State Of Emergency Prompts Power Forecast Revision

BMI View: Disruption to Ukrainian coal production and the destruction of mining infrastructure will have a significant impact on the domestic power sector and we have revised down our forecasts for electricity generation and consumption accordingly. The situation will undermine Ukraine's attempts to ramp up coal-fired generation in order to offset the loss of its Russian gas supplies as the winter months draw closer.

The risks to our Ukraine power forecasts are weighted heavily to the downside and we have revised our forecasts for growth in coal- and gas-fired electricity generation to reflect the bleak outlook for the power sector and the broader economy. We emphasise that further revisions are likely due to the changing nature of the security situation on the ground.

We now forecast that total electricity generation will contract by around 6% in 2014, driven by a decline in thermal generation. One of the biggest factors to have affected our forecasts is reports of falling coal production in unstable eastern regions of the country, which has caused the government to announce a state of emergency in the electricity market. Reuters reported on August 22 that around half of Ukraine's 115 domestic coal mines have been forced to halt production and that coal production contracted 22% y-o-y in July. Furthermore, mining infrastructure has been destroyed and miners themselves have been caught up in the political and social unrest.

Power Sector Set For Contraction
Ukraine - Generation By Type, 2014-2023 (TWh)

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Related sectors of this article: Power, Coal - Power
Geography: Ukraine

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