Digests • 14 February 2025
14 February 2025
Published
Monthly Energy Digest – January 2025
International Cooperation
The MoU on the Ukraine-EU Hydrogen Corridor has been signed.
The TSO operator of Ukraine, along with Stadtwerke München, Wien Energie, Open Grid Europe, Bayernets GmbH, NET4GAS, Eustream, CWP Europe, Hydrogen Ukraine, UDPR Hydrogen, and several other organizations and companies, signed a Memorandum of Understanding to create and support the implementation of the Ukraine-EU Hydrogen Corridor.
The initiative aims to develop renewable energy and hydrogen production in Ukraine while promoting its transportation through pipelines to Slovakia, the Czech Republic, Austria, and Germany for use in these countries after 2030. The renewable hydrogen produced in Ukraine is intended to be transported through the existing pipeline network, part of which will be repurposed for hydrogen.
The Electricity Market
The general situation in the power system
Unusually warm weather in January positively impacted the power system’s operation. The average temperature in January 2025 was approximately 5°C higher than in January 2024. The average power load was 11% lower, with nearly identical import volumes than a year ago. January 2024 was the coldest month of that year, with temperatures dropping to -10°C. Power cutoffs and rolling blackouts were not applied in January. The only emergency cutoffs were applied when Russia attacked energy facilities on January 15. However, this time, gas infrastructure was the target.
Warm weather simultaneously led to low electricity export volumes, primarily during nighttime hours. From the beginning of the year, Moldova contracted additional electric imports. This was caused by the suspension of natural gas transit through Ukraine to Moldova’s separatist Transnistria region, which produces a vast share of the country’s electricity.
February is expected to be the coldest month of the current winter, with temperatures likely to drop to -10°C for several days. Additionally, the power system will face capacity shortages, with a probable need to introduce consumption restriction measures.
Exports and Imports
Electricity export (- minus) and import (+ plus) during the month
In January 2025, Ukraine reduced electricity imports by 56% compared to December 2024, down to nearly 189 thousand MWh. Most of the electricity came from Poland, accounting for 30%. Poland had a 30% share of supplies, Hungary had 25.5%, and Slovakia had almost 25%. In general, imports decreased in all directions.
Electricity import, per month, 2023-2025, MWh (data collected by ExPro )
Compared to January 2024, electricity imports increased by more than 50%.
Debts and non-payments
The payment level for the feed-in tariff in 2024 reached nearly 80%.
Over the past year, the Guaranteed Buyer’s payments for electricity generated from renewable sources purchased during 2021-2024 totaled UAH 57.95 billion. Renewable energy producers received the highest payments for electricity generated in 2024, amounting to UAH 39.35 billion, while UAH 17.47 billion was paid for electricity generated in 2023. Overall, in 2024, 7,260,000 MWh were purchased through the feed-in tariff, with more than 80% coming from SPPs.
As of the end of 2024, the level of payment under the feed-in tariff is 79.6%, 93.3% for renewable energy supplies in 2023, 62.2% for 2022, and 99.7% for 2021 supplies. Comparatively, as of August 1, the level of payment under the feed-in tariff was 63.4% for 2024 supplies, 90.5% for renewable energy supplies in 2023, 61.2% for 2022, and 99.7% for 2021 supplies.
The Verkhovna Rada voted to allocate funds to Ukrenergo for debt repayment
Ukrainian Parliament adopted a law on amendments to some laws in the field of energy and heat supply (draft law No. 9381), which, in particular, provided for the distribution of surplus funds of NPC Ukrenergo from dispatching debts on the balancing market in 2023-2024 to the industrial RES generation and domestic SPPs.
Ukrenergo will allocate the excess income from its dispatch department operations in 2023-2024 as follows: 45% will be used to repay Ukrenergo’s debts on the balancing market, 45% to settle debts owed to the State Enterprise “Guaranteed Buyer” for payments to industrial RES projects, and 10% to repay debts to universal service providers for payments to residential solar power plants.
Price Caps
In 2024, hourly day-ahead prices hit their price caps during 22% of settlement periods.
In 2024, hourly prices in the day-ahead market in Ukraine hit the upper price caps during 1,960 settlement periods, accounting for 22% of all hours. The price caps were most commonly reached in May and July.
In December 2024, electricity prices on the day-ahead market (DAM) hit a record high. The weighted average for DAM in Ukraine’s United Energy System surged to UAH 5,965/MWh, representing a 45% increase compared to December 2023. In general, 25 million MWh of electricity were sold at DAM in 2024, 21% more than the previous year’s volume.
Nuclear Power Sector
The former Energy Minister of Lithuania was appointed head of the supervisory board of “Energoatom.”
The first meeting of the Supervisory Board of JSC Energoatom took place on January 17, 2025, six months after the members were appointed. Former Minister of Energy of Lithuania Jarek Neverovych was elected as chairman at that meeting.
Michael Elliott Kirst was elected as Deputy Chairman. The Supervisory Board also established an Audit Committee, which will be chaired by Michael Elliott Kirst. Simultaneously, it was announced that one of the previously elected independent members, Timothy John Stone, an independent director of Horizon Nuclear Power and the chairman of the Nuclear Industry Association of Great Britain, had resigned.
Renewable Power Sector
DTEK will invest another €450 million in constructing the Tyligul wind power plant.
DTEK has unveiled plans to increase the capacity of the Tyligul wind farm by 450 million euros after reaching an agreement with lenders to finance the purchase of 64 wind turbines from Vestas
Under the terms of the agreement, banks including Danske Bank will provide €370 million in loan funds backed by guarantees from Denmark’s state-owned Export Investment Fund (EIFO) – most of which will be used to finance the Vestas EnVentus V162-6.0 MW turbines. DTEK finances the remaining cost of the project with its own funds.
The company plans to complete construction by the end of 2026. The number of turbines of the expanded wind farm will increase from 19 to 83, and the capacity will increase four times – from 114 to 500 MW.
With this expansion, the wind power plant will become the largest in Eastern Europe.
The Gas Market
Gas transit status and updates
On January 1, 2025, at 7:00 a.m. Kyiv time, Ukraine’s gas transmission system operator stopped the transit of Russian gas as the relevant bilateral contract expired. Ukraine’s gas transportation system remained stable in January without Russian involvement.
Renewable Gases
Ukrainian producers pumped 1 million cubic meters of biomethane to underground gas storage (UGS) facilities.
Ukrainian producers have already pumped 1 million cubic meters of biomethane into underground gas storage facilities. Two companies, Vitagro and Gals Agro, pump biomethane into underground storage. Vitagro has accumulated almost 0.8 million cubic meters of natural gas in Ukrainian PSGs, and Hals Agro – more than 0.2 million cubic meters.
Biomethane has not yet been exported because potential European buyers are seeking larger volumes. Consequently, companies are storing volumes in UGS, and as soon as a certain level is achieved, they will export it. The first two companies started exporting biomethane in February.
The Oil Sector
Oil production
In 2024, Ukrnafta increased gas production by 6.5%, while oil production rose by 0.6%.
Ukrnafta has increased its hydrocarbon production for the second consecutive year. In 2024, the state company’s gas production rose by 6.5% to 1.170 billion cubic meters, compared to 1.097 bcm in 2023. Additionally, Ukrnafta produced 1.418 million tons of oil last year, which is 0.6% more than the 1.410 million tons produced in 2023.
In 2025, Ukrnafta aims to carry on with drilling new wells, upgrade its equipment by replacing outdated Soviet machinery with modern technology from global leaders, and ramp up production.
Prices
The National Bank of Ukraine expects fuel prices to increase by 13% and gas station margins to decrease in 2025.
NBU expects fuel prices to accelerate to more than 13% in the current year, due to increase in excise taxes. By the end of 2024, fuel imports also increased to accumulate adequate reserves ahead of the next phase of excise duty hikes at the beginning of 2025. This will somewhat limit the rise in fuel prices over the next few months, though this impact will be short-lived.
Developments on Assets Nationalizations and Sanctions
Regal Petroleum from the Smart Energy Group is forced to stop production again.
On January 23, the representative office of Regal Petroleum Corporation Limited, which is owned by Enwell Energy and is part of the Smart Energy Group, began work on the termination of hydrocarbon production at the Mekhedivsko-Holotovshchyna and Svyridovsky deposits in the Poltava region.
The production stoppage is related to a few contradictory decisions of different courts following the decrees of the National Security and Defense Council, which introduced sanctions against the company’s owners.
Regardless of sanctions, the decision to suspend production severely affects the gas balance in Ukraine, which needs gas amid Russian energy terror.
Other News and Developments
Russian Attacks on Energy Infrastructure
On January 15, Russia launched a large-scale attack on Ukraine’s energy system. However, this time no power facilities were impacted. Some gas storage and production facilities in the western region of the country sustained damage.
***
After a normal operation of the power system in January, it may face challenges in February. The expected cold temperatures in February will cause power production capacity shortages, which could lead to rolling blackouts across the country. Cutoffs are very likely to occur on a wide scale at the left bank of the Dnipro River, which also suffers from capacity shortages.
Russia has started a new wave of energy terror campaigns, targeting gas infrastructure, including gas production facilities. This will lead to a drop in domestic gas production in February, which will require the importation of gas at high prices during the month. The situation will be complicated by the cold temperatures expected during February. At the same time, countries that support Russian gas delivery through Ukraine might leverage this to pressure Kyiv into renewing transit.
Overall, starting in February 2025, improvements in settling debts to the electricity market are anticipated. Over the past year, the Guaranteed Buyer’s payments for electricity generated from renewable sources purchased during 2021-2024 totaled UAH 57.95 billion. As of the end of 2024, the payment level under the feed-in tariff was 79.6%, 93.3% for renewable energy supplies in 2023, 62.2% for 2022, and 99.7% for 2021 supplies. Comparatively, as of August 1, the level of payment under the feed-in tariff was 63.4% for 2024 supplies, 90.5% for renewable energy supplies in 2023, 61.2% for 2022, and 99.7% for 2021 supplies. In January, Parliament voted to allocate NPC Ukrenergo’s surplus funds from dispatching debts on the balancing market for 2023-2024 to industrial RES generation and domestic SPPs. As anticipated, this amount will total UAH 12-13 billion.
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