Ukraine's power sector outlook for 2023-2024: investing in old coal-fired power plants or new decentralized green generation?
by Razom We Stand
In order to support the transformation of Ukraine's power sector, Razom We Stand has prepared a policy brief "Ukraine's power sector outlook for 2023-2024: investing in old coal-fired power plants or new decentralized green generation?", which outlines the main areas of investment to replace coal-fired power plants with environmentally friendly decentralized generation, as well as ways to adapt Ukraine's electricity sector to the application of the EU's carbon border adjustment mechanism (CBAM) after 2026.
Plans to phase out coal-fired power in Ukraine were first officially announced in 2021 at the UN climate conference COP26 in Glasgow - a few months before Russia launched its full-scale invasion. Since then, Russia has deliberately attacked and extensively damaged Ukraine's energy infrastructure, exposing the deep vulnerability of the centralized energy system.
By joining 23 other European countries that have already committed to phase out coal, Ukraine has outlined its intention to play an important role in the fight against climate change, and is showing investors that Ukraine is open to green business and that it sees its future as a green energy superpower supplying clean energy and developing clean energy technologies together with the EU.
According to the Energy Charter Secretariat, "no European energy system has ever experienced or withstood such large-scale destruction, including during the First and Second World Wars." As of February 2024, the cost of damage to Ukraine's energy sector is estimated at USD 10.7-12.9 billion.
Given the scale of the damage and Ukraine's historical dependence on Russia for traditional energy, including imports of coal, gas, and nuclear fuel, restoring the Soviet-era energy infrastructure is out of the question.
Rapid investment in solar and wind power, energy storage, bioenergy, and decentralized, highly efficient cogeneration is the most cost-effective and reliable solution.
By investing in affordable and clean energy technologies, digitalization, and innovation, Ukraine can securely meet the energy needs of its economy and lay the groundwork for a decentralized, renewable energy-based, secure energy system of the future.