Energy Storage Systems (ESS) enable decarbonization and promote renewable energy around the world. Additionally, energy storage may be the key to Ukraine’s energy security as well as boost the growth of the Ukrainian energy sector. These issues were discussed in Kyiv by participants of the Ukrainian energy market during a round table of the First Energy Storage Day which was dedicated to the launch of Ukraine's first industrial lithium-ion energy storage system by DTEK with a capacity of 1 MW/2.25 MWh.
The event was attended by Maxim Timchenko, DTEK CEO; Dmytro Kovalenko, Member of the National Energy and Utilities Regulatory Commission; Maksym Nemchinov, Deputy Energy Minister of Ukraine; and Volodymyr Kudrytskyi, Chairman of Ukrenergo’s Management Board; Volodymyr Omelchenko, Director of Energy Programs at the Razumkov Center; and Sukru Bogut, USAID Senior Energy Advisor.
Timchenko said in his opening speech that the battery launch is DTEK's pilot project aimed at finding optimal ESS operation models for various segments of the national energy market. The project became possible thanks to DTEK's international partnership and cooperation with Honeywell and SunGrid, the world's leading producers of energy storage systems. According to Timchenko, the first industrial energy storage system is the start of bringing Ukraine’s energy sector to a new technological level and will accelerate the synchronization of Ukraine with the European energy system ENTSO-E.
"We have declared our commitment to transitioning to renewable energy sources. Of course, it is impossible for our energy system to set ambitious objectives for developing renewables without similar ambitious plans for building systems that improve the flexibility of our energy system, and allow us to manage electricity production from wind and solar we have today. The launch of the industrial energy storage system is not a one-day experiment, but certainly an event defining the future of the energy sector," commented Timchenko.
Energy Storage: Required Regulatory Framework
Timchenko noted that a 1 MW battery is just the beginning, DTEK plans to have 50 MW batteries. However, the assistance of all market players, including the state, is needed to accelerate the energy transformation of Ukraine.
"This pilot project will allow us to test the technological system and technical parameters, and here I fully rely on our colleagues from Ukrenergo who are dealing with this issue. The second and third aspects are regulatory and economic, requiring serious attention and efforts. Today, having this energy storage system, we do not quite fit into the regulatory framework that defines only two market entities: electricity producers and consumers. It is necessary to determine what the energy storage system means in our regulatory context. And economic aspect includes creation of a market and a market segment that is ready to accept such a service and pay a fair market price for this service," explained Timchenko.
He also noted that DTEK has invested money in the project, not fully understanding its financial component, but at the same time fully understanding that these are investments in the future and such systems are necessary for the country.
"I hope that we will find the right balance both with the regulatory framework and economic aspects of the project to motivate other players to enter the market and continue developing and scaling up this project. We are completely open to our partners and colleagues. We don't see any competition here, and we don't want to leave the pilot project only inside our company. These are exactly the first steps taken not only for the sake of of DTEK or DTEK Energy, but also our contribution to the future of the Ukrainian energy system," stressed Timchenko.
Maksym Nemchinov, Deputy Energy Minister of Ukraine, confirmed that the operation of such a battery is really not regulated today in the Ukrainian energy market, and how such storage facilities will be used in Ukraine is not fully clear.
"I must admit that there is no definition of such energy storage systems in the Ukrainian legislation. We have ‘consumer’ and ‘producer,’ but there is no definition of ‘storage.’ Such systems define the future in terms of frequency control, balancing, and working with peak loads. Our energy system really needs them, " said Maxim Nemchinov.
According to him, implementing such projects absolutely fits into the model, vision, and policy currently being formed by the Ministry of Energy as well as the Ministry of Environmental Protection and Natural Resources.
"This is our future, and we must take care of the environment and the health of our children. Accordingly, such projects allow us to have a perspective and a chance to impact the climate changes that are taking place," added Nemchinov.
Volodymyr Kudrytskyi. Chairman of Ukrenergo’s Management Board, supported his colleagues and noted the participants should do whatever necessary to make sure appropriate conditions are created in Ukraine for operating systems such as the DTEK battery.
"At the same time, we must also understand that transforming the energy sector should lead not only to decarbonization, but also to reducing the cost of KW that is consumed. This is not an easy task, but we must create a regulatory framework incentivizing economically viable investments in the storage system," said Kudrytskyi.
Dmytro Kovalenko, Member of the National Energy and Utilities Regulatory Commission, said that on May 15th the law certifying Ukrenergo was put into effect defining energy storage systems.
"Now, within our organization and among other market participants, we can discuss this small step and how it can develop into opportunities for transforming the Ukrainian energy system. Through joint efforts, including those of DTEK, we have prepared our proposals on the regulations and certain procedural documents. It is necessary to make and finalize the adoption of the relevant law. We cannot develop in isolation from the whole world," stressed Kovalenko.
Volodymyr Omelchenko, Director of Energy Programs at the Razumkov Center, noted during a round table discussion that the launch of the DTEK battery is not just an energy issue, it is an issue relating to the development of structural changes in the entire Ukrainian economic system. Omelchenko believes that without high-quality elements for the green transition, Ukraine will not be able to compete in metallurgy, agriculture, or other industries. Changing regulations alone is not enough as systematic and comprehensive approaches are needed.
"There are serious defects in the market itself. We already see that even the traditional generation sector is really struggling to survive in conditions where the market model is not perfect. I think we need a set of measures improving the existing market model and creating incentives for energy storage to evolve from a dream to a real commercial project so Ukraine can join the club of European states aiming to be climate-neutral. I know DTEK has also set a very ambitious goal to become climate neutral by 2040. However, it will be very challenging for one company to achieve this goal alone. This process requires support at the highest political level – the support of not only the National Energy and Utilities Regulatory Commission, but also lawmakers and the Cabinet of Ministers of Ukraine. This is our common task," said Omelchenko.
Energy Storage: Energy Security of Ukraine
Kudrytskyi believes that the energy storage system is the key to effectively transforming the energy sector.
"Many people know the opinion of several futurists who suggest that soon energy will be currency, it will all come down to having energy. Therefore, such energy storage systems practically bring us closer to such futuristic ideas. That is why today's event is so important. This is really our first step towards this transformation which will take place regardless of whether we want it or not. The task of our country is to become a leader in this industry, and not to lag behind," stressed Kudrytskyi.
He went on to say that by 2023 the Ukrainian and European energy systems will be integrated and Ukraine will be able to generate and export more electricity. This, according to Kudrytskyi, will provide the Ukrainian consumer with more competitive prices and a flexible consumption schedule, which will ultimately make our economic system more competitive.
“Energy storage is not only about synchronization, but also about the life after it, which is even more important. And here, of course, this technology and this type of market participant, which has just appeared in our country today, is crucial, " concluded Kudrytskyi.
Timchenko pointed out during the discussion that if Ukraine physically, regionally, and economically becomes part of the European energy market, it can boost a huge transformation of the state's economic system as a whole.
"Being a part of the European energy market means setting ambitious decarbonization goals. And of course, these ambitious goals within the state cannot be implemented without the active development of a green generation. We have had quite a great breakthrough in the development and construction of solar and wind power plants in the last three years. I am convinced it is necessary to continue at the same pace. The government's current task is to create the appropriate balanced scheme for supporting and promoting green generation, while not sending negative signals to companies that have already invested in green generation. We need a balanced approach here," said Timchenko.
"Today, with its available natural resources, Ukraine may well declare itself as a leader in decarbonization in Eastern Europe. The technologies and experience we have already acquired at DTEK, energy storage systems that may well be scalable in the coming years, prove that it is time for Ukraine to take a leading place in global decarbonization. DTEK is happy to be an innovator and a driver of this process. I think the energy storage system, which I hope will be scaled up, will give a new push to the development of green generation and the integration of our country into the European Union. We will rebuild our energy system and our industry. We and our clean electricity will be welcome, and every Ukrainian will feel that the transformations we have made in the energy industry have benefited both the economy and life as members of the European family," summed up Timchenko.
