About 100 kilometres from the front lines of the conflict in southern Ukraine, 650 workers building the Tyligulska wind farm dove into underground concrete bomb shelters whenever Russian missiles and drones attacked targets nearby. The crews, clad with body armour, toiled for seven months, much of the time during the dead of winter. They spent roughly one day in five underground when the explosions came too close for comfort.
By mid-March, the first stage of Ukraine’s newest renewable energy project – 19 turbines with a capacity of 114 megawatts – was completed. None of the workers had been killed or injured, and the turbines began to generate much-needed electricity a few weeks later. During a time of war, when Ukrainian infrastructure everywhere was being turned to scrap by Russian missiles, the achievement was nothing short of heroic.
For DTEK, the Ukrainian energy company that owns the project, the launch of the wind farm – which officially opened this week – was not just an act of defiance in the second year of the Russian invasion; it was an act of strategic desire and necessity.
DTEK in particular – and Ukraine in general – wants to play a role in the European Union’s clean-energy drive, whose goal is to achieve net-zero emissions by 2050. The company also wants to clean up its own act, since grubby old coal plants provide the vast bulk of its electricity generation. “I am more than confident that we can be one of the main providers of green energy to Ukraine and the EU,” DTEK chief executive officer Maxim Timchenko said in an interview in April in Rome, where he was trying to drum up financial support from international financial institutions at a Ukraine reconstruction conference.
DTEK is Ukraine’s biggest privately owned generation company, producing about a quarter of the country’s electricity. It’s owned by Ukraine’s richest man, Rinat Akhmetov, who, like many Ukrainian and Russian oligarchs, made his fortune after the collapse of the Soviet Union by snapping up natural resources and heavy industries on the cheap. Forbes magazine put his worth at US$4.3 billion earlier this year, down from more than US$9 billion before the start of the war in February 2022. Many of his most valuable businesses, including the massive Azovstal steel plant in Mariupol, were seized or demolished in Russian offensives in the spring of 2022.
The effort to keep the lights on has been cruel to DTEK and Ukrenergo, the government-owned national transmission company. (On one of my Ukraine stints in late 2022, while I was covering the war for The Globe and Mail, the electricity and heat in the Kyiv bureau apartment were off nearly half the time). By the end of last year, relentless Russian attacks, initially on the transmission system, then on the generating stations themselves, including a small DTEK solar plant, had cut Ukraine’s total generating capacity by more than half.
I am more than confident that we can be one of the main providers of green energy to Ukraine and the EU.
–DTEK CEO Maxim Timchenko
Much of the lost capacity has been restored, though all six of DTEK’s main generating stations in Ukraine-controlled areas have suffered severe damage, and two others were overrun by Russian forces. In the first 15 months of the war, DTEK lost 173 employees on the front lines. Another 474 were injured, 37 missing and five in captivity. Three of them died at plants that came under Russian attack; one died when he stepped on a landmine while repairing a power line near Kyiv.
The company’s renewables-and-decarbonization strategy began in earnest in 2009, when only about 3% of the country’s electricity supply came from renewable energy. By 2020, the share had increased to more than 12%, with solar leading the mix, followed by hydro, wind and biomass. A hefty feed-in tariff – a guaranteed above-market price for renewable energy delivered to the grid – propelled the rise of wind and solar, which together supplied almost two-thirds of Ukraine’s renewable energy before the war. Ukraine’s pre-war goal, still very much in place, is to raise the share of electricity from renewables to 25% by 2035.
The war has set back DTEK’s renewable energy rollout by years – but has not killed it.
As the Center for Strategic and International Studies, a Washington think tank, pointed out, the highest potential for wind and solar development is in areas that are now under Russian control. Ramping up Ukraine’s renewable energy program depends in good part on recapturing those areas, located in the south and the east of the country. At the same time, private financing for these projects dried up, since investors had no interest in supporting projects that could get destroyed by Russian missiles. That left DTEK begging for loans from the World Bank, the European Bank for Reconstruction and Development and other international financial institutions. “The key problem for us is financing,” says Oleksandr Selishchev, the chief executive officer of DTEK Renewables.
Additional stress came from the Ukraine Ministry of Energy, which, under pressure from a government on financial war footing, froze most payments to wind and solar operators shortly after the war started. Those payments have since climbed, though are still short of normal, breathing some life into near-dead projects.
DTEK’s first bit of good news came last November, when the successful Ukrainian counter-offensive liberated Kherson in the country’s south, allowing a 10-megawatt solar plant in the village of Tryfonivka to be returned to Ukrainian hands. At the same time, DTEK was well on its way to completing the Tyligulska wind project to the west, near Odesa. Using turbines supplied by Denmark’s Vestas, the project is one of the biggest of its kind in Europe, with a total cost of US$450 million. The second stage, to be completed in 2024, will take the capacity to 500 megawatts, when 83 turbines are scheduled to be in place.
Tyligulska has great practical value to DTEK and Ukraine. The turbines will partially compensate for the loss of power in damaged DTEK coal plants and Ukraine’s off-line nuclear plants and should be reliable generators even in times of war. They will be hard to destroy en masse since they are spaced hundreds of metres apart on 200 hectares of land. Well-aimed missiles could take out one or two of the turbines but not the whole project. The symbolic significance is even greater, because it delivered the message to the EU that Ukraine is determined to become a green-energy export power.
The key problem for us is financing.
- Oleksandr Selishchev, CEO of DTEK Renewables
Ukraine exported electricity to Moldova, Hungary, Slovakia and Poland before the war and recently resumed those sales as it rebuilt its transmission lines and power plants – its grid is now entirely detached from Russia’s and interconnected with Europe’s. The country has obvious competitive advantages to play the green game. Ukraine has ample land, meaning that it is unlikely to see the NIMBY campaigns that have stalled or crippled many wind projects in Europe. Certain parts of the country have high wind speeds, and the permitting process is faster than in Europe. Add in a relatively low cost of labour and energy production, and Ukraine will certainly have a seat at the export table. It also knows that certain European countries are setting themselves up for power shortages. Coal power stations are on their way out, and Germany in April closed the last three survivors of its once vast fleet of nuclear plants.
To be sure, there are obstacles. Ukraine’s power project will always have a higher cost of capital than those in Europe, and the country needs to institute a robust permitting process that would allow DTEK and other power producers to prove that their renewable energy truly comes from sustainable sources. Then there is the war, which could drag on for years, making it difficult for Ukraine to finance power projects of any kind.
Still, U.S. Energy Secretary Jennifer Granholm said last year that Ukraine is determined to become “a clean energy powerhouse and energy exporter to the European Union.” The war has slowed Ukraine’s energy revolution. But the completion of the first phase of Tyligulska wind farm and the resumption of electricity exports to Europe, even as the bombs and bullets rained down on the country, showed that Ukraine’s direction is set and carries a distinct shade of green.
Eric Reguly is the European bureau chief for The Globe and Mail and is based in Rome.
