Serhii Kravchuk on energy-independent and energy-efficient solutions for businesses

“Energy independence is no longer an ephemeral idea, but a fully attainable strategic opportunity for businesses” — this was the key idea from the speech by Serhii Kravchuk, Director of Electricity Trading and Supply in KNESS, as part of the course “Economic Training for Businesses Affected by the War in Ukraine.”

As a guest lecturer, Serhii Kravchuk spoke to entrepreneurs about:

• legislative innovations and trends in the energy sector relevant to business;
• new business models for enterprises: active consumer, operation within an aggregated group;
• comprehensive solutions for power supply to enterprises based on renewable energy sources (RES) and energy storages (ESS).

The expert explained the operation principles of enterprises with the status of “active consumer.” Key points:

• An active consumer is a consumer who has their own generation sources or energy storage systems to compensate for their own electricity needs. The economics of this model: savings on electricity purchases and earnings from the sale of surpluses at wholesale market prices in accordance with contractual terms with the supplier, which are not regulated by third parties.
• How to obtain an active consumer status?
  • get an electrical installation (either generating or energy storage);
  • notify the distribution system operator of the installation of electrical unit;
  • set up an automated commercial electricity metering system to enable electricity to be supplied to external power grids.

• Electrical installations (up to 20 MW) may be owned by the enterprise or by third parties, but must be directly connected to the consumer’s grids. The entire volume of electricity produced must be consumed by such consumers.

Another key topic is the installation of energy storages at enterprises in combination with renewable energy sources.

“Solutions based on RES in combination with ESS make it possible to build an uninterruptible power source that can be used both for own power supply and for operation on the market to generate additional income. For example, this is possible with the acquisition of “active consumer” status and as part of an aggregated group. We have already built several SPP+ESS facilities at production sites where there is a certain inertia in the process, and according to entrepreneurs’ feedback, investments in the construction of these power facilities are justified. Why? A backup power source avoids power outages and reduces the risk of costly production equipment failure. It also prevents losses from production downtime and product rejection, especially in enterprises with complex technological processes”,  Serhii Kravchuk shared the experience.

Serhii Kravchuk also paid special attention to the currently relevant model of the Aggregator’s operation.

• An aggregator is a physical or legal entity with a special license that combines a large number of different types of low-power electrical installations designed for the production, storage, and consumption of electricity in order to provide system services to the transmission system operator, certain services for traders and suppliers, as well as to optimize imbalances among the participants in its group. We have already described the value component that becomes available to each participant in the aggregated group in a special article on the aggregation model.
• Serhii Kravchuk recommends that two categories pay particular attention to the aggregation model:
  • those enterprises that installed ESS during periods of active power outages but are not currently using this equipment due to lack of need.
  • those businesses that implemented gas turbine or cogeneration power units at a time when fuel was significantly cheaper, and are now using their generation capacity extremely limitedly in order to save money.

As part of an aggregated group, electrical installations will operate for the benefit of their owners: they will accelerate the return on investment, generate profits from the provision of system services to the transmission system operator, traders or suppliers, and optimize imbalances. In addition, aggregator services are also effective in terms of optimizing operating costs. It is not always feasible for companies with small, low-power electrical installations to hire dedicated staff or purchase expensive software to manage these installations effectively. Instead, all these needs can be met by an aggregator.

“Business models such as ‘active consumer’ or ‘aggregation’ have already been tested in practice by European countries operating within the ENTSO-E system, and Ukraine is following the same path by implementing the necessary energy reform packages and stimulating the development of renewable generation. Moreover, we have already established fairly liberal conditions for the development of RES facilities in close proximity to consumers”,  highlighted Serhii Kravchuk. 

KNESS experts often participate in initiatives aimed at supporting Ukrainian business. We are grateful to the organizers of this educational course for creating an effective platform for knowledge sharing, discussion, and cooperation.

The event was organized by the KIEF Academy on the Ukraine Global Faculty platform in partnership with the Ministry of Economy of Ukraine and with the support of the Ministry of Foreign Affairs of the Kingdom of the Netherlands within the framework of the Private Sector Development Program of the Netherlands Enterprise Agency.