BMI View: The immediate outlook for electricity generation in Ukraine is poor with the country in an official state of energy emergency. Despite a ceasefire agreement earlier in September 2015, reports at the time of writing indicate that fighting in eastern Ukraine has continued. That said, we expect power generation to stabilise in 2016 as conditions improve marginally, and see total generation returning to near-2014 levels.
|e/f = BMI estimate/forecast. Source: EIA, UN, BMI|
|Generation, Total, TWh||155.659||152.678||155.479||158.291||161.377||163.263||172.068|
|Consumption, Net Consumption, TWh||153.7||144.8||145.4||147.5||149.1||152.0||155.4|
|Capacity, Net, MW||54,863.0||55,309.3||55,803.6||55,839.8||56,210.6||56,226.6||57,449.1|
Longer term, production and consumption will rise as the economy starts to recover and processes of integration with the EU bring about a partial liberalization of the power sector and investment from abroad. This will create opportunities for investment in Ukraine's power sector. However, multiple barriers stand in the way of developing the sector, including corruption, vested interests and the fractious political environment, that electricity production will fall far short of Ukraine's potential.
Latest Updates And Structural Trends
According to media reports in mid-September, Ukraine, Russia and the EU appear to have reached an agreement for Russia to supply gas to Ukraine through the rest of 2015. Ukraine is likely to be offered gas at a discount, similar to that received by Poland. Although exact details have yet to be revealed.
The short-term outlook for Ukraine's coal-fired power sector is poor due to the ongoing conflict in Ukraine's main coal-producing regions in the east of the country. Around two-thirds of Ukraine's mines have ceased activity, forcing Ukraine to import coal to cover its needs.
As a result of the uncertainty surround Ukraine's long-term energy supply, the national energy company Ukrenergo has imposed rolling blackouts and suspended exports to Belarus and Russian-occupied Crimea. Ukraine has also started to import electricity from Russia, but this is vulnerable to political conditions, specifically Russia's demand that Ukraine continues supplying electricity to the rebel-held Donbass region.
In line with an agreement with the IMF, prices increased 40% in March 2015 and will continue rising until 2017. This follows a sharp increase in wholesale prices in 2014 (from UAH730 to UAH830 per MWh) due to problems in domestic generation.
Consumption is falling as swathes of south-eastern Ukraine are left without electricity following damage to power lines and stations. As of February 2015, around 175,000 residents were without electricity, in places such as Luhansk, Donetsk and Debaltseve. Instability has also compromised the steel industry, the single main consumer of electricity, exacerbating an existing dip in global demand for steel, which has already been lowering production.
Crimea faces widespread power shortages, which have left the local administration dependent on back-up generators to keep key installations and emergency services running. According to the BBC, more than 1.6mn people are without power in Crimea, as activists and Ukrainian nationalists prevent crews from carrying out repair work on the main power lines that supply Crimea from southern Ukraine
Ukraine and the EU are continuing to work on the implementation of a trade deal that will bring Ukraine more closely under the ambit of Brussels and could accelerate a liberalisation of the power sector including deregulation, privatisation and the introduction of a market-based pricing system.
The Ukraine Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The Ukraine Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for Ukraine to test other views - a key input for successful budgeting and strategic planning in the power market.
- Target business opportunities and risks Ukraine's power sector through our reviews of latest power industry trends, regulatory changes, and major deals, projects and investments in Ukraine.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Competitive Landscape analysis.
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).