South Ukraine electricity transmission lines
The European Bank for Reconstruction and Development (EBRD) is considering to approve a €175 million loan to the National Energy Company of Ukraine, Ukrenergo, for implementing the South Ukraine Transmission Project. An equal amount of financing was already approved by the EIB in October 2009. The project foresees construction of a new 750 kV power transmission line connecting the Zaporizhska Nuclear Power Plant (NPP) with the newly planned 750/330 kV Kahovska substation, two 330kV double circuit diversions between the Kahovska substation and existing 330 kV lines, and modernisation of the existing 330/220/110 kV Novokahovska substation.
According to the project sponsor the project is part of the 'Energy Strategy of Ukraine for the period up to 2030'. In previous years the company obtained EBRD financing for the Odessa High Voltage Grid Upgrade Project, EBRD and EIB financing for the Rivne-Kyiv High Voltage Line Project and the World Bank supported the Power Transmission Project that includes the construction of a 330 kV transmission line to connect the Bar substation with the Dniester Hydropower Pumped Storage Plant (PSP).
This project has raised concern among NGOs in Ukraine not only for environmental reasons but also because of social and economic concerns:
- It foresees construction taking place on the territory of the National Nature Park 'Lower Dnieper' that protects the only existing part of the River Dnieper ecosystem in Ukraine that remains unspoiled by hydro-power dams.
- The project's transmission lines are planned to cross other protected areas, including nature reserves of local and national importance.
- According to Ukrenergo, the transmission lines are needed to overcome a lack of output capacity for the Zaporizka NPP (roughly a 700 MW deficit). However, the designed capacity is two to three times greater than required to achieve this. One conclusion is that these transmission lines may enable the expansion of the Zaporizhska NPP from six to eight nuclear reactors and facilitate the export of electricity to Europe.
- The construction of these transmission lines will require the acquisition of agricultural lands. Since agriculture is the main economic activity in the region, it is expected that affected people will disagree with such plans and actively oppose them. There is evidence to suggest that the majority of landowners have not yet been consulted about compensation.
- The project sponsor has started an environmental impact assessment (EIA) process for the project and conducted a series of public hearings in Ukraine during autumn 2009. The process of public consultations had a number of serious flaws and violations of the EBRD’s requirements. However, despite serious concerns raised by the public and NGOs about the consultations stage, as well as violations of the bank’s procedures, the project has not been rejected by the EBRD, although approval by its board of directors has been postponed.
- The poorly designed EIA documentation overlooked a number of issues (including the existence of natural protected areas, the already existing noise pollution from transmission lines and etcetera.)
Ukrenergo – A company with a dubious corporate responsibility record It should be mentioned that Ukrenergo received its first loan from EBRD in 2005, to construct a new 330 kV transmission line between two substations in the Odessa region, to improve the efficiency of the grid in the Odessa region and to provide stability in the electricity supply to Odessa by enhancing the existing transmission line with a new parallel one.
In 2005, Ukrenergo conducted an environmental impact assessment and consultations with the affected public in line with EBRD requirements. The EIA report proudly declared that "Route selection and tower spotting was in general governed by the approach to avoid environmental and land use conflicts." According to the project the new transmission line was designed to bypass settled areas along its 124 kilometre length. The project was scheduled for completion in May 2008. However, in spite of its declared importance for the region the actual construction was started in 2008, three years after the project approval.
In September 2009 the villagers of Usatove noticed that Ukrenergo's subcontractor construction company had dismantled the poles of the old transmission line crossing their village and was preparing to install the new double circuit towers. Soon after they learned that one of the two circuits will form the section of the EBRD financed Adjalyk - Usatove transmission line. Such plans were not shared with people who have already suffered from electricity lines passing through their village since the communist era, and people naturally opposed it. Villagers succeeded in blocking the construction for two months until Ukrenergo called into the conflict a large number of police forces and installed the new towers in the village. The installation of these towers was accompanied by clashes with local inhabitants.
In response to the violation of the initial project design, in November 2009 the EBRD made a public statement (pdf) and, under the threat of blocking the project financing, required Ukrenergo "to halt immediately further construction work and to take measures aimed at defusing the tense situation in the area".
This conflict in Usatove remains unsolved until now.
In 2008 Neighbourhood Investment Facility approved €800.000, with the purpose of assisting the Government of Ukraine and Ukrenergo to legally and commercially corporatise the national transmission system operator, introduce modern management information systems, and help the new entity address and implement corporate sustainable development strategy. The Grant is considered as parallel to EBRD/EIB parallel loans for the "Rivne-Kyiv High Voltage Line Construction Project", that according to the project information, will substantially improve efficiency, quality and reliability of electricity generation and transmission in Western and Central Ukraine.
In 2009 NIF grants €10 million (€2.23 million out of the NIF trust Fund) to Power Transmission Network Project in Ukraine. In accordance to NIF information, the leading financial Institution EBRD will provide €400 million, with same amount of co-financing from EIB side. The total project cost is €1.1 bn. In accordance with the project documentation, it targets selected investments in the Ukrainian high-voltage power network, focusing on technical loss reduction, overall improvement of network reliability/stability and fulfillment of requirements for full synchronisation of the whole Ukrainian power network system with the rest of Europe. The investment is part of the Ukraine Energy Strategy to 2030, which stresses the necessity to implement large-scale up-grades of the Ukrainian power grid in order to accommodate predicted growth in peak demand and electricity consumption, improve energy security and reliability, and prepare for the Ukrainian power system’s integration into the European network (ENTSO-E, formerly UCTE).
As usual the NIF documentation stresses that the technical assistance provided through the NIF is necessary to support the project’s preparation and implementation and will contribute to the introduction of social and environmental considerations at a very early stage of project conception and development.
NIF support to a controversial strategy, 'Energy Strategy of Ukraine for the period up to 2030', is raising serious concerns among Ukrainian civil society groups. The strategy was strongly criticised for focusing on nuclear energy, expansion of coal use in the energy mix and neglecting energy efficiency measures (pdf).
The same strategy also foresees the construction of a new, 1050 kilometre long, 750 KV major power line, connecting five power plants: the Khmelnitsky nuclear power plant (NPP), the Dniester Hydropower PSP, the two substations Kakhovska and Prymorska and the Zaporizhska NPP. The idea behind the strategy is that such a line will create the conditions for integration of the Ukrainian grid into the European network (ENTSO-E/UCTE) and for a significant increase in electricity export.