Figures shared by the Ministry of Energy of Ukraine state that, during three years of war, there have been 63,630 instances of damage to Ukraine's oil, gas, and energy infrastructure, including over 34,000 substations, distribution and transmission lines, 4,800 generation facilities, 23,000 gas facilities, and 1,400 heating facilities.
By the end of 2024, the total estimated losses to the energy sector were approximately USD 93 billion. Despite these challenges, the Ukrainian energy system continues to operate and has introduced new measures to enhance its resilience.
Here are several lessons that can be learned to improve European energy resilience against various threats:
Synchronisation of networks
As a legacy of the former Soviet Union, the Ukrainian power system was synchronised with Russia's grid network. Before the war, Ukraine had begun the integration process with ENTSO-E and was scheduled to synchronise in 2025.
In February 2022, Ukraine planned a test to disconnect from the Russian grid and operate in island mode for several days. The first day of this test coincided with the start of the war on February 24, 2022, however the Ukrainian TSO and ENTSO-E worked tirelessly to secure urgent synchronisation within three weeks. Currently, the Ukrainian grid is synchronised with the EU grid, and efforts are underway to extend cross-border capacity from 1.7 GW to 2.5 GW for emergency situations. Importing electricity from the EU has helped Ukrainian businesses avoid power cuts during major attacks on the energy infrastructure.
Lesson: Synchronisation and the interconnection of networks between neighbouring countries plays a crucial role in grid resilience and stability.
Cyber attack protection
There were numerous cyber attacks on Ukraine's energy infrastructure that predate the war. During the war, that number increased significantly, with DTEK, the largest private energy company, reporting over 300 million cyber attacks during the war. The Ukrainian TSO and its foreign partners are working closely to introduce new measures against such attacks. Efforts have been made to foster a culture of cybersecurity within the energy sector, including regular training and awareness programmes for employees to ensure they can recognise and respond to cyber threats.
Lesson: Strengthening cybersecurity is essential for resilience. Multi-layered security, regular updates, and promoting 'cyber hygiene' are critical components.
Diversification of oil and gas supply
Ukraine was previously heavily dependent on oil and gas supplies from Russia, but currently, is more flexible in purchasing oil and gas, sourcing these commodities from EU partners. There are increasing contracts for LNG supply from the US and other markets, delivered via EU ports. Several projects are underway to enlarge cross-border capacity for gas supplies.
Lesson: Each country should diversify its energy resources and not rely on a single source of supply.
Vulnerability of centralised generation
Ukrainian power generation and heat supply are predominantly centralized, with large coal-powered plants, nuclear stations, and hydro power stations supplying electricity to multiple cities or regions. Most cities also have centralised heating. Russia targeted power plants, causing blackouts across entire regions, and in response, the Ukrainian government adopted a strategy to build decentralised generation, with numerous small power plants that are more difficult and more costly to destroy.
Additionally, there is a strategy to introduce smart grids. DTEK, which lost all its coal-powered plants, is investing in wind projects in Ukraine, which are less vulnerable to missile attacks.
Lesson: Decentralised generation can create a more stable and resilient power system than one reliant on centralised production.
Energy as a service and merchant PPAs
During the war, Ukraine lost two-thirds of its generation capacities. To support businesses, the government introduced significant incentives for importing gas and renewable energy generating equipment. This led many businesses to build generation capacities on their sites. Most operate independently and are not visible to the grid, but more companies are becoming active consumers, consuming part of the electricity and selling the rest on the market. There is growing interest in the 'energy as a service' model, attracting investments in new projects.
High demand for electricity has driven market prices up, making Ukraine's electricity DAM prices the second highest in Europe. Many renewable energy producers are selling electricity based on market prices, having suspended their FiT licences. IFIs are beginning to finance projects based on market prices and are considering introducing a Minimum Price Guarantee Platform to increase the bankability of projects based on merchant sales of electricity.
Lesson: While system resilience is crucial for many businesses, energy resilience for businesses is equally important. Energy as a service and merchant PPAs models have significant potential to enhance the resilience of individual businesses from disruption to their energy supplies.
Contributor
Foreign Qualified Lawyer (Ukraine)
