Ukraine and the World Bank Sign Agreements to Implement an Innovative Hybrid Energy Storage Technology at Ukrhydroenergo to Advance Ukraine’s Integration to European Electricity Networks

September 14, 2021

Photo credit @Ukrhydroenergo

On August 13, at the Cabinet of Ministers of Ukraine, in the presence of Mr. Denys Shmyhal, Prime Minister of Ukraine, and Ms. Anna Bjerde, the World Bank Vice President for Europe and Central Asia, a package of agreements with the International Bank for Reconstruction and Development (IBRD) and the Clean Technology Fund (CTF) was signed to support the implementation of the investment project “Ukraine – Increasing Power System Resilience for European Power Grid Integration Project (Installation of Hybrid Systems for Electricity Production in PrJSC UkrHydroEnergo)”.

 The Loan Agreement, signed by Mr. Arup Banerjee, the World Bank Regional Director for Eastern Europe and Mr. Ihor Syrota, Director General of UHE, provides for loans totalling USD 212 million.. UHE also received a grant of USD 1 million to support project implementation. UHE will contribute the equivalent of USD 38 million of its own funds to cover the total project cost estimated at USD 249 million.

This innovative project was prepared by the USAID Energy Security Project (ESP) from concept through to feasibility. The ESP proposed the initial project concept, developed a pre-feasibility study including a comprehensive financial model, prepared a package of documents required under the World Bank’s environmental and social framework (ESF), and contributed to the project planning (including the procurement plan) thus enabling the approval of the project by both parties.

Photo credit @Ukrhydroenergo

The project concept and design is based on a state-of-the-art technology of hybrid operation between the existing hydropower plant turbines of UHE with  new utility-scale battery energy storage systems (BESS) to provide a quick frequency response to the national power grid, while simultaneously reducing the wear–and-tear on the hydro units, extending their overhaul interval and lifetime, improving the overall power system reliability, and reducing operational costs.

Solar photovoltaic plants will be also installed at each hydropower plant to help UHE reduce on-site operational costs without delivering this solar-generated electricity to the national grid. The design of Dniester HPP site includes an opportunity for the local municipality to provide charging points for electric vehicles.

Photo credit @Ukrhydroenergo

The innovative hybrid BESS solution, intended for commissioning in 2023, will improve reliability and stability of the Integrated Power System (IPS) of Ukraine, leading to improved power quality, helping the national grid to accommodate the planned integration to the European Network of Transmission System Operators for Electricity (ENTSO-E). When completed, this innovative project will the largest and one of only a handful of such projects globally.The project is a least-cost and “green” solution to address the challendge of power system flexibility, an important challenge given the commitment to expand clean energy and provide cost-effective ancillary services. The project also contributes to the implementation of Ukraine’s National Emission Reduction Plan 2033, as it creates an emission-free (i.e. “green”) source of system flexibility.

Using such renewable and leading-edge technologies supports the move to decarbonize the energy sector, increases the overall energy efficiency, and strengthens the country’s energy security – all of which are fundamental goals of USAID’s support to Ukraine.

The USAID ESP will continue to support this project to achieve successful completion. At present, the ESP is initiating the required Ukrainian technical and economic assessment (TEO) and supporting the final detailed technical specifications for this very important project.