{"id":38409,"date":"2025-11-11T13:28:15","date_gmt":"2025-11-11T10:28:15","guid":{"rendered":"https:\/\/ces.org.ua\/?p=38409"},"modified":"2025-11-14T15:40:33","modified_gmt":"2025-11-14T12:40:33","slug":"why-russians-wont-split-ukrainian-energy-system","status":"publish","type":"post","link":"https:\/\/ces.org.ua\/en\/why-russians-wont-split-ukrainian-energy-system\/","title":{"rendered":"Why won&#8217;t Russians succeed in splitting the Ukrainian energy system into left and right banks?"},"content":{"rendered":"<p><i><a href=\"https:\/\/linktr.ee\/cesukraine\" target=\"_blank\" rel=\"nofollow noopener\">\u201cWhat\u2019s Up With the Economy?\u201d<\/a>\u00a0is a podcast by the Centre for Economic Strategy in cooperation with Hromadske Radio, supported by PrivatBank.<\/i><\/p>\n<p><i>Every week, hosts\u00a0<a href=\"https:\/\/ces.org.ua\/en\/experts\/anhelina-zavadetska\/\">Anhelina Zavadetska<\/a>\u00a0and\u00a0<a href=\"https:\/\/ces.org.ua\/en\/experts\/maksym-samoiliuk-en\/\">Maksym Samoiliuk<\/a>\u00a0talk with experts, entrepreneurs, analysts, and government officials about what is happening with Ukraine\u2019s economy.<\/i><\/p>\n<p><i>While the podcast is held in Ukrainian, we decided to summarise each issue with the most important insights.<\/i><\/p>\n<p>In the new episode of the \u201cWhat\u2019s Up with the Economy?\u201d podcast, we discuss the state of Ukraine\u2019s energy sector ahead of winter with Oleksandr Kharchenko, Director of Energy Industry Research Center.<\/p>\n<p>Topics covered:<\/p>\n<ul>\n<li>How has Russia\u2019s strike strategy changed, and is Ukraine\u2019s energy infrastructure well protected?<\/li>\n<li>How do artificially low tariffs for households threaten the next heating season?<\/li>\n<li>Why is it more profitable for businesses to build their own power generation, and what obstacles do they face?<\/li>\n<\/ul>\n<h3>Russian attacks and infrastructure protection<\/h3>\n<p>Last winter, Ukraine managed to avoid large-scale blackouts for households, which created a false sense of stability.<\/p>\n<blockquote><p>\u201cApart from Ukrenergo, and probably Energoatom and Ukrhydroenergo, other major players in the sector have done little to prepare during the inter-heating season,\u201d says Oleksandr Kharchenko.<\/p><\/blockquote>\n<p>Russian attacks now fall into three main categories:<\/p>\n<ol>\n<li>Gas and gas production facilities<\/li>\n<li>Regional distribution networks, particularly along the front line<\/li>\n<li>Targeted strikes on specific regions, aimed at high-voltage networks, generation capacities, and thermal power plants.<\/li>\n<\/ol>\n<p>These concentrated attacks, when hundreds of drones and a dozen missiles hit a single region, are the hardest to recover from. That\u2019s what residents of Kyiv, Lviv, and Odesa are experiencing now.<\/p>\n<p>According to the Temporary Investigative Commission of the Verkhovna Rada, out of 119 key transformer nodes, 74 already have level-two protection, and construction continues on the remaining 45. Of the protected ones, only one was destroyed \u2014 by a direct missile hit.<\/p>\n<blockquote><p>\u201cUnfortunately, regional protection systems are almost non-existent. The exceptions are Kharkiv, Mykolaiv, and partially Odesa. Most regions have done nothing to protect local power grids. That\u2019s why we now see outages in Chernihiv, Sumy, Zaporizhzhia \u2014 these are strikes on distribution networks. They may not affect millions anymore, but hitting 30,000 users is enough for Moscow to call it a success,\u201d Kharchenko says.<\/p><\/blockquote>\n<h3>How artificially low tariffs threaten the next heating season<\/h3>\n<p>Subsidizing low household tariffs, both for gas and electricity, has led to a dangerous accumulation of debt.<\/p>\n<blockquote><p>\u201cNaftogaz, Energoatom, and Ukrenergo are now the three state-owned companies absorbing all public debt in the energy market. Even water utility debts end up there because water utility companies can\u2019t pay for electricity. They would pay, but they can\u2019t because their tariffs don&#8217;t cover energy costs,\u201d Kharchenko explains.<\/p><\/blockquote>\n<p>He adds that the IMF\u2019s position is clear: the Ukrainian energy system must be completely overhauled, as Moldova did in 2022, when it switched all consumers to market prices. Natural monopolies would still be regulated, but everyone \u2014 households, municipal engineering, and water utility companies \u2014 would pay market rates, with targeted subsidies distributed to vulnerable groups.<\/p>\n<p>Energy Industry Research Center estimates that \u20ac6 billion would be needed to cover the transition and provide subsidies to all vulnerable households.<\/p>\n<blockquote><p>\u201cUkraine could go to the European Commission and say: we need a four-year transition fund of \u20ac6 billion annually, and it would gradually decrease as state-owned companies start earning more. Energoatom alone could bring in an extra \u20ac2\u20133 billion in dividends once it operates fully on the market.<\/p>\n<p>Naftogaz would also become profitable. Selling gas at real market prices would generate huge dividends. These could easily fund the subsidies, while eliminating the thick, well-fed layer of corruption that feeds on the current system. And we\u2019re talking about billions of hryvnias here.<\/p>\n<p>Right now, we\u2019re getting financial aid. But once the war ends, we\u2019ll be asked, rightly so, why British, French, Dutch, or German taxpayers, who don\u2019t get cheap gas at home, should pay for cheap gas and electricity for Ukrainians? A logical question, right? At that point, the money will stop coming. And we\u2019ll have to find real solutions\u201d, Kharchenko explains.<\/p><\/blockquote>\n<h3>Why should businesses invest in their own power generation and what are the obstacles?<\/h3>\n<p>Frequent power outages have prompted more companies to invest in independent energy sources. According to Kharchenko, such projects boost energy independence and pay off quickly, especially for firms that consume both heat and electricity.<\/p>\n<blockquote><p>\u201cWhat\u2019s the issue with Kyiv, for example? A city of 3.5 million people, with peak consumption reaching 2 GW, or 3 GW including the region. Before the attacks, Kyiv\u2019s own generation capacity was just 1.2 GW.<\/p>\n<p>Chornobyl was originally built to power Kyiv, but it\u2019s shut down. Now electricity must be pulled via high-voltage lines from western nuclear plants. It must be pulled from the heavily damaged Trypillia power plant, meaning the city lacks sufficient local capacity. What is the way out in this situation? The logical solution is to build an additional generation in Kyiv itself,\u201d the expert explains.<\/p><\/blockquote>\n<p>However, businesses that attempt to build such facilities face numerous bureaucratic barriers:<\/p>\n<blockquote><p>\u201cThere are plenty of nice talks about supporting business, but once you start, it feels like the system hates you.<\/p>\n<p>You try to build generation capacity that could even provide heat to the city, but it\u2019s almost impossible to reach the right officials to simply agree on an issue \u2014 everyone\u2019s \u2018too busy.\u2019 Then come crazy land issues. Land allocations are just a disaster. Getting land reclassified for energy use is an unbelievable success,\u201d Kharchenko notes.<\/p><\/blockquote>\n<p><i><a href=\"https:\/\/linktr.ee\/cesukraine\" target=\"_blank\" rel=\"nofollow noopener\">\u201cWhat\u2019s Up With the Economy?\u201d<\/a>\u00a0is a podcast by the Centre for Economic Strategy in cooperation with Hromadske Radio, supported by PrivatBank.<\/i><\/p>\n<p><i>The podcast is available in Ukrainian on different platforms by the\u00a0<a href=\"https:\/\/linktr.ee\/cesukraine\" target=\"_blank\" rel=\"nofollow noopener\">link<\/a>.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cWhat\u2019s Up With the Economy?\u201d\u00a0is a podcast by the Centre for Economic Strategy in cooperation with Hromadske Radio, supported by PrivatBank. Every week, hosts\u00a0Anhelina Zavadetska\u00a0and\u00a0Maksym Samoiliuk\u00a0talk with experts, entrepreneurs, analysts, and government officials about what is happening with Ukraine\u2019s economy. While the podcast is held in Ukrainian, we decided to summarise each issue with the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":38338,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[666,200],"tags":[595],"experts":[462,525],"news_type":[138],"class_list":["post-38409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcasts","category-news-list-en","tag-energy-en","experts-maksym-samoiliuk-en","experts-anhelina-zavadetska","news_type-press-release"],"acf":[],"_links":{"self":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/38409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/comments?post=38409"}],"version-history":[{"count":1,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/38409\/revisions"}],"predecessor-version":[{"id":38410,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/38409\/revisions\/38410"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/media\/38338"}],"wp:attachment":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/media?parent=38409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/categories?post=38409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/tags?post=38409"},{"taxonomy":"experts","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/experts?post=38409"},{"taxonomy":"news_type","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/news_type?post=38409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}