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

• Locations have been agreed and permission has been obtained from local state administration bodies for the placement of installed capacities of 70 MW, 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 Installation of a gas-fired power plant of up to 20 MW in Lviv region: Project IV (hereinafter - the 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 power grid. According to various estimates, this has led to the loss of about 8 GW of generating capacity. Daily power outages have 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. In line with the above challenges, supported by its own gas production capacity, Ukrnafta has decided to develop power generation capacity. The Wärtsilä gas piston plant technologies planned for 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-fired 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 for the Support of Critically Necessary Distributed Generation of the Stage  in the Lviv region, it is expected to install an additional gas-fired power plant manufactured by Wärtsilä with a capacity of up to 20 MW manufactured by the Finnish company Wartsila Finland Oy at the own production site of JSC «Ukrnafta».

The gas-fired power plant will operate on gas to produce and supply electricity to meet the strategic enterprise's own needs and sell it on the «day-ahead market» (DAM) in peak load mode by providing additional services to NPP «Ukrenergo». In addition to generating additional income for PJSC "Ukrnafta" from the sale of electricity, the project is designed to ensure the supply of additional electricity to the Unified Electricity System of Ukraine.

Expected production volume:

The implementation of the project will allow providing an additional 113-140 GWh annually (depending on the operating mode) for the network.

Completion level

Since the Project is an expansion stage of the "Support of Critically Necessary Distributed Generation", the current status of the main project is as follows:

• Land plots with optimal conditions and access to the necessary networks were selected from JSC "Ukrnafta"'s own production sites;
• Most of the technical specifications have been finally agreed and secured. Financing from the EBRD has been successfully received;
• Financing for the procurement of EPC works for design, installation and commissioning has been successfully received from the EBRD, the tender process for the procurement of EPC works has been launched through the EBRD e-procurement platform;
• Financing for the procurement of the GPU has been agreed with the Finnish side of the FUIF.

The total estimated budget of the project is UAH 812.9 million excluding VAT (excluding the cost of EPC works for installation and commissioning).

Financed: equipment (GPU), 100% (as financing from the FUIF funds)Planned form of investment: Mixed form of investment attraction – soft loan financing, own funds.

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 supplier (OEM) for power plants with spark ignition and piston engines since 1992. Its cogeneration units are characterized by high efficiency, reliability and flexibility in using different types of fuel, 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 plants and district heating solutions. Their technical support and network of service centers 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.