As Ukraine rebuilds its energy infrastructure, embracing decentralisation and microgrids is crucial for enhancing energy security, resilience and independence. However, overcoming legislative and regulatory barriers is essential for unlocking the full potential of these technologies.
What is the purpose of battery storage systems? Are they ancillary services, a balancing market, arbitrage, or own needs? Does the crisis in the balancing market and the market as a whole affect the ESS segment?
pillar in Ukraine''s transition towards a green economy, fuelled by private investments. This study aims to offer practical recommendations and insights, drawing from exemplary practices within the EU and worldwide, to support the ongoing post-mediation process and facilitate the
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• This report presents the conceptual design, costs, and benefits of integrating solar photovoltaics (PV) and battery energy storage systems (BESS) into critical community facilities in Chernihiv, Ukraine. • Conceptual designs, economic metrics, and resilience benefits are presented for the following facilities: – Hospital No. 2
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Russia''s full-scale invasion of Ukraine has led to dramatic changes in the European energy market, with countries across the continent moving to end years of growing reliance on Russian gas. However, more can still be done to safeguard European energy independence and prevent the further weaponization of Russian exports. In the search for greater energy security, EU officials and individual member states should explore the opportunities presented by Ukrainian gas storage.
Ukraine''s underground gas storage facilities are the largest in Europe and offer extensive untapped potential. In order to make the most of this potential, however, considerable international investment will be necessary along with guarantees to cover war-related risks.
Constructed during the Soviet era as part of the infrastructure to support Russian gas deliveries to European markets, Ukraine''s gas storage facilities have an overall capacity of 31 billion cubic meters. These facilities are overwhelmingly concentrated in the west of the country, far from the present front lines of the Russian invasion and close to the borders with EU member states Poland, Slovakia, Hungary, and Romania.
Following the collapse of the Soviet Union, state-owned Russian energy giant Gazprom continued to utilize Ukraine''s underground storage facilities until 2013. The decision to stop using these facilities came as relations between Russia and Ukraine entered a period of sharp deterioration, and was part of a broader Russian strategy to bypass the Ukrainian gas transit system entirely and develop alternative routes to European customers.
In line with this new policy, Gazprom began to lease growing volumes of gas storage space inside the European Union. This would ultimately lead to severe price hikes and accusations against Russia of weaponizing energy supplies when Gazprom failed to replenish storage volumes in 2021. Europe has since moved to prevent this situation from repeating by regaining control over energy storage facilities and implementing a range of restrictions.
Over the past decade, Ukraine responded to Russia''s aggressive energy sector stance by reforming its own gas industry in order to attract new partners. In 2019, Kyiv introduced attractive tariffs and trader-friendly regulations. In 2020, Ukraine brought its entire regulatory framework into line with the EU. In spring 2023, Ukrainian gas storage operator Ukrtransgaz was certified under EU gas storage regulations. These measures have proved somewhat effective, with European traders storing around 10 billion cubic meters of gas in Ukraine''s underground facilities in 2020-21. However, this was primarily reverse flow Russian gas passing through Ukraine.
Today, Ukraine has the potential to distribute up to 200 million cubic meters of gas per day to EU markets. The real logistical challenge lies in the limited capacity to transport large volumes of gas in the other direction from the EU to Ukraine''s storage facilities. Present capacity provided by Slovakia, Hungary, and Poland is inadequate.
Further integration of Ukraine''s gas storage infrastructure into European energy networks would require an expansion of physical capacities within the EU. Fortunately, this could be at least partially achieved by enhancing existing infrastructure rather than constructing entirely new pipelines.
For example, four major pipelines from Ukraine pass through Slovakia to Austria and the Czech Republic and connect to German pipelines originally built to transport Russian gas delivered via the Nord Stream pipelines. These German pipelines could be repurposed to deliver gas from the country''s LNG terminals in the North Sea to Ukrainian underground storage facilities. Slovakia''s existing gas transit network currently has sufficient spare capacity for this task.
Investments would be necessary to improve the Polish and Hungarian gas transit systems in order to transport desired volumes of gas to Ukraine''s storage facilities. With an LNG terminal of its own and interconnections with neighboring Baltic countries, Poland is particularly well-placed to benefit from improved access to Ukrainian storage facilities.
The European Commission recognized the strategic significance of Ukraine''s underground storage capacity in 2021, but progress on the European front toward taking advance of this infrastructure remains underwhelming. Clearly, the security challenges presented by Russia''s ongoing invasion must be addressed through enhanced guarantees for customers storing gas in Ukraine. Beyond this, infrastructure upgrades are also needed.
With the winter heating season now only a few months away, the clock is ticking. Ukraine''s storage facilities can help Europe cope with any seasonal spikes in demand for gas, but present infrastructure is insufficient. Looking ahead, Europe would stand to reap the benefits of increased import capacity to Ukraine''s gas storage facilities long after the coming winter season is over. Indeed, this should be viewed as a strategic initiative with the potential to pave the way for a new era of European energy security.
Sergiy Makogon is a Kyiv-based energy expert and former CEO of Gas TSO of Ukraine.
As Ukraine’s long-awaited counteroffensive gets underway, there are fears that Russia’s deteriorating military predicament could lead to an escalation in Vladimir Putin’s nuclear threats, writes Diane Francis.
84% of Ukrainians reject any compromise with Russia and are ready for a long war if necessary in order to fully de-occupy their country. Most simply see no middle ground between genocide and national survival, writes Peter Dickinson.
With dozens of senior Russian officers reportedly detained following the Wagner revolt and a senior commander dismissed this week for criticizing the conduct of the Ukraine invasion, could Putin face a mutiny within the Russian army?
The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.
The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.
© 2024 Atlantic CouncilAll rights reserved.
Gas storage facilities deep beneath western Ukraine are attracting European partners and generating much-needed revenue for the war-torn country
When Russia launched a major missile attack on a Ukrainian gas storage facility in April it inadvertently highlighted the resilience of Ukraine’s underground gas storage system, and bolstered claims by operator Ukrtransgaz that the war has little impact on its ability to inject and withdraw gas on behalf of domestic and international companies.
“The situation will not critically impact UGS [underground storage] operations, since the gas is stored deep underground,” commented Oleksiy Chernyshov, CEO of the state energy company Naftogaz, following the attack. “The damaged surface infrastructure will need repairs – however, we have sufficient backup capacities in place to mitigate any immediate impacts.”
For Szymon Kardaś, Senior Policy Fellow for energy at ECFR’s Warsaw Office, the attack raised an existential concern. “The gas transit contract between Ukraine and Russia expires at the end of this year. According to the data for 2023, there were around 13bcm (billion cubic metres) running through Ukraine to European customers. When the contract expires, the assumption is that Russia would intensify attacks, particularly on the gas infrastructure, because they will have no incentive in keeping it safe.”
Yet for now, Roman Maliutin, CEO of Ukrtransgaz – Storage System Operator of Ukraine, a Naftogaz subsidiary, noted that the attack only marginally affected the daily technical capacity by Ukrtransgaz: a small decrease from 78mcm (million cubic metres) per day to 73mcm. “Even after our storage was attacked, we did not go to force majeure,” he said. “We continued our services immediately after.”
Maliutin’s comments underscore the resilience that has defined Ukrtransgaz’s operations since Russia’s invasion in February 2022. Ukraine is playing a useful role in bolstering Europe’s energy security, offering European companies alternative gas-storage options as EU storages approach full capacity, and as concerns continue over potential price spikes from war-related supply disruptions. European gas prices rose to about 10 times their usual levels following the invasion and, with winter always presenting energy challenges, the need for energy security remains a pressing concern.
Last year, with storage capacities at their limit, European countries had two options: to store in tankers offshore or to use underground storage systems, which is less expensive. Their attention turned to Ukraine, which began storing gas underground during the Soviet era, in 1964. The country boasts subterranean capacity of almost 31bn cubic metres, the largest in Europe and the third largest in the world. With its domestic needs met, Ukraine has offered 10bn cubic metres of gas storage capacity to partners – roughly a third of its total volume. Storing gas in Ukraine offers European companies a hedge against future interferences to supply.
In April 2023, Ukrtransgaz won certification as a European storage operator, allowing it to hold strategic gas reserves for EU member states. That year, foreign traders and energy companies stored 2.5bn cubic metres of gas in Ukrtransgaz’s underground systems, with uninterrupted gas injection and withdrawal. Naftogaz hopes that figure will rise to 4bn cubic metres in 2024.
Kardaś believes Ukrtransgaz is set to meet its projections. “They are on the right track to reach the numbers projected for this year, so this is absolutely doable.” The company currently serves more than 1,260 customers, including companies from 32 countries, through its “customs warehouse” set-up. It earned over $200mn in revenue in 2023, according to Oleksiy Chernyshov, with European traders earning $320mn, according to one estimate.
The customs warehouse enables companies to profit from the spread in gas prices: they buy gas in summer when the price is low, keep it in underground storage for up to three years without paying taxes or customs duties, then start withdrawing gas in winter when prices rise. They also have the option of trading it on the Ukraine Energy Exchange or re-exporting it to the EU.
Ukrtransgaz operates 12 underground storage systems, made up of 10 depleted gas fields and two aquifers. Even though two of those former gas fields are currently under Russian occupation in the Luhansk region, there is still enough capacity to meet European storage needs. The gas fields offer a geographical advantage, as they are located in the west of the country, far from the front lines, and are hard to hit because they are situated far underground, at depths of 400m to 2,000m.
A report in August 2023 by USAID, the US international development agency, which sought to assess different risk scenarios that could affect Ukraine’s UGS facilities and gas infrastructure, and EU customers’ ability to withdraw gas, concluded that it is “relatively unlikely” that storage facilities far from active war zones would suffer full capacity outage. That assurance was given a fillip by the Russian attacks in March-April and the quick response and recovery by Ukrtransgaz.
For Ukraine, there is an additional benefit in partnering with Europe’s gas companies. Integration into the European energy market might mean that the EU will be more motivated to help to defend it against Russia. “Gas will still play an important role in the energy mix of many EU member states for at least a decade, regardless of climate and energy goals,” says Kardaś. “So it is important for European companies to act in a more courageous way by sending a strong political message that we will act if Russia continues to attack those kinds of facilities.”
Meanwhile, as summer and the injection season dawns, and with winter not too far away, Ukrtransgaz and its parent company Naftogaz Group continue to woo customers in Europe and beyond, marketing a competitively priced alternative storage option with extensive and secure storage facilities – far underground, and far from the theatre of war.
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