Power output rises 3.5% yoy in 1H12, led by thermal GenCos

Ukrainian electricity production increased 3.5% yoy to 100.1 TWh in 1H12, Interfax reported, citing the Energy Ministry. The growth was thanks to the thermal power sector (+7.6% yoy) and nuclear power plants (+3.0% yoy), while other producers decreased output. Notably, renewable and alternative energy sources increased output 25x yoy, but their share in total output remained negligible (0.3%). Three of Ukraine’s five thermal GenCos showed double-digit yoy growth in output in 1H12: Centrenergo (CEEN UK: +29.8%), Zakhidenergo (ZAEN UK: +21.1%) and Donbasenergo (DOEN UK: +12.2%). The other two companies, which have been controlled by DTEK for more than four years, decreased output: Dniproenergo (DNEN UK) by 3.6% yoy and Vostokenergo by 9.2% yoy. According to another announcement by the Energy Ministry, mining of steam coal increased 8.0% yoy to 30.1 mmt in 1H12.

Alexander Paraschiy: The 1H12 data supports the idea that coal-fired thermal GenCos are the main source of power production growth in Ukraine, and coal remains the main fuel, for which demand is increasing. The reduction in power output by DTEK’s Dniproenergo and Vostokenergo is explained by the start of large modernization programs there; state-controlled Centrenergo and Donbasenergo, which do not have large-scale modernization programs were filling in the gap to achieve double-digit growth. Zakhidnergo’s increase in output is mainly related to the resumption of electricity exports to Poland, and an increase in exports to Hungary, Romania and Slovakia. We expect Centrenergo and Zakhidenergo to remain main output growth contributors in 2H12.