Oleksandr Katsuba: The second winter of war. How did the Ukrainian energy sector get through it and what's next?

In the fall of 2023, everyone from President Zelenskyy and military intelligence to dozens of experts warned Ukrainians that the winter of 2023/2024 could be even more difficult than the winter of 2022/2023. We were expecting thousands of "Shaheds" and hundreds of missiles to hit our power plants, distribution centers, and transformers. But now, at the beginning of March, it seems that we have avoided the catastrophic consequences of the Russian winter attacks and the Ukrainian energy sector has generally done well this winter. Why is this so?

On the one hand, the Russians have been concentrating their attacks this winter primarily on industrial regions and important logistics hubs, actively attacking Dnipro and Poltava regions, Odesa and ports in Odesa region. After Ukrainian naval drones drove the Russian Black Sea Fleet to distant ports and largely expelled it from Crimea, Ukraine managed to resume maritime trade. Therefore, attacking port infrastructure and industry from the air has become a top priority for the Russians. This tactic is significantly different from last year's, when the enemy primarily tried to freeze Ukrainians and plunge the entire country into darkness. 

At the same time, the Russians continued to attack the energy infrastructure of the frontline territories this winter, and they did not manage to "blackout" the country or a significant part of it. Cyberattacks on energy infrastructure were also unsuccessful, although the Russians did not stop trying for a single day or hour.

Ukraine was much better prepared for the shelling than a year ago. The shelling last winter had delayed consequences - I think you remember the accidents and breakdowns in the summer of 2023. And massive successful attacks on the energy sector, if the Russians had succeeded, could have had truly catastrophic consequences. But in general, Ukraine was much better prepared for this winter, managed to protect its energy and industrial infrastructure and return its exports by sea to almost pre-war levels.

We can now summarize the factors that helped Ukraine get through the winter so smoothly.

1.    Restoration of generation after last year's damage. Minister Galushchenko estimated that more than 2 GW of power generation capacity - at least 4 large thermal power plants - returned to the grid due to the repairs. 

2.    Weather. For the second winter in a row, Ukraine did not experience severe frosts - the temperature did not stay below the critical minus 10 for more than 3-4 days, even in some regions. Therefore, the pressure on heat and power generation was low.

3.    Possibility of expanded energy exchange with the EU. In November, the European network of electricity transmission system operators ENTSO-E increased its capacity to supply Ukraine by 500 MW to 1,700 MW.

4.    Strengthening the air defense system. Ukraine has a large number of foreign weapons, which are used in parallel with Soviet-era models. In addition to Western aid, mobile air defense groups, camouflage, and reinforcement of critical infrastructure facilities help fight Russian drones and missiles.

5.    Russia's fear that Ukraine could retaliate. Ukrainian drones have reached Moscow and St. Petersburg, destroying critical infrastructure of the Russian military industry and blocking the capabilities of the Russian occupiers. Therefore, the Russians, fearing a retaliatory strike, are quite cautious about attacking critical infrastructure.

6.    The work of energy companies to decentralize energy supply. In 2023, energy companies did a lot of "homework" - they prepared backup power for energy delivery, stocked up on transformers and equipment for repairs.

7.    Strategic reserves. Ukraine has accumulated enough gas, oil, coal, and nuclear fuel to successfully get through the heating season.

In general, this winter, Russians' hopes were not realized. After all, when in January 2024, industry increased consumption by 27% and private consumers by almost 14%, Ukraine still had a sufficient surplus of electricity production to resume exports. Ukraine sold electricity to Slovakia, Hungary, Poland, Moldova, and Romania. Since the beginning of January 2024, commercial net imports to Ukraine have almost halved, and in mid-February, net exports turned positive.

However, the overall positive outcome of the winter of 23/24 in the energy sector does not relieve the Ukrainian government, business, and our international partners of the need to prepare for the next winter. For example, it is necessary to create additional generation capacity, as Ukraine may lose up to 0.5 GW of generating capacity due to the constant attacks by Russia on Kurakhivska and Slovianska thermal power plants.

In addition, Ukraine needs to continue its policy of decentralization of energy supply, further integration into the European energy network, and implement a more consistent energy saving policy. Grants and loans from the World Bank and European energy funds can now be attracted to help our cities and businesses invest more in modern energy.

Ultimately, our energy security can be greatly enhanced by investing in domestic production and green energy in areas far from the war. To increase gas production, build wind and solar power plants, we need money from Western and Eastern investors. And we are returning to business guarantees, judicial reform, and institutional changes. These are also investments in security, including energy security.

Oleksandr Katsuba is a Ukrainian entrepreneur, energy expert, and owner of ALFA GAS.