Two of 14 Ukrainian TPPs idling on absence of coal

Out of 14 thermal power plants (TPPs) in Ukraine, two were non-operational due to exhausted coal stockpiles on August 10, according to company reports. DTEK’s (DTEKUA) Prydniprovska TPP has sat idle since August 1, while Centrenergo’s (CEEN UK) Zmiyivska TPP was switched off the morning of August 10. Both power plants were designed to burn anthracite coal, which is not mined in Ukraine outside the occupied territory of Donbas. Of the five other anthracite-burning TPPs, two have accumulated enough coal for just a couple of days of work, namely Donbasenergo’s (DOEN UK) Slovianska TPP and DTEK’s Kryvorizka TPP.

Total coal stockpiles at all the Ukrainian TPPs were 1.31 mmt as of August 10, according to a report from Ukrenergo, the state power sector dispatcher. This is 55% less yoy, we estimate. Stockpiles have shrunk on yoy basis for both types of coal used in Ukraine: anthracitic (about -65%), which is in deficit; and bituminous (-40%), which is not scarce.

Alexander Paraschiy: Idling at one of three Centrenergo power stations clearly illustrates the company’s unattractiveness for privatization, in our view. Recall, one of its other TPPs, located at the front line in Donbas, wasn’t working for couple of days in July-August due to damage from artillery shelling. For that reason, we do not expect Centrenergo will be put up for privatization until Donbas de-escalates.

The key risk for Ukraine’s energy system is that Ukrainian TPPs are not able to accumulate enough bituminous coal at their warehouses. TPPs burning bituminous coal were the most critical providers of electric power in the last winter season, but with insufficient stockpiles their capacity will be limited the next season. Ukrainian hydro power plants will also be at limited capacity due to the exceptionally dry summer. All this puts at risk the entire power system of Ukraine for the nearest winter. At least, it would mean Ukraine will have to import more gas (for power generation purposes) or more electricity from Russia, which would affect negatively the country’s current account balance.