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Ukraine Power Report Q4 2013 - New Market Research Report

New Energy market report from Business Monitor International: "Ukraine Power Report Q4 2013"


Boston, MA -- (SBWIRE) -- 11/12/2013 -- We forecast Ukraine to remain an underperformer in Emerging Europe with regard to its energy policy over the remainder of 2013, on into 2014, and for the duration of our forecast period. A stifling business and regulatory environment, a poor economic outlook and an unstable and fractious political sphere will all combine to deter investment in the Ukrainian energy sector, slowing further development and leaving the country at the mercy of its neighbour Russia with regard to its supplies of oil and natural gas.

Ukraine is set to remain reliant on Russia for its supply of oil and natural gas for the foreseeable future, as domestic gas resources are not sufficient to sustain demand at the country's gas-fired power stations. The government has attempted to diversify the country's energy sources away from natural gas, with hydropower, renewables and nuclear each receiving increasing investment in the past couple of years. However, as the economy is set to experience recession in 2013, with our forecast for real GDP to decline 1.4%, and post a modest recovery of 1.0% growth in 2014, this may prove unaffordable.

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Key Trends and Developments in the Ukrainian Power Sector

- The energy ministry stated on August 19 2013 that the government has commissioned a key power line linking its Dniester Hydroelectric Pumped Storage Power Plant, the largest plant of its kind in Europe, with the power grid. The 330kw line cost UAH308mn and was made possible with financial backing from the World Bank. The line will help to save UAH 250mn per annum through lower purchase costs of natural gas.
- We forecast Ukraine's power generation in 2013 to be 181.2 terawatt hours (TWh), rising to 181.4TWh in 2014. During the period 2014-2022, we project Ukraine's overall power generation to rise by an average of 1.8% per annum, reaching 213.7TWh. The primary driver of this growth will be an average per annum increase in gas-fired generation of 2.3%. We also forecast non-hydro renewables to increase as a proportion of Ukraine's power generation, with forecast average growth in the sector of 10.0% per year up until 2022.
- The government is much more optimistic in its view of the country's electricity consumption in the years ahead, predicting demand to rise to 307.0TWh in 2020, whereas we forecast net consumption to reach 163.3TWh in that year. Government policy is to continue supplying half of this from nuclear power. This will require 29.5 gigawatts (GW) of nuclear capacity in 2030, up from the current rate of 14.84GW. We view this as unfeasible in the long term given Ukraine's poor macroeconomic outlook and declining population which mean that the planned capacity expansion is not only overly ambitious but also unnecessary.

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