Ukraine’s DTEK eyes renewable expansion over 2022

LONDON (ICIS)–Ukraine’s largest coal-fired power producer, DTEK Energy, is expecting to develop a raft of renewable projects this year as it seeks to take advantage of the country’s green potential and decreasing technology costs.

Speaking to ICIS, Emanuele Volpe, DTEK’s chief innovation officer, said the company was looking to increase its renewable portfolio, expand its battery storage capacity and explore opportunities to develop hydrogen clusters in 2022.

DTEK’s coal-fired plants have an installed capacity of 13.5GW, producing one quarter of the country’s electricity.

RENEWABLE EXPANSION

In line with DTEK’s ambition to become net zero by 2040, the power producer is focusing on technologies that would take advantage of Ukraine’s renewable potential while also being cost-efficient.

A major objective within this ambition is the completion of the Tiligul 500MW onshore wind farm in the Black Sea Mykolaiv province later this year. DTEK has been developing the wind farm with Danish company Vestas. The first phase of the project includes the installation of 126MW of capacity by spring 2022, while the remaining 372MW is expected to be installed by the third quarter of this year.

DTEK’s green portfolio currently includes 1GW of operational onshore wind and solar capacity. However, Volpe said the most efficient means of generation remains onshore wind even though solar generation is cheaper.

“In Ukraine the solar output is only 18% compared to 40% for wind,” he said.

Ukraine’s combined wind and solar capacity has increased from less than 500MW in 2015 to 7.7GW in 2021 but due to issues with the feed-in tariff system the state owed nearly $1bn to producers. Much of the debt was expected to be paid off after the electricity grid operator Ukrenergo was allowed to issue a Eurobond for $865m in October 2021.

Volpe said the costs to generate renewable electricity were fast decreasing, noting that Ukraine may soon be able to sell the production to the free market.

BATTERY STORAGE

The deployment of renewable capacity, however, would need to be complemented by the expansion of battery storage, Volpe said.

Last year, DTEK launched a 1MW/2.25MWh industrial lithium-ion battery unit in the southeastern Zaporizhzhia province. The battery stores and dispatches electricity to the grid as well as maintains frequency stability on the grid.

This year, DTEK aims to expand the capacity to 50MW. Volpe said the capacity could be increased following cost reductions in battery technology.

He said lithium-ion batteries could guarantee four to six hours of continuous flows but superior flow batteries, which DTEK is now mulling, could increase the time to 10 hours.

HYDROGEN PRODUCTION

Volpe said DTEK was also working on at least three hydrogen projects, which are still at early stages, but could place the company at the forefront of the technology once costs start to decrease.

Fossil-based hydrogen costs around $2.00/kg (€1.77kg) to produce but electrolysed hydrogen produced from renewable energy is more than triple that price, Volpe said. ICIS hydrogen price data showed that on 7 January, front-year Dutch unabated (grey) hydrogen would have cost around €3.53/kg, while electrolytic hydrogen supplied with baseload front-year power would have cost almost €8/kg.

Despite higher production costs of electrolytic hydrogen, Volpe said that the only real choice for the future would be investing in electrolysed hydrogen despite underlying obstacles for now.

“Right now, for a 1GW electrolyser you need about 3-4GW of renewable capacity. In the future that is likely to drop so that for a 1GW electrolyser you need 1-2GW of renewables,” he said. The drop in required renewable capacity is a result of utilising more onshore wind following cost reductions.

However, even if it were cost-effective to scale up the hydrogen production base, Ukraine’s transmission and distribution infrastructure cannot accommodate natural gas-hydrogen blends higher than 20% as of now, he said.

The EU has singled out Ukraine as a major hydrogen exporter to the bloc, noting that it could establish at least 10GW of electrolysed capacity, which could offer one eighth of Europe’s total requirements by 2030. The European Commission’s hydrogen strategy outlines a target of 40GW of installed electrolysis capacity inside the EU and 40GW of installed capacity in neighbouring countries by 2030.

However, Volpe said exports were too ambitious for the time being, noting that a more attractive option was to establish clusters of renewable generation and electrolysers to produce hydrogen and deliver it locally to consumers.

He said the option was suitable not only for the production of electrolysed hydrogen but also for the electricity infrastructure.

“Why build high-voltage transmission lines to flow electricity from renewable plants from one part of the country to the other when the plants can be connected to electrolysers and generate hydrogen?”

DISRUPTIVE TECHNOLOGIES

As the head of DTEK’s innovation, Volpe is also keen to promote disruptive technologies such as microgrids, which establish an entirely new model. As consumers start to generate electricity for their own needs, they could be connected with each other, helping to create backup supplies.

Microgrids have already been in use in other countries such as the US, but Volpe is keen to introduce and scale up similar arrangements in Ukraine, particularly after the formula for the calculation of electricity tariffs for distribution changed. The new regulatory asset-based tariffs aim to create incentives for electricity distribution companies to improve the infrastructure.