25.11.2024
How Current Energy Transformation Trends Will Ensure Energy Sustainability of Ukrainian Communities During War and Recovery
Over 700 MW of cogeneration power capacity will be installed in Ukrainian communities in 2024-2025 thanks to the support of foreign donors to Ukraine, who responded to the call to help compensate for the destruction of the Ukrainian energy sector by terrorist attacks by the Russian Federation.
However, the damage caused to Ukraine’s energy system and infrastructure is not the only challenge facing Ukrainian communities in restoring economic viability and further development.
How to preserve the local economy and lay the foundation for further development is a question that should concern every community and be a certain focus of attention of its leaders. And without answers to the challenges of energy supply, solving this issue is impossible.
The development strategy of each community should contain not just a formal section dedicated to energy supply, but this section should be the core of the entire strategy. Such a core should ensure transparency and adequacy of the prospects for achieving the goals and objectives of the strategy through high-quality analysis and justification of decisions on the formation and development of local energy. Each target indicator of the socio-economic development of the community should be justified by adequate provision of megawatt-hours of energy. All further socio-economic development of communities depends on how a particular community will be able to provide itself with energy.
Given the current state of the unified energy system of Ukraine, which has lost more than half of its installed capacity, and the other half is largely worn out, damaged and is under constant terrorist attacks, waiting for its full restoration in accordance with the existing and prospective requests of communities is not a universal solution. Moreover, a passive position deprives the community of the opportunity to build a system of competitive advantages both in the energy sector and the economy of the community as a whole. Such a decision should be more of a forced exclusion for communities that are critically deprived of other practical alternatives. But, even in this case, the community should take a proactive position in requesting centralized energy supply systems. For example, the development of investment programs of electricity distribution system operators serving certain territories should be under soft but systemic pressure of a corresponding request from communities to ensure access to capacities for the local economy both for the current period and for the future.
A much better, more advantageous position for the community is to maximally promote the birth and development of local energy. Modern and sufficiently mature technologies for energy production and supply already open up solid opportunities for such development. And the further development and improvement of such technologies is one of the key points of efforts in the global energy transformation.
But the first issue that arises before the community is not the issue of energy production, but the issue of efficient use of already available energy volumes.
Energy efficiency first
It is energy efficiency in communities that is the main fundamental lever for achieving both sustainable socio-economic development and energy security. The energy sustainability of communities depends, first of all, on how large-scale and universal the adherence to the principle of “energy efficiency first” will be during the development and implementation of the entire range of local social, economic and energy policies. Such adherence should receive both a clear formal fixation in community development strategies and real practical content in local energy plans and local socio-economic development programs.
It is important that adherence to the principle of “energy efficiency first” be supported by adequate quality tools, where a high-quality and productive community energy management system should take center stage. After all, the existing experience of Ukrainian communities shows that it is precisely the introduction of energy management and related organizational measures that allows achieving about 10% savings in energy resources used by the community for the functioning of local social infrastructure. It is also important that municipal energy management paves the way for high-quality energy modernization of municipal infrastructure and real estate, and this, in turn, allows achieving real resource savings of up to 40% per year. Moreover, such indicators open the way for attracting investment resources – from funds from international financial organizations to private investments under the mechanisms of energy service contracts (ESCO). The reserves of such opportunities are counted in billions, but they are still not used even by a fraction of a percent.
The Law of Ukraine “On Energy Efficiency” provided for the need for communities to make formal decisions on the introduction of energy management systems. But those communities that do The leaders of economic leadership and prosperity must go much further and achieve the highest possible level of local energy management. Without a qualitative analysis of the level of existing and prospective provision of energy resources through the formation of a local energy balance, such leadership is impossible.
Modern trends in energy transformation support the development of opportunities for the formation of local energy more than ever. The key paradigm of energy transformation is currently described by the formula of three “Ds”, which stand for “decarbonization”, “decentralization” and “digitalization”. And behind each of these “Ds” are those opportunities for the development of local energy in communities that the world has not seen before.
Decarbonization
Decarbonization is a movement driven by political decisions at the highest levels to prevent climate change and achieve climate neutrality in the global economy. In turn, this movement determines the dynamics of public and private investments in everything related to it – from supporting relevant scientific and practical research on decarbonization technologies to developing business projects using such technologies. And the results are already impressive – energy generation using photovoltaics and wind turbines has ceased to be an “alternative” energy source, and heat pumps and battery systems for storing electrical energy are quickly gaining a strong place in electricity and heat energy systems.
Ukrainian communities are already actively engaging in using the possibilities of solar generation to ensure the operation of social and engineering infrastructure. Megawatts of generation capacity are already being installed at water utilities and public buildings, but the potential is estimated at tens of megawatts of clean generation even at the level of one community. In combination with storage systems, such generation can not only provide individual facilities with sustainable energy supply, but also become the basis of local energy.
However, the possibilities of using solar and wind energy are much larger.
Bioenergy attracts attention as one of the key tools in achieving the goal of obtaining a perfectly “pure molecule” in the gas mix, and hydrogen is finding its place in such a mix with difficulty, but quite confidently.
According to the Bioenergy Association of Ukraine, the energy potential of biomass in Ukraine may exceed 40 million tons of oil equivalent in 2050, half of which is in the form of solid biomass, and more than 40% – in the form of biogas. The latter can not only replace, for many Ukrainian communities, natural gas, but also become, in the case of further purification to biomethane, the basis of the community’s export potential.
One of the key tools for the development of local energy should be the development of bioenergy clusters that will combine biogas production and its industrial use and biomethane production.
Decentralization
It is important that most of the latest technologies for decarbonized energy generation naturally allow their use and development at the local, decentralized level, the level of individual communities in particular. Adequate understanding by communities of the local morphology of energy resources, existing and potential demand, and creating conditions for attracting investments in the development of the local energy base on the basis of local energy planning is the only winning way to achieve high goals of socio-economic growth.
The development of local energy clusters and integrated approaches to energy supply of local engineering infrastructure open up opportunities for reliable provision of energy sustainability of the community by attracting private investment. In turn, this helps to form a high-quality portfolio of investment opportunities and create a favorable investment climate not only in the energy segment of local development, but also in other target sectors for the community.
As of November 2024, Ukrainian communities have already formed the need to install more than 1,300 MW of electricity generation capacity in the form of high-efficiency cogeneration, and more than half of this need has already been covered by donors. This already lays a solid foundation for the formation of local energy, but a serious challenge is the optimization and further development of the local energy base.
It is worth noting that the restoration of the national energy system will also require incredible investments in the restoration of energy transmission and distribution systems. The costs of such restoration will inevitably be passed on to consumers through transmission and distribution tariffs. The more successful communities are in developing local generation and local energy, the lower the costs of electricity transmission and distribution for community residents.
Reducing the load on energy transmission systems will mean reducing losses from such transmission, and at the same time, achieving and increasing energy efficiency, and reducing CO2 emissions associated with the “dirty” fate of the energy mix. Therefore, decentralization of generation should also lead to the decarbonization of the Ukrainian energy sector.
It is the local dimension and development of “energy communities” that is a global trend in energy transformation, stimulating a human-centric approach to the development of modern decentralized and decarbonized energy systems. Today, the development of energy communities receives large-scale support from the governments of leading countries in the world, an example is the National Recovery and Resilience Plan of Italy, which provided 2.2 billion euros specifically to support energy projects in communities.
Digitalization
The capabilities of modern digital technologies in the development of energy systems are already impressive. The level of maturity of such technologies already allows us to illustrate their extraordinary efficiency with thousands of examples. Smart grids allow us to integrate and effectively manage the operation of local energy systems. Demand-side management systems not only balance supply and consumption at the local level, but are also becoming an increasingly powerful tool for the balanced development of national energy systems.
The development of “smart grids” will allow communities to make the most of the opportunities of distributed local generation, while avoiding unnecessary costs for the transmission and distribution of electricity.
Virtual power plants allow the use of a resource that was even unthinkable a few decades ago outside the paradigm of digitalization. But artificial intelligence technologies open up access to new dimensions of energy efficiency. Combined with the deployment of energy production from renewable sources, the growth of electromobility and the use of heat pumps in heating and cooling, the digitalization of energy is already making a real revolution today.
An inspiring example is the success of the British Octopus Energy, which broke into the energy market, destroying the old rules of the game and creating new ones. Starting with a relatively small customer base, offering access to clean renewable energy and heat pump technology, with a revolutionary application of demand management technologies through maximum digitalization, the company has become a leader in the UK’s national energy market. Founded in 2015, it was a small regional company, and today it is a multi-billion dollar multinational business that builds its model precisely on digital technologies and clean energy. And this experience and technology are also available to Ukrainian communities.
The destruction of the domestic energy system is not only a challenge, but also a field of opportunities for Ukrainian communities. The pre-war energy system, oligarchized and, to a large extent, monopolized, would not have given communities the opportunities for developing local energy that they now have. The main thing is to effectively and productively use these opportunities and build a new, decentralized municipal energy system, which should become a significant part of the new unified energy system of Ukraine.
Community-focused energy projects can ensure energy sustainability and demonstrate a new level of service quality through modern digital technologies and the use of clean energy. And high efficiency through the development of energy management systems and following the principle of “energy efficiency first” will lay the foundation for accelerated renewal and sustainable socio-economic growth of Ukrainian communities.
