DTEK CEO Maxim Timchenko announced that his company is ready to “consider the sale of (its) power stations and coal mines,” as part of a long-term strategic shift towards green energy.
He made the comments during an interview with the Ekonomichna Pravda newspaper on June 1.
DTEK and other Ukrainian energy giants may start selling off their coal mines and fossil fuel-consuming power stations in response to Ukraine’s 2060 target for carbon neutrality. This is part of a wider alignment with the aims of the European Union’s Green Deal, which sets a net-zero carbon target for 2050.
Timchenko said that this process would most likely occur in the form of sell-offs of individual power plants and coal mines, rather than entire companies. He also pointed out that any sale has to first receive the approval of DTEK’s creditors.
Timchenko refused to provide details on which plants and mines would be closed, simply stating that the sell-off would be subject to market conditions.
“If there is demand for 10% of our portfolio of power plants and mines, we will sell 10%. If there is demand for 100%, then we will sell 100%,” he said
Timchenko did, however, assure that Zahidenergo, a DTEK subsidiary based in west Ukraine and a key exporter of energy into neighbouring EU countries, would not be sold anytime soon.
Alex Riabchyn, an energy policy expert and former MP with the Batkivschyna party, told the Kyiv Post that this move is primarily driven by a need to secure loans. “They know that without an environmental, social, corporate governance strategy and a long-term goal of climate neutrality, they won’t be able to provide financing for their companies,” he said.
In March of this year, DTEK wrapped up a major debt restructuring deal worth approximately $2 billion. In his interview, Timchenko explained the need for restructuring by pointing out that DTEK’s current debt portfolio was formed in 2012, before the occupation of Crimea and large parts of the Donbas by Kremlin-backed militants.
The events of 2014, which caused DTEK to lose control of many of its mines and power plants, halved the company’s output.
“In 2012, we produced 51 billion KWh (of electricity), in 2020- 26.3 billion. In 2012 we extracted 38 million tons (of coal), in 2020 we extracted 19 million,” said Timchenko.
DTEK has spent approximately $1.5 billion on its renewable energy facilities thus far, for a total capacity of 1GW.
Timchenko confirmed in the interview that, on average, the cost of building a renewable energy facility is repaid fully in seven years. This is mostly due to the high green energy tariffs enforced by the Ukrainian government.
When asked about the viability of these tariffs, Timchenko pointed out that many of the power stations currently operating will need to close within the next 5-10 years due to their advanced age.
“They have already worked through their capacity twice over. They are physically exhausted. Our most modern thermal power plant was built in 1982. Our power plants already don’t meet modern standards,” said the DTEK head.
A recent study revealed that DTEK’s coal-fired power plants are some of the heaviest polluters in Europe.
Timchenko conceded that there is a possibility that buyers may not be found for some of the power stations which DTEK is hoping to offload.
“If nobody buys them, then we will close them (the power stations), just like we do with coal mines. This year we have closed two mines, because their resources have been exhausted. It’s the same with power stations,” Timchenko said.
Riabchyn predicts that the use of coal-fired power stations in Ukraine will significantly decrease in the next 10-15 years.
“They will be either closed down or shifted to gas or another source. I wouldn’t say that Ukraine will close all coal-fired power stations (in this time frame), but their use will be limited dramatically,” he said.
