As the Globe Goes, So Goes Ukraine
When it comes to energy, Ukraine shouldn't be taken out of the global context, according to Maxim Timchenko, CEO and Chairman of the Executive Board, DTEK, an energy holding company with associated enterprises in activities like coal mining and power generation.
Mr. Timchenko spoke of Ukraine's National Energy Strategy at the Ukrainian Energy Forum in Kiev, Ukraine.
He noted that global energy consumption would grow by 70% in the next 20 years, mostly due to Asia, but in Central and Eastern Europe as well.
Timchenko recalled that in the last three years the world had seen the shale gas revolution in North America, which would have been very difficult to achieve even five years earlier. "It has changed global trends in both coal and gas industries," he explained, noting the lower price of natural gas in the US, which had influenced other industries, and made for hard times for the coal industry.
"Coal producers have flooded the European coal market, putting price pressure on markets in Europe and in Ukraine," he said, mentioning the economic crisis, and resulting decline in energy consumption.
Reporting that this had been the first winter which had finished with warehouses full of coal, he said the difficult economic situation was resulting in declining optimism in the energy industry in Ukraine.
Numerous external factors, he said, had been unfavorable for the Ukrainian energy sector, like the fact that Europeans had changed their attitudes toward renewables: "Last year support for them declined, and more countries now have fewer tax incentives for investors," said Mr. Timchenko.
"Why are we so inefficient? What's wrong with our energy industry?" he queried of Ukraine, outlining what he said were the three factors of the energy triangle: availability, environment and energy sector development.
He said, "The new energy market model is based on market principles, but we can't afford to make tariffs several times higher for the population."
Timchenko said trust was at the basis of the development of any industry in Ukraine, explaining, "Society does not know how a kilowatt hour is produced and how much they should pay for them; there's no trust between business and administration because no one understands."
He noted that there was no trust between the population and business in Ukraine. "Until that's established things will not move forward," he said.
Ukrainian Vice Prime Minister, Yuri Boyko, also spoke at the event,
"One must understand what's happened with the energy sector in the last decade all over the world, as it was the decade of renewables. Nobody knew enough about solar and wind 10 years ago."
He explained that those new technologies had been brought to a level which were now significant for every country. "The same thing happened with shale gas revolution," he remarked, saying that this was a time of new technologies.
Ukraine, said Mr. Boyko, must bring cheaper technologies and cheaper energy, but it was a question what the next decade would bring.
"The traditional sector must receive new technologies just like renewables. Our world is connected and if we consider the CO2 emissions problem in Europe it is not separated from other parts of the world," he said.
According to the Vice Prime Minister, natural gas was clean, secure, and one of the cheapest sources; coal was also important for Ukraine, but must be cheaper and clean. He said new technologies were needed, as was privatization.
The gas sector was crucial, he explained: "A real gas market is a way which can bring us to cheaper gas and is good for industry. Dependence on Russian gas was bad for the economy of Ukraine.
"We are increasing domestic production, and must be energy independent."
He named nuclear, gas, coal, and increasing domestic production, that Ukraine was, step-by-step, increasing its own resources.
Among Ukraine's ambitious plans was one for 2020 when 11% of the country's energy needs would be met by renewables. To realize such plans he said Ukraine needed support from the international community, and from private investment.
Mr. Boyko noted that the presence of delegates at the conference showed that more and more companies were coming to invest in Ukraine's energy sector.
He concluded: "We will be energy independent in the next decade. Good luck in your business in our country."
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