DTEK Group performance indices for 2018

“Ukraine is currently going through a transformation process where the Energy Market Reform is one of the key components. We are proactively supporting the ongoing Reform and the past year was the year of structural changes for DTEK. We were the first electricity generation company who finalised the unbundling process, which allowed us to set clear objectives for each business. In particular, electricity distribution business is now to focus on providing uninterrupted electricity supply and electricity loss reduction; electricity supply business is to focus on improving of the quality of services as well as introducing new products. It is also important to note, that in 2018, we nearly doubled our investments into business development and reached UAH 20 bln. This allowed us to increase production of G-grade coal domestically and continue converting our generation units from A-grade to G-grade consumption, which in turn decreased dependence on import of anthracite coal. In 2019, we plan to significantly increase electricity output from renewable generation as we commission additional 500MW of wind and solar installed capacity. These are the specific actions and commitments undertaken by our business on its way of being transformed, where the whole industry is now heading. Partnership, professionalism and effectiveness is what we bring to Ukrainian energy sector with the aim of making it competitive, environmentally friendly, and independent from energy imports,” DTEK CEO Maksim Timchenko said when discussing the company’s operations. 

DTEK Group's key performance indices

*Since March, 2017, indices of assets located at temporarily occupied areas in Donetsk and Lugansk Regions are not consolidated in DTEK Energy or DTEK Group's reporting due to termination of control.

**Since September 1, 2016, production indices of Obukhovskaya Mine Group are not consolidated in DTEK Energy’s reporting due to the transfer of ownership into direct control of DTEK B.V. The transaction took place within the framework of DTEK Energy’s credit portfolio restructuring and was aimed at balancing opportunities to develop the enterprises and service loans.

***Including trading operations outside of Ukraine.

DTEK Energy

Coal mining and processing

In 2018, DTEK Energy produced 24.1 mn tons of gas coal which is the highest annual production in the company's history. The volume of run-of-mine coal processing reached 17.2 mn tons, of which 2.4 mn tons were provided by independent CCMs. Concentrate output from the company's enrichment plants was 9.1 mn tons, and 1.4 mn from the third parties enrichment plants.

The main factors affecting coal production:

• In the second half of 2018, all the company enterprises increased gas coal production. DTEK Pavlogradcoal output increased to 114.9 tons per person per month, and that of Bilozers’ka mine increased to 87.8 tons per person a month. This ensured coal production at a level of 24,131.5 thousand tons in the reporting term, which is 5.3% or 1,216.8 thousand tons more than in 2017;
• Termination of anthracite production.

Key projects in 2018:

• Equipment upgrade: 12 tunneling machines and 8 shearers were installed and 35 electric locomotives were upgraded at DTEK Pavlogradcoal mines. 3 tunneling machines and 2 shearers were installed at DTEK Dobropoliyeugol. Mining equipment fleet upgrades ensure stable mine operations and new equipment features improve operational parameters, which reduce operational costs;
• Equipment development: the concept of the new type medium-weight tunneling machine with an anchoring unit was developed by Corum. The goal of the project is to increase the pace of mining from 5 to 10 meters a day. New RH-160 equipment testing is planned for March 2019 at the Stepnaya mine;
• Mines ventilation system: The first stage of the project aimed at replacing the main ventilation fan is being completed at the Dniprovs’ka mine. Construction of a ventilation shaft is underway at the Yubileyna mine, which will significantly increase the speed of freight and material delivery to the work site. In 2018, we completed construction of the battery room and built a lateral wagon tipper building.
• Coal Processing Plant modernization: two new centrifuges were installed at DTEK Pavlogradskaya CPP, which allowed the plant load to be increased from 925 to 1,013 tons per hour while reducing chemical agent consumption. First equipment was shipped to the DTEK Oktyabrskaya CPP within the framework of the modernization project providing for heavy medium cyclone implementation. DTEK Dobropolskaya CPP is continuing the construction of a refuse dump. The project envisions bordering each dump level with clay, and constructing of an internal drainage system and a fire resistant protective layer. In 2018, a similar project was completed at DTEK Oktyabrskaya CPP. Project implementation reduces environmental burden by eliminating combustion source formation and the environment's contact with coal processing waste, while water will be discharged to a pond and then returned to the production.

Electricity generation

In 2018, DTEK Energy generated and dispatched 34.1 bn kWh into the Joint Energy System of Ukraine with. Power units running on gas coal grades produced 28.3 bn kWh, which is 4.4% or 1,185 mn kWh more than in 2017.

The main factors affecting electricity generation:

• Reduced electricity generation by DTEK Skhidenergo, and Kyivenergo by 20.5% or 2,422.1 mn kWh due to termination of control of the Zuevskaya combined power plant in March 2017, and the end of concession to operate TPP-5 and TPP-6 (part of Kyivenergo) starting July 31, 2018;
• Increased electricity generation by DTEK Dniproenergo and DTEK Mironivs’ka TPP by 3.8% or 373.4 mn kWh.

DTEK Energy is implementing a program aimed at increasing the use of G grade coal (gas coal) in order to minimize the use of imported anthracite coal. In 2018, electricity generation from the units running on gas coals increased to 28.3 bn kWh, which reduced the share of electricity generation from the units running on anthracite coal down to 12% in the total electricity generation.

Key projects in 2018:

• DTEK Burshtyns’ka combined heat and power plant: power unit No. 10 was reconstructed, the installed capacity was increased by 15 MW to 210 MW, and equipment service life was extended by 15 years. Within the framework of the project, the old boiler was uninstalled and its structure was kept intact, which was the first such instance of such reconstruction project in Ukraine. Additionally, a full-scale automated power unit control system was installed;
• DTEK Pridneprovs’ka combined heat and power plant: power unit No. 9 was switched from anthracite to G grade coal. Technical re-equipment of power unit No. 10 for gas coal combustion is ongoing. Within the framework of the project, an electric filter is being constructed at power unit No. 10 in order to reduce dust emission according to 2001/80/ЕС Directive;
• DTEK Mironivs’ka TPP: the switching from anthracite to gas coal grades has now been completed at the plant. In the reporting period, boiler No. 9 was re-equipped and similar works were completed at boiler No. 10 in 2017;
  • DTEK Ladyzhinskaya combined heat and power plant: construction of a 0.5 MW Solar Power Plant was completed. Since July 1, 2018, Ladyzhinskaya SPP located at the HPP site has been providing electricity to the Joint Energy System of Ukraine;
• DTEK Zaporozhskaya combined power plant: in July 2018, the pilot project to develop monitoring, reporting, and the greenhouse gas discharge verification plan was completed. In the future, this will enable the establishment of a system for the heat energy sector enterprise participation in greenhouse gas discharge trading. The project was implemented jointly with the World Bank within the framework of the Partnership for Market Readiness program;
• Automated frequency and power control systems were reconstructed at 11 DTEK Energy power units, which will enable to maintain the electricity current frequency in accordance with ENTSO-E standards.

Since 2012, the company along with modernizing and reconstructing power units has been reconstructing electric filters in order to bring dust discharges in accordance with 2001/80/ЕС Directive.

Commercial activities

Coal exports

In 2018, 486.3 thousand tons of coal were supplied under export contracts, which is 35.0% lower than in 2017. All export operations are performed based at the Obukhovskaya Mine Group resource. The reduction resulted from an increased shipment to the Ukrainian market in order to minimize the anthracite deficit resulting from the termination of this coal grade production within the area controlled by Ukraine. 1.5 mn tons were supplied, which is 26.2% higher than in 2017.

DTEK Energy imported 2.2 mn tons of coal for heat generation, which is 2.7% less than in 2017. Coal was imported from the US and South Africa among other countries.

Coal shipment to industrial consumers in Ukraine remained almost the same as in 2017, i.e. 2,085 thousand tons.

Electricity exports

The company supplied 5.8 bn kWh under foreign trade contracts, which is greater by 16.5% compared to 2017. Electricity was exported to Hungary, Poland, and Moldova.

Natural gas imports and shipments on the domestic market

The volume of natural gas sales on the domestic market was 1.9 bn cubic meters. We were able to maintain the volume of trading operations at the last year level resulted from increased sales to the metallurgic sector enterprises, which compensated reduced demand from the energy sector enterprises.

DTEK Grids

In 2018, 43.7 bn kWh were distributed, which is 1.2% or 529.7 mn kWh more than in 2017.

The main factors affecting electricity distribution:

• The increase of the volume of electricity distribution by DTEK Kyiv Electric Grids and DTEK Dnipro Electric Grids by 3.4% or 1,081.1 mn kWh was due to increased consumption by residential consumers and small businesses;
• The reduction  of the volume of electricity distribution by DTEK Donetsk Electric Grids, DTEK HV Grids, and DTEK PES-Energougol by 4.7% or 551.4 mn kWh was due to a reduction in demand from industrial enterprises and suppliers at the unregulated tariff.

According to the Law On Electric Power Market, companies must effect unbundling, i.e. separate distribution system operator from electricity generation, transmission, and supply by way of establishing separate companies. These changes constitute the first stage of the energy market reform that is aimed at transitioning to the electricity market based on the European model.

DTEK Group effected system transformations of its operations. Kyivenergo, DTEK Dniprooblenergo, and DTEK Donetskoblenergo divided their operations according to the requirements. Starting from January 1, 2019, electricity distribution and electric grid operations are performed by DTEK Kyiv Electromerezhi, DTEK Dnipro Grids, DTEK Donetsk Grids, DTEK Power Grid, and DTEK Energougol ENE. The distribution system operators are responsible for reliable power supply, infrastructure development, and electric grid operations in Kyiv, and the Dnepropetrovsk and Donetsk Regions.

Starting January 1, 2019, electricity supply services to consumers are provided by Kyiv Energy Services, Dnipro Energy Services, and Donetsk Energy Services.

Key projects in 2018:

DTEK Kyiv Electric Grids, DTEK Dnipro Electric Grids, DTEK Donetsk Electric Grids, and DTEK HV Grids opened access to online electric grid maps for all clients. Using the geo-information system, everyone can obtain information online about the location and voltage level of overhead lines; addresses and names of transformer substations and distribution points. The company continues filling the geo-information maps in order to ensure data transparency and facilitate connection to electric grids.

• DTEK Dnipro Electric Grids: The first stage of 150/10/6 kV Naddnepryanskaya substation construction was completed in Dnipro. This substation is an important project in terms of infrastructure, as it will provide electricity to new underground stations, and reliable power supply for 2 districts of the city;

Flying platforms (helicopters and drones) were used in the Dnepropetrovsk Region for the first time to inspect the electricity transmission lines. Due to the data obtained, experts will be able to effect preventive repairs of emergency sections;

2 renovated client service centers were opened in Dnepr and Pavlograd that provide the entire range of basic services.

• DTEK Kyiv Electric Grids: the technical upgrade of the 35/10 kV Garnizonnaya substation serving Kyiv airport (Zhulyany) was completed. A modern automated control system was installed at the substation. This enables the real-time collection, storage, and transfer of information both on equipment condition and electric connection parameters. In addition, protection relay, electrics, and control systems were switched to modern microprocessor devices with the possibility of free programming;

Reconstruction of the 110/10 kV Center substation ensuring quality and sustainability of power supply in the central districts of the capital was completed. Within the framework of the project, a capacity reserve of 40 MVA was established;

Pilotless drones equipped with scanners, video cameras, and thermal cameras were used to check the condition of electric transmission lines in Kyiv for the first time;

Reconstruction of the Poznyaky substation is ongoing to improve power supply reliability in the left bank part of the city. 110 kV integrated distribution gas-insulated unit is already commissioned, 2 cable lines are built and connected;

within the framework of implementing the long-term capital electric grid modernization program, construction of a 110 kV HV power transmission cable line was started.

• DTEK Donetsk Electric Grids: energy workers ensure the reliable power supply for settlements in the near-front zone. Since the military action began, the power supply has been recovered in 1,037 settlements;

The first stage of reconstruction of the 35 kV Selidovo substation was completed, which will significantly improve power supply reliability in the town of Selidovo and adjacent settlements;

A renovated one-window client service center was opened in Pokrovsk. The center provides the entire range of services for residents of Pokrovsk, Mirnograd, and Rodinsky: from meter reading reconciliation to contract formalization;

the project to arrange a new central control room is ongoing to improve energy infrastructure control in the region.

• DTEK HV Grids: the integrated reconstruction of 110 kV Ugledar substation began in order to ensure stable and reliable power supply in Ugledar.

DTEK RES

In 2018, the company produced 677.0 mn kWh of green energy. This is 6.1% or 39.2 mn kWh more than in 2017.

The main factors affecting renewable generation:

• An increase in supply by the Botievo wind farm by 4.8%, or 30.2 mn kWh. This was facilitated by favorable weather conditions and properly organized maintenance campaign. In 2018, wind plants and station infrastructure availability factors increased to 99.64%, and 99.34% (98.33%, and 99.23% in 2017). This corresponds to the world highest operating standards of wind farms performance;
• Trifanovka SPP produced 12.7 mn kWh. The solar station equipment availability factor was 99.89%.

The main projects in 2018:

• Primorsk wind farm (200 MW installed capacity): construction is divided into two stages. In 2018, 7 wind plants were installed at the first stage (11 wind plants as of February 2, 2019), and construction and assembly of the station infrastructure were completed. Tower and blade set delivery is being completed. Pre-installation of towers and commissioning works at the central distribution substation and transformer substation are ongoing. At the second stage of the project, pile fields are being prepared for the wind plants.

The company has signed an agreement with GE Renewable Energy on the purchase, installation, and subsequent maintenance of 52 wind turbines of 3.8 MW each. The second stage of the project is expected to be completed in late 2019;

• Orlovskaya WPP (100 MW of installed capacity): preparatory works are ongoing at the construction site, and delivery of the main equipment will start in April.

A contract for wind farm construction was signed with Vestas (Denmark), and the latter will supply 26 wind turbines of 3.8 MW each. Vestas equipment has attained high credibility in Ukraine, both in terms of wind-dynamic characteristics, and electrical power output to the grid;

• Nikopolskaya SPP (200 MW of installed capacity): 95% of solar panels and 100% of inverters were assembled, infrastructure construction was completed. The station is expected to be connected to the grid in March 2019.

An agreement was signed with the project partner, China Machinery Engineering Corporation (CMEC), for the design and construction of the station. Solar panels will be supplied by Seraphim Solar and Trina Solar, invertor substations will be supplied by KSTAR, and transformers will be supplied by Xian Electric Engineering (all the suppliers are Chinese);

• new projects: According to the development strategy, the company shall ensure 1,000 MW of installed capacity in solar and wind generation by 2020.

DTEK Oil & Gas

In 2018, natural gas production was 1,648.5 mn cubic meters, which is 50 mn cubic metes more than planned. 51.5 thousand tons of gas condensate were produced. Compared to last year, gas production decreased by 0.4%, and condensate production decreased by 6%.

The main factors affecting performance indices:

• Drilling completion at Semirenkovskoe deposit for the 5,652 m deep well No. 25 with a 700 m diversion from the vertical, and 5,605 m deep well No. 61 with a 380 m diversion from the vertical;
• Major repairs of wells 23, 68, and 70 with high condensate contents at Semirenkovskoe deposit;
• Measures aimed at flow augmentation at the existing wells.

The main projects implemented during the term:

• drilling of well 43 at Semirenkovskoe deposit;
• construction and commissioning of a propane cooler at the Olefirovskaya gas treatment plant;
• commissioning compressors for condensate stabilizing gas utilization ensuring increased pressure and condensate stabilization gas return to the gas treatment system.