Experience and track record

Within the framework of the power generation project, Ukrnafta has demonstrated significant progress in the implementation of the emergency distributed energy generation project (Stage IV):

• Locations have been agreed and permission has been obtained from local state administration bodies for the placement of 70 MW of installed capacity, including gas piston units, in Lviv, Poltava and Cherkasy regions;
• A loan of EUR 80 million has been secured from the EBRD for the implementation of the project. The loan agreement has been signed, and the procedure for purchasing equipment on the EBRD platform is ongoing. The state guarantee to secure the loan has been confirmed.

Project «Support for Critically Needed Distributed Generation Stage IV: Capacity Expansion in Lviv Region (hereinafter – Project)

Rationale

The energy shortage in Ukraine due to Russian attacks has been critical, leading to significant disruptions in the country's energy sector. The attacks have led to the loss of electricity, heating and other critical services. More than 40% of Ukraine's energy infrastructure, or more than 1,000 energy facilities, has been damaged or destroyed since the beginning of the Russian invasion in February 2022, in particular as a result of missile and drone attacks targeting power plants, substations and the electricity grid. According to various estimates, this has led to the loss of about 8 GW of generating capacity. Daily power outages affected millions of Ukrainians and businesses, with some regions experiencing power outages lasting up to 12 hours a day or even longer at times. Estimates of the cost of restoring power facilities range up to 5 billion USD. In line with the above challenges, supported by its own gas production capacity, Ukrnafta decided to develop power generation capacity. The Wärtsilä gas piston plant technologies planned for use in this project are well suited for flexible modes with frequent starts and stops, and can therefore effectively cooperate with renewable energy installations and provide system services. Thus, gas piston power plants can also provide so-called auxiliary services for balancing the power system, in particular during hours of no wind (for wind power plants) or lack of sunlight (for solar power plants). During the implementation of the capacity expansion project to Support Critically Needed Distributed Generation Stage IV in Lviv region, it is expected to install an additional gas piston unit manufactured by Wärtsilä capacity of up to 20 MW at the power plant site developed in Stage I. All necessary communications and preparatory work will be completed during the first stage, which will simplify the installation and commissioning of the additional gas-fired unit in Stage IV.

Expected production volumeThe implementation of the project will provide an additional 140 GWh per year (depending on the operating mode) to the grid.

Completion level

As the Project is an expansion phase of the «Support for critical distributed generation», the current status of the main project is as follows:

• Land plots with optimal conditions and access to the necessary networks have been selected and approved by local state administration bodies.
• Most of the technical specifications have been finalized and secured. Financing from the EBRD successfully received.
• The tender process for the procurement of the main equipment and the design, installation and commissioning works of Stage I was launched through the EBRD platform.

The project “Support for Critically Needed Distributed Generation” (Stage I) is expected to be completed by Q2-Q3 2027, depending on the results of the tender. The implementation of the Project (Stage IV) is subject to receiving support from the Finnish-Ukrainian Investment Fund (FUIF).

Technical Solution

Wärtsilä can be considered as the supplier of the main equipment - a gas piston unit - for this project. The company's track record includes 79 GW of power plant capacity in 180 countries around the world, and Wärtsilä is the oldest original equipment manufacturer (OEM) for spark-ignition and reciprocating engine power plants since 1992. Its cogeneration units are characterized by high efficiency, reliability and fuel flexibility, which is a decisive factor for energy projects. Wartsila technologies ensure optimal fuel use, reducing operating costs and CO₂ emissions, which meets modern environmental standards. In addition, their engines have fast start-up times, which increases the stability and flexibility of energy systems. Wartsila has extensive experience in implementing similar projects around the world, including industrial cogeneration units and district heating solutions. Their technical support and service network help minimize operational risks and ensure stable operation of the equipment throughout its entire life cycle. All these factors made Wartsila the optimal choice for our projects.

The main beneficiaries of the project implementation:

1. Local communities – Residents of the region will have access to a stable and secure energy supply, which will reduce the risk of power outages, especially in the winter months.

○ As of 2021, the population of Lviv region was 746 thousand people, including 111.8 thousand children (aged 0-14) and 118 thousand elderly residents (65+ years), many of whom are vulnerable to energy shortages.

2. Critical infrastructure – ​​A reliable power supply will support hospitals, schools, emergency services and utilities, ensuring their uninterrupted operation.

○ There are 35 accredited healthcare facilities in Lviv region, all of which require a stable power supply and heating to provide essential healthcare.

3. Businesses and industries – Energy security is essential for local businesses, helping them to maintain operations, avoid disruptions and promote economic growth. A reliable power supply will increase productivity and support regional economic stability.

Vulnerable groups and social impact

The project will provide direct benefits to groups most affected by energy insecurity, including:

● Elderly people – Ensuring access to heating and electricity, especially for those living alone or in care facilities.

● Low-income households – Reducing the risk of energy poverty and improving overall living conditions.

● People with disabilities – Ensuring uninterrupted access to essential services, including health facilities, rehabilitation centers and assistive technologies.

● Internally displaced persons (IDPs) – Many displaced families have been displaced to these regions by war and are in need of stable housing with reliable access to energy.

To ensure equitable energy distribution and targeted support, the project will implement a data collection system that:

● Tracks uptime data, measuring the reliability of electricity and heat supply to ensure uninterrupted service to critical facilities and communities.

● Uses analytical data to shape future energy planning and social policies, aligning it with international best practices on energy equity and inclusion.