses rich agricultural resources, growing industries, a skilled labor force, and a good education system. Ukraine gained independence from the Soviet Union in 1991 and proceeded to implement reforms. However, domestic resistance forced the government to backtrack on its reform agenda. The lack of reforms in the political and economic system has been the biggest challenge faced. Between 2000 and 2007, its economy, hinging on steel production and exports, progressed due to the high price of steel in the global market. However, Ukraine borrowed massively during this time, and when the recession began in 2008, its economy was set back as a result. Economic growth resumed in 2010 and 2011, but, due to the lack of reforms, the effects could not continue for long and the economy lagged again in Ukraine s Gross Domestic Product (GDP) increased at a CAGR of XX% (constant prices) or XX% (current prices) between 2000 and 2012, registering an average year-on-year rate of XX% between 2000 and The economy increased by XX% in 2008, and in 2009 it registered a substantial decline of XX%. Growth in 2010 and 2011 amounted to XX% and XX% respectively, while in 2012, growth was only XX%. Between 2013 and 2017, the economy is expected to grow at a CAGR of XX% (constant prices) (IMF, 2012). The services sector is the dominant contributor to the national economy in Ukraine, accounting for an estimated XX% share of GDP in Other important sectors in terms of contribution to GDP were the industrial sector, with XX% of GDP, and agriculture, with XX% (CIA, 2013). Ukraine is one of the largest coal-producing countries in the world, with the seventh-largest coal reserves, estimated at XX billion tons, and the third-largest anthracite coal reserves, estimated at XX billion tons, as of In 2011, XX million metric tons of coal were mined, of which XX% was steam coal (Sadovaya Group, 2012). Despite this, the country depends on imports for around XX% of its gas and oil requirements. All of its nuclear fuel is imported. The Ministry of Fuel and Energy is the apex body responsible for energy policies in Ukraine. The Ministry is responsible for the Department of Electricity, and for the development of a secure supply 10

11 Introduction of electricity, the development of investment policies, and the supervision of the market participants. The national regulator, the National Electricity Regulatory Commission (NERC) of Ukraine, was established in 1995, and issues licenses for power generation, transmission and distribution. 2.1 GlobalData Report Guidance This report begins with an executive summary covering the key growth trends in the Ukrainian power market. Chapter two provides an introduction to Ukraine s macro-economic scenario and the Ukrainian power market. Chapter three provides an insight into the key performance areas of the Ukrainian power sector. Chapter four covers historic and forecasts trends on capacity and generation according to type of plant. This section also includes information on the upcoming power plants and decommissions in Ukraine, and analysis on how these developments will affect capacity and generation growth. Chapter five provides information on Ukraine s power infrastructure, including existing and planned developments in transmission, distribution infrastructure, and cross-country interconnections. The section also includes information on electricity imports and exports in Ukraine and the status of electricity trading in the country. Chapter six includes a market analysis of the Ukrainian power market. It includes the basic structure of the power sector of Ukraine, an analysis of the market shares of companies in the power generation and the retail market, an analysis of the financial situation of the power market in the country, and analysis of deals from 2004 to The chapter also describes historical trends in electricity consumption, a breakdown of electricity consumption for 2012, and a forecast of the consumption of electricity up to Chapter seven describes the power regulatory structure and prominent policies expected to influence the future of the power market. Chapter eight includes complete descriptions and SWOT analyses for the leading companies in Ukraine s power market. 11

12 Introduction Note: the report provides actual or estimated data for 2013, depending upon information availability at the time of writing the report. 12

13 Market Analysis 4.2 Ukraine, Power Market, Key Market Players The largest power generation utility in the power market in 2013 in terms of installed capacity was Donbass Fuel-Energy Company (DTEK) with a XX% share of the country s total installed capacity. The second largest was NNEGC Energoatom (Energoatom), which is the nuclear power generation utility in Ukraine, with a share of XX% as of The third largest was the Energy Company of Ukraine (ECU), a conglomerate of most of the former state-owned thermal power generation companies, with a share of XX%. PJSC Ukrhydroenergo, a state-run company that owns all of Ukraine s hydropower facilities, had a market share of XX% in Other smaller power generation utilities had a total market share of XX% in Since no new power plants have been developed, and also since the revamping of the existing power plants in 2013, the market share of these companies remains the same as in the previous year, Figure 2: Power Market, Ukraine, Market Share of Power Generation Companies by Capacity (%), 2013 Other Ukrhydroenergo DTEK ECU Energoatom Source: GlobalData Table 2: Power Market, Ukraine, Market Share of Power Generation Companies by Capacity (%), 2013 Company name DTEK Energoatom ECU Ukrhydroenergo Other Source: GlobalData ECU: Energy Company of Ukraine Share 20

14 Capacity and Generation Overview 6.2 Ukraine, Power Market, Cumulative Installed Capacity and Annual Power Generation, Ukraine s cumulative installed capacity amounted to XX GW in 2013, representing growth at a CAGR of XX% from XX GW in The country s installed capacity is expected to continue to grow at a CAGR of XX% to reach XX GW in The majority of Ukraine s cumulative installed capacity has been contributed by the country s coalfired power plants, due to its sizeable coal deposits. The development of the coal industry in Ukraine has been a lot to do with its historical association with the Soviet Union: the large Thermal Power Plants (TPP) in the country were developed in order to supply electricity to Russia s manufacturing units in Russia. Nuclear power, which is another important source of electricity, also has its origins in the Soviet days. The future growth of cumulative installed capacity in Ukraine is expected to be spearheaded by these two technologies. Hydropower potential, especially large hydro, has been more or less fully exploited, and any expansion would primarily be in the form of new downstream units or turbine replacements. There is, of course, expansion expected in the area of small hydro, since it is classed as a renewable technology by the Ukrainian government and is therefore eligible for green tariffs. Drastic increases in the capacities of other renewable technologies, including wind and solar PV, are also expected. However, the Ukrainian government is focusing primarily on nuclear capacity and intends to generate XX% of its requirements from nuclear sources by Annual power generation in Ukraine amounted to XX TWh in By 2013 this total had increased to XX TWh, at a CAGR of XX%. Annual generation is expected to grow at a CAGR of XX%, reaching XX TWh in

15 Capacity and Generation Overview Figure 8: Power Market, Ukraine, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Cumulative installed capacity (GW) Annual power generation (TWh) Cumulative installed capacity Source: GlobalData, Power Database [Accessed on: December 1, 2014] Annual power generation 36

16 Capacity and Generation Overview Table 9: Power Market, Ukraine, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Year Cumulative installed capacity Annual power generation Source: GlobalData, Power Database [Accessed on: December 1, 2014] 37

17 Appendix 9 Appendix 9.1 Market Definitions Power Power refers to the rate of production, transfer or energy use, usually related to electricity. It is measured in Watts (W) and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real power or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. It is given in Megawatts (MW) on a nameplate affixed to the generator Electricity Generation Electricity generation refers to the process of generating electricity from other forms of energy. It also refers to the amount of electricity produced, expressed in Gigawatt hours (GWh) Electricity Consumption Electricity consumption is the sum of electricity generated, plus imports, minus exports and transmission and distribution losses. It is measured in Gigawatt hours (GWh) Thermal Power Plant This is a plant where the turbine generators are driven by burning fossil fuels Hydropower Plant This is a plant where the turbine generators are driven by falling water Nuclear Power This is the electricity generated by the use of thermal energy, released from the fission of nuclear fuel in a reactor. 80

18 Appendix Renewable Energy Resources Renewable energy resources are those that provide energy that is naturally replenished but limited in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydro and wind are examples of renewable resources. 9.2 Abbreviations Table 28: Abbreviations ARS Btu CAGR CCGT Ckm CN cogen DTEK EBRD ENTSO-E EU FDI FiT GDP GHG Gt GWh IAEA IPS km kv kw kwh kwh/m²/year m/s MVA MW NERC NPC NPP AtomRemontService British thermal unit Compound Annual Growth Rate Combined Cycle Gas Turbine Circuit kilometer Concrete cogeneration Donbass Fuel-Energy Company European Bank for Reconstruction and Development European Network of Transmission System Operators for Electricity Network European Union Foreign Direct Investment Feed-in Tariff Gross Domestic Product Greenhouse Gas Giga Tons Gigawatt hour International Atomic Energy Agency Integrated Power System kilometer kilovolt kilowatt kilowatt hour kilowatt hour per square meter per year meters per second Megavolt Ampere Megawatt National Electricity Regulatory Commission of Ukraine National Power Company Nuclear Power Plant 81

19 Appendix PSPP PV PWR SNRI SS ETC T&D TE TPP TWh USSR VVER WEM Source: GlobalData Pumped Storage Power Plant Photovoltaic Pressurized Water Reactor State Nuclear Regulatory Inspectorate of Ukraine SS Emergency and Technical Center Transmission and Distribution Earth Fill Thermal Power Plant Terawatt Hour Union of Soviet Socialist Republics Vodo-Vodyanoi Energetichesky Reaktor (Water-Water Power Reactor) Wholesale Electricity Market 9.3 Bibliography CIA (2013). Ukraine: The World Factbook. Central Intelligence Agency. Available from: [Accessed on: December 3, 2014] DTEK (2013). DTEK s Operational Results in 2Q and 1H of DTEK. Available from: IEA (2012). Ukraine International Energy Agency. Available from: s_2012.pdf IMF (2012). World Economic Outlook Database [database]. International Monetary Fund. Available at: tries. [Accessed on November 28, 2014]. MECIU (2012). Statement on Security of Energy Supply of Ukraine. Ministry of Energy and Coal Industry of Ukraine. Available from: 82

20 Appendix Sadovaya Group (2012). Ukrainian Coal Market. Sadovaya Group. Available from: [Accessed on: December 2, 2014]. SSC of Ukraine (2013b). Foreign direct investment. State Statistics Committee of Ukraine (SSC of Ukraine). Available from: [Accessed on: December 5, 2014]. Stracansky P (2013). Nuclear Safety Plan Has Ukrainians Worried, IPS-Inter Press Service, March 27, Available from: [Accessed on: December 2, 2014]. World Bank (2013). Ease of Doing Business in Ukraine. The World Bank Group. Available from: [Accessed on: December 2, 2014] Mondaq (2014). Legal and Regulatory Framework in Ukraine. Available from: amewofr+in+ukraine [Accessed on December 1, 2014] 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research and consulting in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( The following research methodology is followed for all country outlook reports Coverage This report gives detailed information on Ukraine s power market. It examines Ukraine s power market structure and provides historical and forecast numbers for generation, capacity and consumption up to The report provides insights on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects. 83

21 Appendix Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople Secondary research and analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources including but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature GlobalData s proprietary databases like the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database. Further to this, the following secondary information is collected and analyzed to project Ukraine s power market scenario through to 2030, analyzing factors such as the following: Ukraine s macroeconomic scenario Government regulations, policies and targets Government and private sector investments Contract and deal announcements Utility expansion plans The sector s historic track record 84

22 Appendix Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations. 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such, GlobalData can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. This report is a licensed product and should not to be reproduced without prior permission. 85

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