Integrated report 2020
Financial
and non-financial results
and non-financial results
UA
EN
PDF
Dear colleagues and partners,
I am delighted to present the results of the DTEK Group’s operations for 2020.
It was a challenging year for everyone, with quarantine measures slowing down economic growth. It was not all negative, though. Governments, communities and companies had the time to rethink their policies and strategies to discover new growth potential, as well as reassess their impact on society.
In 2020, we began implementing the New Strategy 2030, driving our priorities: to transform into a more eco-friendly, efficient and technological business. Our strategy is based on the ESG (Environmental, Social and Governance) principles, as well as ethical business values and the desire to meet the urgent needs of society. We are also taking into account the global energy sector trends and Ukraine’s development. The combination of these factors has allowed us to set the ambitious new goal of becoming carbon neutral by 2040.
I would like to tell you about the developments in the context of six corporate strategy directions.
About DTEK Group
About DTEK Group
Key Events in 2020
Mission, Vision, Values
Development Strategy until 2030
About DTEK Group
2007
DTEK has been a participant of the UN Global Compact since 2007
DTEK Group is the largest private investor in Ukraine’s energy sector. Our enterprises produce coal and natural gas; generate electricity at solar, wind, and thermal power plants; trade energy products in both Ukrainian and international markets; distribute and supply electricity to households; offer customers products and services for the sustainable use of energy resources and develop networks of fast charging stations.
Our production enterprises are merged into operational holding companies in each of our business areas that perform the day-to-day management functions. With our New 2030 strategy, DTEK commits to transforming the company into a more environmentally friendly, efficient, and technologically advanced business based on ESG principles. For this purpose, we have launched new business lines, continue to introduce innovations and implement our digital transformation program. Our goal is to achieve carbon neutrality by 2040.
DTEK adheres to the principles of sustainable development and has been a participant of the UN Global Compact since 2007. DTEK Group is a member of SCM, where Rinat Akhmetov is a shareholder.
DTEK Group's Corporate Governance Structure
DTEK B.V.
Operating holding companies and areas of activity
DTEK ENERGY B.V.
Coal production and processing
Thermal power generation
Mining machinery manufacturing
DTEK RENEWABLES B.V.
Wind power generation
Solar power generation
DTEK OIL&GAS HOLDINGS B.V.
Gas production
DTEK GRIDS B.V.
Electricity distribution and grid operation
D.TRADING B.V.
Trading in electricity, gas and condensate, coal
D.SOLUTIONS B.V.
Electricity and gas supply
Energy efficiency: smart home solutions
Energy service, energy storage, solar roofs
Fast charging stations for electric vehicles
Key Production Indicators 2020
1.8bn cubic meters
Gas production
2.4bn kWh
electricity generation by WPP and SPP
47.3bn kWh
Electricity distribution
21.3mln tonnes
Coal production
23.8bn kWh
electricity generation by TPP and CHPP
45.3bn kWh
Electricity supply to consumers in Ukraine and Europe
Location of DTEK Group Enterprises
Key Events in 2020
January
A roundtable discussion in support of the EU Green Deal was held by DTEK during the World Economic Forum
In 2020, the World Economic Forum brought together leaders from all over the world for the 50th anniversary meeting in Davos. During the forum, the company moderated the roundtable discussion, ‘A European Green Deal — How Can Ukraine’s Energy Sector Contribute?’, to discuss with our European partners both, the contribution of and opportunities for Ukraine, through its energy reforms, to work in tandem with the Green Deal.
In particular, Ukraine can significantly supports the Green Deal and its targets by increasing the share of renewables in the country’s energy balance to replace other generation capacities, developing responsible consumption, and building a customer-focused energy sector.
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1 / 5
DTEK CEO joins Supervisory Board UN Global Compact Network in Ukraine
The Supervisory Board includes representatives of Ukrainian and international companies, NGOs and educational institutions. The objective of the Supervisory Board is to set the standard for responsible business practices. In this way, it will be possible to expand the circle of Ukrainian companies that share and follow the UN Sustainable Development Goals.
DTEK adheres to the principles of sustainable social development and, since 2007, has been a signatory to the UN Global Compact, joining the Global Compact alliance in Ukraine in 2010.
DTEK Ladyzhynska TPP: artificial intelligence improves labour safety
Farseer, a system for recognising occupational safety violations, was introduced by Innovation DTEK at DTEK Ladyzhinskaya TPP.
Images from video surveillance cameras installed in areas that require special attention, taking into account compliance with occupational safety regulations, are being analysed in a real time mode. If employees do not have personal protective equipment or appear in dangerous or prohibited areas without authorised access, the information is instantly transmitted to the personnel responsible for Occupational Safety. This allows us to stop actions that endanger the wellbeing and health of our employees in a timely manner. In addition, the technology helps employees to play a proactive role in maintaining their own safety.
The developer of the Farseer system is the Ukrainian technological association Limpid Group.
DTEK Oil&Gas creates an oil and gas hub to attract innovation
DTEK Oil&Gas has launched a large-scale national project - the creation of a technological oil and gas hub, which will be able to systematically attract innovations, advanced technologies, international start-ups and experts.
Ukraine's oil and gas industry urgently needs a high-quality basis for preparing for technological breakthroughs both in the exploration and intensification of existing fields, and in attracting the modern technologies for the development of hard-to-recover reserves and the sea shelf.
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March
YASNO makes 15 European pledges to consumers
92 European energy supply companies have joined the European electricity industry association’s (Eurelectric) ‘15 pledges to consumers’ initiative. In particular, together with Enel, E.On, Vattenfall, EDP, EDF and others, the initiative was joined by DTEK and D.SOLUTIONS, which is developing a retail business under the YASNO brand.
Energy suppliers have committed to creating new services and solutions for greater transparency, simplicity and availability of electricity in order to create a better energy future.
‘15 pledges’ mean that signatories will promote the introduction of services for electric mobility, energy efficiency and renewable energy sources. This is important in the context of addressing climate change. The signatories will provide professional advice to local authorities and communities on planning the infrastructure necessary for the transition to decentralised electricity supply, from electric vehicle charging stations to renewable energy projects.
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DTEK installs Ukraine’s first underground Wi-Fi connection in a mine
The Wi-Fi connection is installed by DTEK in the Yubileyna mine at a depth of
500
meters
DTEK Energy deployed a Wi-Fi network in the Yubileyna mine at a depth of 500 meters. This project was included in the Book of Records of Ukraine and registered in the category "Technologies, for the first time".
Based on this wireless communication infrastructure, the company is rolling out a multifunctional system for labour safety. Through their Wi-Fi and special smartphones, miners can instantly communicate via voice calls or text messages with the above-ground teams and the control room, as well as quickly exchange information between underground sections.
In addition, the communication infrastructure opens up a new range of opportunities – from operational collection of data on the state of equipment to remote control of processes and machines, and the acquired experience can be used in other areas.
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Arbitrary regulatory interference in the energy market provokes a systemic crisis in the energy sector: operation of coal enterprises is no longer possible
The systemic crisis in the energy sector was provoked by arbitrary regulatory interference in the energy market, uncontrolled import of electricity from Russia and Belarus, as well as the lack of coordination of the industry by the ministry. This resulted in Ukraine’s currently dysfunctional energy system and the inability of reliable operation of coal enterprises.
DTEK Energy has repeatedly requested National Power Company "Ukrenergo" (system operator) to stop its practice of forced shutdown of TPP power units. The system operator has reduced the load on DTEK Energy thermal power plants to one power unit, despite the existing contracts for electricity production, which threatened the smooth operation of the thermal power plant and significantly reduced the coal consumption.
Due to the inability to dispatch coal to thermal power plants almost 6,500 employees of DTEK Dobropilliacoal, DTEK Bilozerska Mine ALC and DTEK Zhovtneva CPP were put into stand-by from April 1, 2020, which lasted more than three months. In accordance with the Industry Agreement and collective agreements, all employees retained their seniority and were paid the official salary.
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April
The systemic crisis in the energy sector is made worse by a general economic downturn due to the COVID-19 pandemic
The prolonged systemic crisis in the energy sector was exacerbated by the general economic downturn due to the COVID-19 pandemic, and electricity consumption and the level of payments decreased as a result of quarantine restrictions in Ukraine.
In particular, in thermal generation, all power plants operated below the minimum composition, which led to the accumulation of more than 2.9 million tons of coal in the warehouses of thermal power plants and mines. Due to the lack of demand for domestic electricity, it was decided to suspend the operation of DTEK Pavlohradcoal, DTEK Pavlohradska CPP, DTEK Dobropilska CPP, DTEK Kurakhivska CPP, as well as CORUM Pershotravenskyi Repair Plant and DTEK Research and Design Center for three weeks.
18,700 employees have been furloughed since April 20. In accordance with the Industry Agreement and collective agreements, all employees put into standby mode received income in the amount of the tariff rate and retained their seniority.
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May
DTEK Oil&Gas fracks hydrocarbons from compacted sandstones at the Semyrenkivske field
DTEK Oil&Gas has successfully completed multi-stage hydraulic fracturing operations. As a result, an industrial influx of natural gas and condensate was obtained, which proved the presence of hydrocarbons which had yet to industrially developed. Successful adaptation of hydraulic fracturing technology was carried out under the supervision of DTEK Oil&Gas Technology Centre.
The hydraulic fracturing program shows the feasibility and efficiency of such work at depths of over 5,000 metres in conditions of high pressure and temperature. This will allow us to develop new hard-to-recover reserves, which is strategically important today to increase gas production and achieve energy independence of Ukraine.
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1 / 5
Innovation DTEK launches a platform to collect innovative ideas
Due to rapid technological progress, it is quite difficult to develop solutions based solely on internal resources. Accordingly, DTEK has adopted the use of open innovation. DTEK publishes its queries to find ideas, innovations, technologies and teams on the platform. Preference is given to creative ideas with a readiness level more than 5 (TRL> 5), which are aimed at improving labour safety, business efficiency and environmental friendliness of production. In addition, through innovation, the company will look for solutions to adapt to changes in the energy sector, additional monetization of traditional businesses, as well as the creation of non-energy businesses.
Using this platform, anyone can submit an idea in response to one of the requests or go to the "I have a project" section and suggest any other solution if the author believes that his or her project can be useful for DTEK. The company is ready to work with the author to finalise an idea or technology, share its expertise and launch a pilot project in a real business environment.
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July
DTEK is the first company in Ukraine to install an industrial energy storage system
The first industrial energy storage system produced by Honeywell (USA) with a capacity with a capacity of 1 MW/1.5 MWh was installed at DTEK Zaporizka TPP site. With this pilot project, we will be able to develop optimal models of operation in various segments of the energy market.
To ensure the smooth and reliable operation of the Ukrainian energy system, auxiliary services are needed to ensure a balance between basic and highly manoeuvrable generating capacity. Energy storage systems allow consumers to postpone electricity consumption until they need it.
After signing the contract, DTEK joined the Honeywell Experion® Energy Program, which enables large customers to develop and launch large-scale industrial energy storage systems.
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1 MW
capacity
1.5 MWh
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DTEK becomes a member of the Hydrogen Europe
The Association brings together European leaders in hydrogen technologies, providing an opportunity to build a network of direct contacts with international partners interested in the development of the hydrogen economy both in Ukraine and around the world.
In 2020, the European Commission presented the strategy for using hydrogen, which it considers one of the most important sources of energy in the transition to a carbon-free economy. According to the Green Deal, the priority partners in the hydrogen strategy are the Southern and Eastern partnerships, and Ukraine in particular. Ukraine is expected to have 10 GW of electrolyser capacity and corresponding renewable energy capacity to ensure sustainable cross-border trade with the EU. Thus, hydrogen technologies open opportunities for decarbonising the main sectors of the economy, as well as for building a new energy sector and creating jobs.
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DTEK Grids uses drones to monitor the state of power lines
A pilot project aimed at using drones to inspect power lines has shown that the new technology is twice as effective as traditional round checks and visual inspection to detect damages. The new approach also better detects overheated equipment.
The unmanned aerial vehicles were equipped with thermal imagers, photo and video cameras. The obtained information was processed by defect recognition programs using artificial neural networks. This makes it possible to take proactive measures – to predict a possible failure site and make preventive repairs or strengthen grids in advance. According to the company's calculations, the use of the modern technologies will reduce the failure rate and duration of power outages (SAIDI indicator) by 10-15% by 2025.
The use of drones and specialised data processing software for power grid diagnostics is a project within the framework of DTEK MODUS digital transformation program.
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DTEK Renewables receives the New Market Green Pioneer Award from the Climate Bonds Initiative
DTEK Renewables was awarded the New Market Green Pioneer: Ukraine award by the Climate Bonds Initiative in recognition for being the first Ukrainian company to issue green bonds. This was a landmark debut for the company and Ukraine, as a new financial tool for the development of renewable energy sources was opened to accelerate the decarbonization of the economy in accordance with the key goals of the European policy.
The company received its second award from Global Capital platform in September for issuing green bonds. This news platform has been a key source of information about international financial markets for more than 30 years. The winning companies from all over the world operating in various sectors of the economy are determined by the vote of participants in the international financial market.
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August
D.SOLUTIONS starts selling natural gas
D.SOLUTIONS has been supplying natural gas to its customers in addition to electricity and energy-efficient solutions since 2020. This became possible thanks to the reform of the natural gas market – from now on, consumers can choose a supplier and buy blue fuel at free prices.
D.SOLUTIONS creates a comprehensive system of energy solutions under YASNO brand. The company understands how convenient and profitable it is for customers to have a single supplier that simultaneously provides electricity and gas, and also helps them save money thanks to energy-efficient solutions and products. This is a modern European practice that D.SOLUTIONS implements in Ukraine together with high quality services.
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DTEK Oil&Gas wins a competitive auction for Budyshchansko-Chutovska oil and gas area
81,6
UAH million
650
UAH million
Oil&Gas Geoexploring LLC (subsidiary of DTEK Oil&Gas) was recognised as the winner for Budyshchansko-Chutovska oil and gas area at the auction held by Ukraine’s State Service of Geology and Subsoil via ProZorro.Sales platform. During the auction, the initial price of the lot increased from UAH 81.6 million to UAH 650 million. The full amount was transferred by the company to the state budget and, thus, all conditions for obtaining the permit to develop the area were fully met.
Budyshchansko-Chutovska area, located in Poltava region, includes several fields with a proven reserve base of oil and natural gas. Industrial development of deposits requires a detailed geological study.
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OCTOBER
DTEK Grids announces building the first fully automated 110/20 KV closed-type substation in Ukraine
DTEK Odesa Grids will build a substation in Odesa by the end of 2021 to provide the city with additional capacity of 52 MW of electricity. The uniqueness of the Chubaivka substation lies in its voltage level of 20 kV, under which electricity is transmitted and distributed in the grids. A higher voltage has a direct influence on the electricity transmission level to consumers, as well as increases the reliability of power supply and the quality of electricity.
By virtue of its design, the Chubaivka substation will be a closed-type station and will be operated using a dispatching console, without involving duty personnel. This will allow us to quickly detect emergency failures and eliminate their consequences without disconnecting customers from the power supply.
One of the priorities of the DTEK Group is to preserve the environment. At the new facility, the company plans to install vacuum circuit breakers that do not harm the environment and meet the highest fire safety requirements. The power engineers plan to use a cross-linked polyethylene cable at the substation. This will not only allow us to minimise losses in the grids, but also ensure their green operation, by eliminating oil leakage and environmental pollution in the event of damage.
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110/
20 kV voltage
DTEK Grids helps turning a high-rise building in Kyiv into a "green" power plant
DTEK Kyiv Grids has connected a rooftop solar power plant built by Aurora Term to the grid. This is the first industrial solar power plant in Ukraine, built on the rooftop of an apartment building. It consists of more than 1,200 solar panels and has a capacity of 330 kW.
The SPP on the rooftop of a residential apartment building was the embodiment of the new paradigm of modern energy. Today, residential buildings are gradually changing from electricity consumers into electricity producers and retailers. Originators of the rooftop SPP idea in Kyiv want owners of multi-storey buildings to become full-fledged co-investors in such power plants in the future.
DTEK Grids distribution system operators is creating conditions for unhindered access to the infrastructure, which also contributes to the development of renewable energy.
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DTEK Group receives two Eco-Oscars for systematic and consistent environmental protection activities
Two DTEK Group subsidiaries received awards for the systematic implementation of environmental protection measures in their activities during the Ecotransformation 2020 Forum.
Environmental experts have recognised DTEK Grids efforts to preserve the white stork population. The company has installed 237 special protective structures in five regions of the country to protect birds' nests from electric shock. DTEK Grids’ experience confirms that the conservation of biological diversity is not only possible in nature reserves, but also in urban areas.
DTEK Oil&Gas, which produces natural gas using innovative technologies at every stage of production, received the award for ‘Innovations and introduction of new technologies’. Systematic investments in innovation allow DTEK Oil&Gas not only to increase gas production and contribute to Ukraine's energy independence, but also to do so with minimal impact on the environment.
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DTEK joins Business Without Barriers initiative, launched by the First Lady of Ukraine
Business Without Barriers Initiative led by the First Lady of Ukraine Olena Zelenska is designed to ensure equal opportunities in access to work, services for people with disabilities and other social groups.
The corresponding declaration was signed by Maxim Timchenko, DTEK CEO, together with other leaders of large public and private companies. The signatories intend to use the best practices of implementing a barrier-free environment in their companies to create opportunities for social inclusion of all social groups, including people with disabilities, the elderly, parents with children under 6 years of age, women and young people.
In addition, in December, DTEK became the first company in Ukraine to join the Valuable 500 global movement. This movement aims to promote a culture of integration of people with disabilities among companies in order to reveal their social and economic value.
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DTEK signs UN Global Compact Memorandum on Joint Anti-Corruption Actions in Ukraine
DTEK, together with business representatives and NGOs, joined the UN Global Compact initiative and signed the Memorandum on Joint Anti-Corruption Actions in Ukraine. The initiative should contribute to the creation of a transparent environment which makes corruption impossible, and will stimulate the development of the economy, companies and society.
According to the memorandum, the parties undertake the following obligations:
- conduct their business operations in a fair, honest, and transparent manner, in full compliance with the laws of Ukraine;
- comply with all labour and employment laws and regulations;
- guarantee employees safe working conditions;
- handle waste and industrial residues with proper care to ensure maximum environmental protection and compliance with all applicable standards;
- ensure that employees, business partners and other related third parties know and adhere to these principles by conducting appropriate training activities;
- actively promote transparency by engaging other industry players in coordinated communication and training efforts to disseminate this document and its principles.
All commitments are consistent with the principles of sustainable development and contribute to social progress.
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DTEK Oil&Gas signs PSA for Zinkivska Area
The Cabinet of Ministers of Ukraine approved the texts of seven Production Sharing Agreements (PSA) for hydrocarbon production in Ukraine. They include an agreement with companies that are part of DTEK Oil&Gas on sharing of production for Zinkivska Area.
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DTEK presents its new 2030 strategy
2030
Maxim Timchenko, DTEK CEO, presented the company's long-term 2030 development strategy. The new strategy relies on the ESG principles (Environmental, Social, Governance), respects the core business values and seeks to meet the current needs of society. With the new 2030 strategy, DTEK commits to transforming the company into a more environmentally friendly, efficient, and technologically-advanced business.
According to the strategy, in the next decade DTEK is going to focus on projects in gas production, renewables, trading, and distribution networks. The company plans to further cultivate open innovation and complete the digital transformation of business to become a digital enterprise by year 2025+. These processes will be supported by automation of production, innovations across the entire value creation chain, extensive application of cutting-edge digital technologies and AI solutions.
DTEK has plans for an international expansion: active development of renewables and trading in the EU.
The strategy highlights the increasing role of clients in the decision-making process of the company and a stronger customer-centric focus of DTEK business. DTEK plans to evolve from an energy supplier into a solution provider and integrator of new technologies.
The implementation of the strategy will be a significant contribution by DTEK to the decarbonisation of the economy of Ukraine and Europe as a whole.
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Key events
after the reporting period
after the reporting period
Dobropolyeugol mines are transferred to the state enterprise "Dobropolyeugol-Mining"
DTEK Energy completes debt portfolio restructuring
Mission and Vision
Our Mission
We are working in the name of progress and social prosperity. Our energy brings light and warmth to people.
Our Vision
We are a dynamically developing Ukrainian company that strives for leadership in the European energy markets. Our success is based on people, efficiency, and advanced technologies.
Our Values
Professionalism
Our employees have extensive professional knowledge, carry out their duties responsibly and diligently, and accomplish their tasks in a timely and efficient manner. We strive to achieve the best results while making the best possible use of human, natural and financial resources.
Unity
We value team spirit, unity and solidarity. We can only achieve strong results as a team. We enjoy both working and socialising together. Our common potential comes from a diverse experience and knowledge of each employee. Our unity comes from common pursuit of same ideas and goals while understanding and supporting each other.
Responsibility
We are building our business on the understanding that all of our efforts should serve the interests of society. We bear responsibility for the quality of our work and the observance of corporate standards, for meeting our obligations, for using resources prudently, and for protecting the environment. We are responsible for the people who make the success of our company possible — our employees.
Openness
We are open and keep our employees, partners, shareholders and other external stakeholders informed about important issues regarding our development, creating a foundation for working together in a spirit of trust. We conduct our business based on principles that are clear to our employees and partners.
Customer Focus
We build trust with our customers by creating a diverse portfolio of energy products and solutions for them, educating them about responsible consumption through the provision of energy services. We have created a retail brand to allow everyone access to reliable supply and innovations.
Pursuit of Excellence
We create right conditions for the development of talents and abilities of our employees, implement the most promising technologies, and improve production and management processes. As we expand our business, we strive to instil confidence in our employees and contribute to the successful development of Ukraine.
Development Strategies
until 2030
until 2030
Development Concept
DTEK will actively develop in Ukraine and enter the markets of neighbouring countries as a diversified energy company with secured fuel resources.
DTEK will focus on the sale of electricity to all categories of consumers while maintaining high standards of service and building a strong retail brand.
DTEK will support and develop key success factors: the talents and potential of its employees and efficiency of production, investments and management.
DTEK will participate in the reform and upgrading Ukraine’s economy, social development of regions where it operates, and promotion of best standards in industrial and environmental safety.
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Six vectors of development
1. Energy sector
DTEK increases gas production, develops renewable sources of energy and power grids that make the foundation for managing electricity generation and consumption. DTEK excavates coal to fully meet the demand of its own thermal power generation.
2 Customers
DTEK is implementing a transformation program to build trust among customers, by providing industry-leading service and a diverse portfolio of products and solutions. DTEK aims at becoming a reference standard of customer orientation in the sector.
3. Ukraine “plus”
DTEK is becoming an international company, creating its own innovation ecosystem and attracting the world's finest technologies, experts and partners to enhance business activity in Ukraine. The company is entering international electricity, gas and coal markets by establishing a global trading infrastructure and implementing renewable energy projects.
4. Efficiency
Production efficiency, investment efficiency and management efficiency are the fundamental principles of DTEK’s operations. Search and implementation of innovations are the pillars for the further company’s development.
5. People
People are the key driving factor of DTEK’s development and a source of its competitive advantage. DTEK heavily invests in advancement of its employees, engages new talents and instils the culture of innovation.
6. Society
DTEK is a responsible investor, reliable partner, and largest employer. DTEK contributes to social transformation and development of a competitive economy, acts transparently, and encourages entrepreneurship, cooperation, and innovations. The company promotes modern international environmental safety standards and the best occupational health and safety practices.
Development business strategy: stages and priorities
The long-term corporate development strategy sets out priorities of business, management projects, and technologies.
Core
business
2015–2020 Efficiency
• Scaling of LEAN projects
• A reform of the energy market and introduction of an incentive-based regulation tariffs
• Expansion of the products and services portfolio
• Development of a distribution infrastructure
• Pilot innovation projects
2020–2025 Transformation
• Active development of RES and gas markets, a transition to the RAB-regulation in the grids
• Reduction of the share of thermal power generation in the energy mix, transformation of coal regions
• Retail brand development, promotion of new products and services
• Automation and digitalisation of business processes
• Participation in international innovation projects
• Compliance with the best ESG practices
2025–2030 Innovations
Introduction of robotic technologies in manufacturing processes
Introduction of innovations throughout the entire value chain
Large-scale use of digital technologies and AI solutions
New
opportunities
Extension
• Expanded asset portfolio
• Gradual expansion and transition to self-financing of new businesses
Partnership
• Identification and implementation of strategic partnerships in Ukraine
• Attracting international partners to Ukraine
• Entry into European markets based on international trade and implementation of RES projects
Diversification
• Geographical diversification
• Management of the international investment portfolio
• Business value realization
ESG development strategy
DTEK is a leader in the environmental modernisation of Ukraine's energy sector. The company takes responsibility for its ecological and social impact and cares about the well-being of future generations. DTEK has integrated 12 UN Sustainable Development Goals into its ESG strategy.
Business activity results
Production and
Investment Activities
DTEK Energy: Coal Production, Thermal Power Generation, Mining Engineering
DTEK Energy established an entire electricity generation chain: enterprises produce G-grade coal, mainly concentrated at their own central concentrating mills (CCMs), and then subseuqently generate electricity. Mining engineering plants are integrated into the production chain, enabling efficient and timely response to production needs: from new equipment development to spare parts supply.
By 2030, Ukrainian TPPs will decrease production,
while remaining an important part of the Ukrainian energy sector, securing the stability and reliability of the energy system.
DTEK Energy aims to redesign its TPPs into energy hubs with coal blocks, flexible capacities, and energy storage systems. These plants will provide a wide range of services: from ‘green’ energy capacity balancing to storing seasonal reserves for winter and summer consumption peaks.
11
mines
2
manufactures machinery
438.9
mlntonnes
G-grade coal industrial reserves
13.3
GW
TPPs installed capacity
8
TPPs
DTEK Energy: New Strategy 2030
The strategic goal: maximum electricity generation using own coal production under competitive market conditions
01
Vertical integration in the coal and thermal generation market
02
Leadership in the competitive electricity market of Ukraine
03
Transformation and new directions
By 2030, Ukrainian TPPs will decrease production, while remaining an important part of the Ukrainian energy sector, securing the stability and reliability of the energy system. DTEK Energy’s strategic goal for the next decade: efficient electricity generation using locally sourced coal in the competitive market conditions. Ensuring flexibility of our power plants will be the company’s key expertise. This will enable a shift in the role of thermal production the United Energy System of Ukraine, switching from basic to balancing mode.
Having established a full electricity supply chain, DTEK will be able to maximise the production and sale of the its coal. In particular, production concentration and digitalisation projects will bolster operational efficiency. For instance, starting from 2025, coal production will be concentrated at six of DTEK Pavlohradcoal’s mines and the Bilozerska mine. Electricity production will focus on the most efficient power plant units, considering the effect of several external factors: the implementation timeline of Ukraine’s National Plan to reduce emissions at large incinerators, renewable energy development in the domestic market, and synchronisation with the European energy system ENTSO-E. Among DTEK’s initiatives to digitalise production are the Digital Mine, Digital Logistics, and Digital TPP projects, which are aimed at improving personnel safety and production efficiency through new technologies and automation.
Seeking out new opportunities for development will help the company maintain its competitive position and increase efficiency. Energy storage systems is one such prospect. In 2021, the first Ukrainian industrial energy storage system was installed at DTEK Zaporizka TPP, balancing power during preiods of higher and lower demand. In addition, the company is researching the viability of highly flexible capacity projects. The global goal is to redesign TPPs into energy hubs with coal units, flexible capacities, and energy storage systems. These hubs will provide a wide range of services: from "green" energy balancing to storing seasonal reserves for winter and summer consumption peaks.
We are focusing on sustainable development, including environmental conservation, safe working conditions, personnel retention, and the fair transformation of coal regions. The company aims to achieve zero injuries, develop employees’ competence, and introduce environmental initiatives under the National Plan to reduce emissions.
DTEK Renewables: Renewable power generation
DTEK Renewables is the largest investor in the Ukrainian renewable energy sector. Since its founding, the company has invested $1.2 billion in the construction of wind farms and solar power plants.
The company owns Botievska and Prymorska WPPs with a capacity of 200 MW each, as well as Orlivska Wind Farm with a capacity of 100 MW. They are the most powerful WPPs in Ukraine and some of the largest in Central and Eastern Europe.
The pilot solar energy project was implemented in 2017. The construction of Tryfonivska SPP with a 10 MW capacity proved the concept, and in 2019 Nikopolska and Pokrovska SPPs with a total inverter capacity of 440 MW were commissioned. These are the largest SPPs in Ukraine and some of the largest in Europe.
Projects of this scale can be implemented only in a spirit of trust and cooperation with a high level of expertise possessed by both you and your partners. Our partners in the Ukrainian "green" energy development are the world's best equipment producers, leading construction and financial companies. Thanks to close cooperation, we have acquired unique experience and become experts at all stages, from the development of "green" generation projects and short time plants construction to WPPs’ and SPPs’ operation under international quality standards. Our projects have demonstrated the high professional competence of Ukrainian companies to foreign investors. In 2019, we successfully issued "green" Eurobonds for EUR 325 million with a five years turnover time. The raised funds will exclusively finance existing and future DTEK RENEWABLES projects.
DTEK Renewables: New Strategy 2030
The strategic goal: increasing the installed capacity of assets through end-to-end project implementation and effective fund management
01
Leadership in the RES market of Ukraine
02
International expansion
03
Full cycle of project implementation
04
Effective fund management
Decarbonization policy and technological progress will enable the development of renewable energy sources. This will usher in a gradual replacement of the fossil fuel electricity production. The global trend of LCOE reduction with a parallel increase in ICUF will facilitate the "green" energy sector’s ability to secure a more competitive position vis-à-vis coal electricity production. Projections indicate that, between 2025-2027, renewable energy’s LCOE will achieve parity with the tariff for generating companies’ TPPs , while the implementation of new tech solutions will increase renewable energy’s ICUF to 42-45%.
New tech solutions will increase renewable energy’s ICUF to
42-45%
Renewable energy in Ukraine is growing and transforming both structurally and regulatorily:
- RES’ installed capacity in the United Energy System of Ukraine has increased from 2 GW in 2018 to 7.7 GW in 2020, and the further growth potential is projected at 15 GW in 2030;
- the current RES support system is being updated: in 2020 the "green" tariff was lowered, in 2021 there will be a launch of RES quotas and the auction system, which will function until 2029.
DTEK Renewables' strategy includes RES generating capacity increase to 2 GW due to Ukrainian projects and expansion into European markets. In particular, the updated Ukrainian regulatory framework and stable payments from the state-owned company Guaranteed Buyer lay the foundation for expanding the company's asset portfolio, namely the Tylihulska wind farm construction in 2021-2022. We are considering acquisition, construction, merger or consolidation of existing companies in wind and solar power generation in the European markets.
A key success factor is to ensure a full cycle of project portfolio management from development to operation and efficient capital management.
DTEK Renewables in 2020: 71.7% increase in “green” electricity production and decrease in CO2 emissions
DTEK Oil&Gas: Natural Gas and Gas Condensate Production
Stable growth in Ukrainian gas production is only possible in case of intensive development of gas wells deeper than 5-6 km. DTEK Oil&Gas successfully develops deep gas wells, thanks to investments in modern equipment and the latest technologies. The acquired experience allows to consider drilling wells deeper than 7 km.
Naftogazvydobuvannya PrJSC is the main production asset. The company produces gas and gas condensate in the Poltava oblast at the licensed Semyrenkivske and Machukhske fields at a 5+ km depth. In addition, the company is geologically exploring five new licensed sites: Budyshchansko-Chutivska, Svitankovo-Lohivska, Khoroshivska, Zinkivska, and Kovalivsko-Sulymivska.
DTEK Oil&Gas is exploring opportunities for business expansion. The growth strategy includes both participation in state auctions for subsoil use and acquisition of promising assets. DTEK Oil&Gas is ready to apply its experience and expertise to manage other companies’ projects.
2
Gas condensate fields are in operation
5
Oil and gas fields are being explored
32
Active wells, each deeper than 5,000 m
37.1
bn cubic meters
natural gas reserves (2P category – SPE-PRMS classification)
12.8
bn cubic meters
natural gas resources (2P category – SPE-PRMS classification)
1.8
bn cubic meters
of natural gas produced in 2020 (+ 11.2% YOY in 2020)
DTEK Oil&Gas: New Strategy 2030
The strategic goal: achieving maximum growth in hydrocarbon production through expansion of the resource base and implementation of cutting-edge technologies
01
Boosting oil and gas production in Ukraine
02
Growing asset portfolio
03
Cutting-edge technologies
Natural gas remains a long-term strategic energy resource and is considered a transitional fuel in becoming carbon neutral under the European Green Deal.
Ukraine possesses significant resources of 1.2 trillion cubic meters of regular natural gas and has the potential to increase its production. Both public and private companies will be incentivized to grow by positive regulatory changes and the recent market liberalization: the projected optimistic annual increase in production volumes is 2% until 2030. Meanwhile, natural gas consumption in Ukraine will gradually decrease mainly due to increased energy saving among households and lower costs of production and technological maintenance of transit in Ukraine.
These differing trends (an increase in production against decreasing consumption) can lead to a significantly lower natural gas deficit by 2024.
DTEK Oil&Gas’ strategic goal: achieving maximum growth in hydrocarbon production through expansion of the resource base and implementation of cutting-edge technologies. The key tasks for this goal are increasing natural gas production and expanding the asset portfolio, product diversification, improving operational efficiency, and abiding by sustainable development principles.
Regular natural gas production on the continental part of Ukraine is the company's main priority. In 2020, the company reached a new development milestone: increasing gas production to 1.8 billion cubic meters, which set a new record in Ukrainian private gas production industry. In addition, as part of the strategy, the company is considering oil production to diversify its energy resources portfolio.
DTEK Oil&Gas undertook the mission to form a technological ecosystem and drive the development of the entire gas production industry. The company plans to introduce previously unavailable here technologies, partner up with major international companies, and spur the country's scientific and technological potential. This will create additional value not only for DTEK Oil&Gas, but also for the entire Ukrainian fuel and energy complex.
Technological development ecosystem, by DTEK Oil&Gas
Technology Center
Increasing hydrocarbon production, drilling speed and wells operation time without repair, reducing production costs
Expert Council
Improving business efficiency through engaging leading international experts to implement best practices
DTEK Oil&Gas Technology Hub
Access to capital and previously unavailable technologies, growing business value and revenue sources diversification, increasing life cycle of sites, production of synthetic gases from CO2 and H2, electricity generation from thermal energy of industrial equipment
DTEK Grids: Electricity Distribution and Grids Operation
Smart Grid infrastructure brings together “green” generation growth, electrification, and sustainable development, enabling for progress in economy and society as a whole. We are systematically adopting automation and digital technologies to enhance Ukrainian grids and turn them into reliable, flexible, and sustainable smart grids. Ukrainian consumers will ultimately benefit from the advantages of a modern energy sector.
Today, DTEK Grids distribution system operators work with 5.6 million customers in Kyiv and Kyiv oblast, Dnipropetrovsk, Donetsk, and Odesa oblasts. Operators carry out investment programs aimed at improving the quality of life in their respective regions. To this end, a reliable and uninterrupted electricity supply is guaranteed and power distribution losses are reduced. Infrastructure is currently under development to mitigate the power deficit caused by growing communities.
DTEK Grids aims to set the highest standard in customer service. Operators are introducing modern digital communication channels, allowing for smoother and quicker interface with consumers.
In 2018, Ukrainian distribution system operators were separated into independent companies as a result of unbundling required under the electricity market reform. Accordingly, electricity suppliers gained equal access to the grids, while customers were able to choose between suppliers.
Total
188,234 km – total length of power lines: 38,683 MVA – total capacity of substations:
5,558,235 – number of connections
DTEK Dnipro Grids
50,589 km – total length of power lines; 11,603 MVA – total capacity of substations;
1,414,677 – number of connections
DTEK Kyiv Grids
12,745 km – total length of power lines; 7,370 MVA – total capacity of substations;
1,213,918 – number of connections
DTEK Odesa Grids
39,352 km – total length of power lines; 6,950 MVA – total capacity of substations;
1,019,081 – number of connections
DTEK Kyiv Regional Grids
50,818 km – total length of power lines; 6,689 MVA – total capacity of substations;
1,015,103 – number of connections
DTEK Donetsk Grids
32,775 km – total length of power lines; 5,137 MVA – total capacity of substations;
887,845 – number of connections
DTEK Energougol ENE
106 km – total length of power lines; 47 MVA – total capacity of substations;
7,109 – number of connections;
DTEK High Voltage Grids
1,848 km – total length of power lines; 888 MVA – total capacity of substations;
502 – number of connections
DTEK Grids: New Strategy 2030
The strategic goal: maximizing business value by expanding the asset portfolio, improving the regulatory environment, and investing effectively
01
Growing asset portfolio
02
Improvement of the regulatory environment
03
Effective investments: production upgrades and digitalisation
We are considering two options to expand the asset portfolio: partnering up with Ukrainian and international companies, and participation in privatization tenders for government’s shares in distribution system operators.
Decreasing CO2 emissions by reducing grids power losses
0,7
million tons per year
To improve the regulatory environment, we apply our expertise to support the state in implementing European standards for the regulation of the industry, such as tariff calculation methods and parameters, responsibilities of distribution system operators, and implementation of the Green Deal provisions on electricity distribution.
Our strategy includes efficient investments in technical upgrades and the digitalization of power grids. Programs to modernize existing assets and build the Smart Grid will be crucial. The company will also focus on improving operation efficiency through refining the management model and reducing operating expenses per kilometer of the grid.
Maintaining high standards of industrial and environmental safety is our main sustainable development goal. We will contribute to decarbonization of Ukraine, reducing power losses in the grids, which will decrease greenhouse gas emissions by 0.7 million tons in CO2 equivalent per year. Since 2013, we have been systematically implementing programs to protect birds, and we plan to keep up to achieve the goal of installing 600 bird protection devices per every 60 km of power grids to preserve the avifauna. In addition, we will continue implementing conservation initiatives to protect the white stork population.
D.TRADING: Energy Resources Trading in the Ukrainian and International Markets
D.TRADING specializes in wholesale trading of electricity, natural gas, and coal both in Ukraine and abroad. When supplying electricity, D.TRADING focuses on the bilateral contract market, working with large consumers and universal service providers, as well as performing export operations. In addition, D.TRADING is an active player at the day-ahead and balancing markets. In the natural gas and coal markets, the company manages DTEK Group's
energy resources portfolio and trades third-party resources. Ukraine switched to a new electricity market model in July 2019. The new model introduced segments of organized and unorganized electricity trade. The market of bilateral contracts, concluded directly between parties, is in the unorganised segment. Meanwhile the day-ahead, intraday, and balancing markets are in the organized segment, where rules for relations are determined by the regulator.
D.TRADING: New Strategy 2030
The strategic goal: expanding the portfolio of energy product sales in domestic and international markets at an acceptable risk level
01
Growing portfolio of energy products and clients in Ukraine
02
International expansion
03
Risk management
The company aims to become an efficient tool for managing market volatility and create a competitive trading platform that will drive DTEK Group’s international expansion. We plan to preserve the current value of DTEK Group's portfolio of operating assets in a competitive market conditions, as well as create new revenue sources by developing trading operations in the domestic market, building an analytical center, and expanding sales and trading in foreign markets. We are considering an expansion into European energy markets, where our resource base and market expertise will allow us to secure additional income sources, taking into account DTEK Group’s risk preferences.
By 2030, we project a 95% increase in electricity sales to end-users. Natural gas sales to industrial consumers are projected to increase by 105%.
D.SOLUTIONS: Retail Electricity and Gas Supply, Energy Efficiency and E-mobility Solutions
By supplying electricity and gas, D.SOLUTIONS helps customers use energy resources rationally. The company has popularized “green” technologies and energy saving knowledge among the public. Moreover, consumers can reduce their carbon footprint with the company's integrated innovative products and services
THREE COMPANIES SUPPLY ELECTRICITY AND GAS UNDER THE YASNO BRAND
3.5
MLN CUSTOMERS
Three companies supply electricity and gas under the YASNO brand: Kyiv Energy Services, Dnipro Energy Services, and Donetsk Energy Services with 3.5 million customers and branches in 6 regions: Kyiv and Dnipropetrovsk, Donetsk, Kharkiv, Zaporizhzhia and Cherkasy oblasts. Energy service company YASNO Efficiency invests in and implements plants and buildings modernization projects for business clients with guaranteed energy savings.
The YASNO product line includes a wide range of energy efficiency and electromobility products and services that help customers improve comfort, reduce expenses, and generate additional revenue. At YASNO, customers can order energy efficiency packages, climate control equipment, rooftop solar panels, energy storage systems, electric vehicles chargers, as well as request energy services, energy audit, and energy management.
D.SOLUTIONS develops EV infrastructure: a network of fast charging stations YASNO E-mobility, already present in nine regions of Ukraine, connecting the largest cities in Ukraine.
D.SOLUTIONS: New Strategy 2030
The strategic goal: creating a customer-focused diversified retail business with a customer portfolio of at least 23 TWh
01
Strong retail brand
02
Extensive lineup of products and solutions
03
Best customer experience
As a part of the Ukrainian energy sector, the retail electricity market is subject to significant transformations under the influence of local and global trends. The company’s main objective is to actively manage business transformation in order to increase commercial efficiency, step-up marketing and sales functions, and improve brand perception.
D.SOLUTIONS development priorities:
- Strong retail brand development: The company aims to provide best-in-class customer experience. All products and services under a single brand must meet the customers' needs, ranging from basic to innovative.
- Extensive lineup of products and solutions.: This includes basic energy products (electricity and gas supply, energy efficiency and electromobility solutions), additional services (household, financial, telecommunications, insurance), and the so-called "blue ocean" area (products related to lifestyle shift, new needs, global trends, emerging technologies).
- High operational efficiency: This features the work of offline offices network, expansion of remote service channels, development of billing and CRM systems.
- Building a stable customer base: We plan to take part in tenders for the universal service supply to expand the customers portfolio and to offer our solutions throughout the country after the liberalization of the retail electricity market.
ANNUAL REPORT
2020
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