Innovations in energy and energy efficiency

Lecture content:

1. Introduction
2. Innovation and governance in energy: European and Ukrainian context
3. Ukrainian realities: challenges and opportunities
4. Active links (NPAs, standards, resources)
5. Glossary
6. Questions for self-test

1. Introduction

Energy today is one of the areas where the most innovative changes are taking place. In fact, its development in modern conditions of transformation directly depends on innovation. And no less important is that energy itself has always played a key role in all scientific and technological revolutions — from the industrial age to the digital one.

This role of innovation has also been clearly recorded by the European Union. There, a special regulation on governance in the energy and climate sectors was adopted. It defines the principles and approaches by which countries should plan their development, and most importantly, it obliges them to prepare National Energy and Climate Plans.

Last year, Ukraine approved such a plan for the first time until 2030. It, like in all EU countries, must necessarily define the so-called “dimensions”. This approach was laid down in the fourth energy package, which is closely related to the European strategy Fit for 55 and the “Green Deal”.

The five dimensions are a kind of roadmap for national and European governance in the field of energy and climate.

• first — decarbonization;
• second — energy efficiency;
• third — energy security;
• fourth — internal energy market;
• fifth — research, innovation and competitiveness.

And it is precisely innovation that is directly related to competitiveness. It is defined as one of the five key dimensions. It is obvious that responding to modern challenges is impossible without a comprehensive and systematic approach to innovation, as it is an integral part of the energy transformation.

2. Innovations in the power industry

We see the most innovations in the power industry: in the generation, transmission, distribution and consumption of electricity.

Digitalization and artificial intelligence

Digitalization is developing extremely rapidly. It has become a driver of energy efficiency and demand management.

• The concept of “virtual power plant” has appeared – when many small sources of generation and consumers are combined into a single system that works like a large power plant.
• Artificial intelligence helps dispatchers balance power systems, manage electricity flows, and forecast loads.

Generation and science

Many innovations today are taking place in electricity generation. Universities and research centers are constantly working to increase the efficiency of new technologies. In fact, there is a struggle for every percent of efficiency. Take the same photovoltaic panels – adding even one percent to their efficiency means a huge scientific work and a serious breakthrough for the market.

Startups are actively appearing in this area. Young companies are looking for their niches, offering innovative solutions that sometimes become global breakthroughs.

There is also a significant reserve for increasing efficiency in wind energy. China, for example, is currently investing in the creation of a large research center where high-power wind turbines will be tested. This is also part of the global innovation race, where every percent of productivity is of great importance.

New energy sources

The search and discovery of new energy sources continues. Today, billions are being invested in nuclear fusion — and this is no longer a fantasy, but a real prospect. Nuclear fusion opens up access to energy potential for humanity that was previously unattainable. The reserves of energy production through fusion alone are awe-inspiring and are becoming a symbol of the future of energy.

Biomethane is another area that demonstrates the importance of innovation even in well-known technologies. Its production is affordable, but its efficiency depends on new solutions. Its properties are almost identical to natural gas, which makes it a promising alternative to fossil fuels.

The greatest innovations are in hydrogen energy. This is an area where development is not only driven by the market, but also by politics. The European Union is betting on hydrogen: the Green Deal, hydrogen funds, and a multitude of programs that support hydrogen energy. The US has passed the Inflation Reduction Act, which gives hydrogen a key role in the green transformation.

The development of hydrogen energy largely depends on excess renewable generation capacity. There is a concept according to which the system surpluses of solar and wind energy, which cannot be integrated into the grid, are directed to the production of hydrogen. As a result, a large amount ofg relatively cheap “green” energy.

Last year, Europe introduced record solar generation capacity. It is obvious that over time, the sun and wind will provide more energy than the system can integrate. That is why hydrogen is becoming an intermediate energy carrier, capable of accumulating surpluses and returning them to the system at the right time. Hydrogen is considered one of the most promising means of decarbonization, and replacing natural gas with hydrogen is a completely realistic idea.

Battery technologies are developing in parallel. New types of batteries with higher efficiency are appearing on the market, and this creates healthy competition between technologies. Such competition, in turn, accelerates progress in the field of energy storage.

3. Ukrainian realities: challenges and opportunities

Ukraine’s Energy Strategy for 2050 sets clear targets for decarbonization. However, both Ukrainian and European decarbonization plans are currently being thwarted by objective circumstances. The conditions in which Ukraine finds itself are paradoxical: on the one hand, they do not contribute to decarbonization, and on the other, they force it to accelerate.

The aggressor is systematically destroying energy infrastructure and generation. One of the key challenges for the country’s energy security is the issue of replacing coal-fired generation. What technologies can become an alternative, is an energy mix model without maneuvering capacities possible – there are no unambiguous answers to these questions.

Given the Ukrainian realities, planning in the energy sector is extremely complex. And yet, a number of strategic documents have been developed – the National Action Plan for Renewable Energy, the National Action Plan for Energy Efficiency, and the National Energy and Climate Plan.

A realistic assessment of the prospects for complete decarbonization of the Ukrainian energy sector will be possible only after the end of the war. And this completion should come precisely with our victory.

Taking into account all the challenges of energy transformation, including the need to attract and develop scientific and technical potential, the National Energy and Climate Plan for 2030 should contain specific directions supported by state policy in the fields of energy, education, and science. It should be instrumental in nature and be focused on achieving practical goals and objectives in the field of research and innovation.

Each country has its own challenges in energy transformation and in fulfilling the tasks defined by the political and economic documents of the European Union. For Ukraine, this issue is particularly important, since the structure of our energy sector is specific. It has similar features to the energy systems of individual European countries, but at the same time retains unique features. A large share of nuclear generation, unresolved challenges in the transformation of thermal and coal generation, prospects for the development of renewable energy sources and the need to form a new energy mix – all this creates complex tasks that have a political, economic and financial dimension.

Energy use of waste

In Ukraine, it is extremely important to form a separate policy on waste management and solid waste disposal. This should be considered not only from an environmental point of view, but also from a logistical point of view, taking into account the development of modern urban infrastructure. The experience of European Union countries can be very useful here.

Technologies for converting waste into energy already exist. Among them is pyrolysis, which allows converting waste into synthetic fuel. The economic viability of these solutions has been proven in many countries. However, in Ukraine we face a different challenge: there are many regulatory barriers in this area and there are practically no incentives for implementation.

The problem is that despite the availability of innovative technologies and proven business models, the conditions for their effective use in Ukraine have not yet been created. And this is happening against the backdrop of a catastrophic situation with waste disposal, which is only getting worse.

Nuclear energy and innovation

Ukraine has historically had a strong potential for nuclear energy. Traditional high-power reactors, usually one-gigawatt units, remain the basis of the system. Moving away from base load in the power industry is not easy, and it is nuclear energy, like no other, that really allows us to move towards decarbonization.

But time dictates new solutions. Today, small modular reactors (SMRs) are coming to the fore. Their idea is simple: downsizing the unit allows for standardized products that can be mass-produced for different customers. This means better project management, lower construction costs, and the ability to launch nuclear generation without huge budgets and multi-year timelines.

In fact, the energy transformation and decarbonization will largely depend on how quickly and effectively we can implement this technology.

Digitalization as the thirddimension of energy transformation

Today, when we talk about energy transformation, we remember the so-called 3D model — it is decarbonization, decentralization and digitalization. And it is digitalization that is becoming a powerful vector of change, because it allows you to add value to literally all energy products and processes. Just look at the market — the value of digital companies speaks for itself.

Artificial intelligence is developing rapidly, and its application in the energy sector has enormous potential. Algorithms, open models capable of self-learning, take energy efficiency to a new level. This is no longer just automation — it is dynamic consumption management, balancing and optimization of systems in real time.

An example is the British company Octopus Energy. It started as a startup, and today it is a multi-billion dollar business that works with virtual power plants, manages energy distribution systems and actively implements heat pumps for heating. Octopus uses artificial intelligence in demand management systems and demand response, turning innovation into a real competitive advantage.

SMART networks and new possibilities of the energy system

There is every reason to hope that Ukraine will restore its energy infrastructure already on the basis of modern technologies. One of the key areas here is SMART networks. They have huge development prospects and will become the basis for Ukraine’s integration into the EU energy system.

Why is this important? Because without smart networks, the restoration, reconstruction and development of electricity distribution systems and distributed generation is impossible. The same applies to transport electrification – without SMART solutions, it will remain only at the level of concepts.

Separately, it is worth mentioning virtual power plants. They allow you to consider demand management as a separate type of generation. This is a completely new approach: without actually producing additional energy, the system gets the opportunity to balance the load.

And another important point – the efficiency of investments in SMART networks exceeds most other types of capital expenditures in energy transmission and distribution. That is, every hryvnia or euro invested here brings a greater effect than in traditional infrastructure projects.

Examples of communities, BESS and virtual power plants

Let’s look at examples of small Polish communities – 15-20 thousand inhabitants. Solar panels, biogas plants, energy storage systems are already operating there. This is a comprehensive model: generation, accumulation and distribution. And the logical question: can we organize something similar in Ukraine using the latest technologies?

The answer is yes, it is possible, but there are a number of nuances. Energy storage systems, the so-called BESS (Battery Energy Storage Systems), have already become mainstream in Ukraine. However, the main problem is cost and return on investment. This is a key issue that hinders mass implementation.

Several years ago, changes were made to Ukrainian legislation that opened the door for energy storage projects. In the European Union, this direction is a real trend. DTEK was the first to try to implement such a project in our country, but, unfortunately, in the territory that is currently occupied. The company has recently announced investments in a new project.

Even today, in crisis conditions, the population and business already have tens of megawatts of storage system capacity. Theoretically, with the help of smart grids, they could be integrated into the power system. In parallel, new storage technologies are being developed, but again, everything rests on economics and payback.

As for virtual power plants. There are two possible balancing options here: either through additional capacity or through demand management. Moreover, it is interesting that a virtual power plant can provide not only unloading services, but also loading – that is, flexibly adjust the system to the situation.

But there is one “but”: Ukrainian legislation lags behind reality. Today, there is no clear state policy to regulate investments in this segment. We even have examples when enterprises licensed by the National Commission for the Regulation of Energy and Utilities of Ukraine cannot include the costs of developing energy management systems in the tariff. And this is a serious barrier to the development of innovations. A state policy is needed to create incentives and regulate investments in modern technologies.

Conclusion

Innovation is the heart of the energy transformation. It is shaping a new architecture of the energy system that will be decentralized, digitalized, flexible and resilient to challenges. For Ukraine, innovation is not just a fashion trend, but a chance to build a modern energy system integrated with the European Union and make a leap into the future.

Active links (NPAs, standards, resources)

• Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action: https://eur-lex.europa.eu/eli/reg/2018/1999/oj/eng
• European Green Deal: https://ec.europa.eu/commission/presscorner/detail/e%20n/ip_19_6691
• Fit for 55 package: https://www.consilium.europa.eu/en/policies/fit-for-55/
• National Energy and Climate Plan of Ukraine until 2030 (NECP): https://me.gov.ua/view/bb0b9ef5-ea96-4b8a-8f2f-471faf32c9df
• International Energy Agency – Hydrogen – international overview of the state and prospects for the development of hydrogen energy: https://www.iea.org/energy-system/low-emission-fuels/hydrogen
• ENTSO-E – European Network of Transmission System Operators for Electricity: https://www.entsoe.eu/
• Octopus Energy – an example of an innovative company from Great Britain: https://octopus.energy/