Odesa under siege: Expert reveals energy crisis challenges and solutions

On Nov. 17, Russia launched a combined strike on Ukraine’s energy infrastructure, firing around 120 missiles and 90 drones. That day, emergency power outages were implemented in Kyiv and other regions. Ukrenergo continues to enforce scheduled outages from early morning to evening. 

How long will Ukrainians continue to face energy restrictions? What is the energy deficit, and how severe is the situation in Odesa, one of the hardest-hit cities? NV spoke with Omelchenko for answers.

What is the current situation in the energy sector? How are generation volumes and consumption levels? 

Consumption is gradually increasing. Compared to the previous day, today’s consumption is about 1.5% higher. Overall, the situation is slowly improving. However, the generation deficit persists, albeit slightly reduced compared to yesterday or the day before. As we can see, only one stage of outages was introduced nationwide. The deficit is estimated at around 1–1.5 GW. 

What’s happening with electricity imports? How much of the available quota is being used? 

Unfortunately, imports are progressing very slowly, with only 15% of the quota utilized daily. This is because electricity prices in many European Union countries are higher than in Ukraine, especially during hours of domestic shortages. Additionally, there are price cap restrictions on the day-ahead, intraday, and balancing markets imposed by the National Energy and Utilities Regulatory Commission (NEURC). NEURC has yet to resolve this pricing issue. Without these restrictions, the deficit could have been minimal or even nonexistent. 

Is there hope that current blackouts will end soon if there are no new Russian attacks on the energy system? 

This also depends on the weather. In principle, restrictions could be minimized next week, but I cannot guarantee 100% that there will be no outages. The deficit will persist regardless. Unfortunately, imports are not incentivized, meaning businesses have no motivation to engage in electricity imports. Regulatory issues worsen the situation, contributing to capacity shortages and restrictions. 

Currently, there’s no reason to believe that the restrictions will end soon. They could cease next week if price caps are adjusted and import incentives are introduced. However, as far as I know, NEURC is stubbornly refusing to make these changes. Thus, Ukraine continues to underutilize its electricity import capacity, leading to a loss of trust among partners. They note that Ukraine consistently negotiated higher quotas but fails to use them during shortage hours. 

It’s also worth noting that network supply constraints play a role in the current situation. These constraints might soon be lifted or at least minimized.

What is the current situation in Odesa, and what caused the severe energy problems there? 

Restoration work has been carried out in Odesa, and hourly outage schedules are already being canceled, though risks remain. Repairs are ongoing as some damage persists. The situation is still fragile and not fully stable from a technical reliability perspective, but conditions in Odesa today are much better than they were yesterday or the day before. 

The enemy concentrated its efforts on Odesa. Although strikes occurred across Ukraine, Russian forces targeted substations near Odesa with particular focus. These powerful attacks destroyed three out of four key substations. The reasoning behind this strategy seems tied to Russia’s belief that Odesa, a Russian-speaking region, might be more inclined to tolerate their presence under such pressure—potentially inducing a kind of Stockholm syndrome. Another reason is Odesa’s importance for Ukraine’s export economy, making these strikes a blow to economic infrastructure. 

What is the broader situation in Ukraine’s energy system, and how is small-scale generation integration progressing? 

Network restrictions remain in place. Repairs are needed for substations that transfer electricity from western to eastern Ukraine, where conditions are more challenging. Additionally, the Sumy region faces ongoing difficulties as a border area under constant shelling, along with issues in Kryvyi Rih and Svitlovodsk affecting not only electricity but also heating. 

As for cogeneration units and gas mini power plants, many challenges persist in the regions due to a lack of funding to connect small-scale gas generation. There is also a significant debt problem among heating companies, with over 60 billion hryvnias owed for gas. 

One obstacle to gas generation integration, despite the availability of equipment, is the price disparity. The cost of heat energy has not increased to match the price of natural gas, leading to financial shortfalls. Local budgets lack the funds to cover this gap, and the state budget is also insufficient. Additionally, large debts exacerbate the issue. 

Another hurdle is the shortage of money in many regions to implement these projects, even when equipment is available. This sector, in my opinion, is insufficiently incentivized.