DTEK power generation falls 3% in 2M18

The power plants of DTEK Energy (DTEKUA) generated
7.42 TWh of electricity in 2M18, according to sector-wide information provided
by the Energy Ministry. This is 3.2% less yoy and 12.9% below the ministry’s
plan as stipulated by the 2018 state energy balance. Generation by DTEK power
units burning scarce anthracite dropped 50% yoy to 0.98 TWh, while the units
burning hard steam coal increased their production 15% yoy to 5.47 TWh in 2M18,
according to our calculations.

The power plants of other generation companies performed
much better in 2M18: Centrenergo (CEEN UK) produced 1.66 TWh (up 9.9% yoy) and
Donbasenergo (DOEN UK) produced 0.69 TWh (a 106% yoy surge). But due to DTEK’s
under-performance, all Ukrainian thermal power plants generated 10.2% less
power than the ministry’s plan. Their underperformance was mostly the result of
overperformance of cheaper energy sources like large hydro plants (36% above
plan) and nuclear plants (1.4% above plan).

Alexander Paraschiy: The higher
actual share of cheap energy sources in Ukraine’s energy balance – amid the
average price on the wholesale market in line with the plan – allows for
thermal power plants (including DTEK’s) to count on higher-than-planned
achieved average electricity prices. In 2M18, the average power price of Ukrainian
thermal power plants was UAH 1,693/MWh, which is 19% higher yoy (the average
planned growth in TPP energy prices is 16% yoy in 2018).  

We continue to expect DTEK Energy’s power plants
will underperform their 2018 plan and produce about the same amount of power as
in 2017, while their growth in achieved power price will be above the plan. We
also remain neutral about DTEKUA bonds.