«Creation of the Cellular Energy Network (SmartGrid) of the Dolyna Territorial Community»

Project participants

NAFTOGAZBUDINFORMATYKA LTD. (initiator and project manager)

“S&T Company ENPASELECTRO” LTD.

ASTERS LAW FIRM

What is cellular energy network (smartgrid)?

Cellular energy network (CEN) is a network of various local means of electricity generation and consumers, supplemented by methods and means of demand management and system balancing. At present the network may include various means, such as gasoline, diesel, gas generators, renewable energy sources and energy storage stations, and in the future it is expected that fossil fuels will be gradually replaced by renewable energy sources (hereinafter – RES).

Firstly, the favorable size of the community, which covers an area of 20.22 square meters. km with a population of 21,100 inhabitants as of the beginning of 2022. World experience proves that the successful development of pilot projects for the implementation of such "smart systems" is much more effective when implemented in small communities compared to megacities.

Secondly, significant achievements in the field of energy and successful experience of energy managers in the community. In 2008, the city of Dolyna was one of the first in Ukraine to develop an energy saving strategy until 2020, and thanks to the successful implementation of a number of projects in the field of energy saving and the introduction of new best practices, it acquired the status of an indisputable leader in the field of energy efficiency.

Why Dolyna?

The proposed project on CEN creation meets the challenge of modernizing Ukrainian energy sector and implementing the concept of "smart grids". This project is aimed at the development of a decentralized intelligent energy system that is adapted to local conditions and needs of communities in the city of Dolyna, Ivano-Frankivsk region. Its purpose is to modernize the energy networks of territorial communities, increase their reliability, efficiency and social well-being of local residents.

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The project is aimed at solving geographical, political, economic, social, technical, legal and environmental requirements for new and smart local energy systems and their role in the energy transition. This comprehensive approach involves increasing the stability of the energy supply system of the territorial community of Ukraine and the possibility of increasing the efficiency of the use of existing and new distributed generation and energy storage facilities through CEN creation.

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The implementation of this project will not only contribute to the social well-being of local residents, but will also provide an opportunity to study and replicate the developed conceptual solutions throughout the territory of Ukraine. Thus, the project acts as a key step in the direction of modernization and increasing the stability of the country's energy system.

Short overview of the project and its goals

On the territory of the community Ukrnafta extracts about 130 million of passing oil gas and about 7 million of natural gas per year. Also, there is a gas drift, which is simply released into the "air" with the corresponding pollution of the surrounding environment.

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In addition, there are three modular boiler houses with all the necessary infrastructure on the territory of the community.

In 2023, 16.2 kW and 140 kW solar power plants were installed, and another 120 kW solar power plant is planned.

In the near future, the construction of additional solar power plants with a total capacity of 846 kW and an energy storage station with a capacity of 4 MW on the territory of the community is also planned. Wind turbines with a capacity of 2 MW have been installed near Dolyna, with plans for their further expansion.

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There is biogas plant with a capacity of 4 million cubic meters per year near the community.

Possibilities in Dolyna?

Consumption in Dolyna

In 2021, Dolyna community consumed 153,156 MW*h/year

Placement of RES sources in and around the Dolyna Territorial Community,

available and planned

as of December 1, 2023

Available RES

Abbreviations:

WPS – wind power station

SPS - solar power station

HPP - hydro power plant

Planned RES

Dolyna is the center of the community, Ivano-Frankivsk region, Kalush district;

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Population 21 100 (2022р.);

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Dolyna square 20,22 sq.km.

Trader

DSO

Energy Exchange

heat

heat

heat

DSO

TSO

Scheme of the Cellular Energy Network (SmartGrid)

Considering the fact that the project is multi-component and the first of its kind in Ukraine, it is divided into the following three stages, each with its own tasks and goals.

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At the first (short-term) stage, an energy cooperative is created, which should consolidate the electricity needs of local consumers within the community and organize the possibility of its centralized procurement. Such an approach should contribute to increasing the efficiency of the use of community funds due to consolidation of tenders and the quality of their conduction.

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At the second stage (which may overlap with the first and be longer) - the goal is to provide the community with its own sources of electricity and, at the same time, to reduce its consumption by implementing energy-efficient measures to ensure the energy sustainability of the community.

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At the third stage (in the course of the development of own generating capacities) –foresees introduction of demand management systems, balancing and auxiliary services. Thus, additional revenues to the local budget will be formed.

Stages of CEN creation

Four types of possibilities for using resources to make a profit in the created cooperative are considered. Sun panels, wind, gas generation (natural, biogas, passing oil gas), cogeneration.

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Members of the cooperative can be:

• certain utility companies of the community;
• business that works (wants to work) on the territory of the community;
• households.

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At the expense of public-private partnership (or with the funds of a donor or local business), the cooperative receives a certain amount of solar panels, batteries and smart meters for leasing.

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Then, under a subleasing agreement, the cooperative transfers this equipment to the members of the cooperative for a period of 10-15 years (a 4-5 year exemption period is possible, if payment is provided). After 10-15 years, this equipment is transferred to the ownership of the persons who operate this equipment. Also, users of this equipment can redeem this equipment earlier.

Business model

Business model

Terms of subleasing. According to the terms of the contract, each sublessee (hereinafter referred to as the recipient) may consume a certain agreed volume of electricity free of charge (not higher than the stipulated maximum and according to the established schedule). Electricity generated above the established volume (graph) must be transferred by the recipient to the cooperative free of charge.

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Energy transferred in this way to the cooperative can be spent on:

• sale to the market at the green tariff;
• sale to local utilities, budget structures, local businesses at below-market prices;
• sale through a trader to the market at market prices;
• purchase of insufficient amount of energy from a trader;
• for auxiliary services and balancing within the territorial community (we assume that cooperative can receive additional payment for this).

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Profit of the cooperative will be formed from income from the sale of electricity on the market, demand management, balancing of the cooperative’s networks and the provision of auxiliary services.

The project meets the current tasks of Ukraine in the energy sector.

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First, the measures envisaged by the project will contribute to decentralization and increase the stability of the energy system of Ukraine in the conditions of continued enemy attacks on it.

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Secondly, the use of renewable energy sources and electricity storage systems in the project corresponds to the state strategy for decarbonization and green transition.

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Thirdly, the project can also become one of the components of the state course on the development of energy independence of territorial communities. 

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Fourthly, the implementation of this project will allow to develop and put cellular energy network into operation and in the future to replicate these conceptual solutions in other territorial communities throughout the territory of Ukraine.

Advantages of the project

Regulatory: Complexity of legislation and possible delays in the adoption of new laws and regulations due to the war. This risk can be reduced by working with the deputies of the Verkhovna Rada of Ukraine and NEURC to make the necessary changes to the current legislation and regulations in order to speed up the process.

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Financial: Availability of free funds to finance a certain part of the project budget. To reduce this risk, the project is divided into stages, each of which has its own specific practical implementation.

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Social: Perceptions of negative externalities can be reduced through active communication and collaboration with local communities, as well as through educational activities on the use of renewable energy sources to gain greater support.

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Market actors: Possible conflict of interest with distribution system operators (DSOs). This risk can be managed by identifying potential problems related to competition and establishing cooperation with DSOs.

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Resources: Availability of data, tools and resources may be limited due to war. To avoid interruptions in the workflow, it is possible to use secondary data, collect information through online interviews and surveys, and involve networks of partners to find reliable contacts to collect data remotely.

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Military: Aggressor attacks on the territory where the project is deployed. It is possible to make compensation with the help of insurance.

Main project risks

At the moment, the following measures have already been taken (together with Enpaselectro company):

• Appropriate contacts and communication with interested parties have been established;
• The territory of the Dolyna territorial community was surveyed;
• Collected and analyzed the necessary output data;
• Possible connection points of gas piston units have been identified and the necessary additional reconstruction of the existing infrastructure was determined;
• The existing model of power supply of critical infrastructure was evaluated and 2 options of the improved model were proposed with the determination of the corresponding necessary measures;
• The business model was chosen based on corresponding consultations;
• The composition of measures and the decomposition of works on CEN creation have been determined, since CEN creation requires the implementation of measures for automation and dispatching of the process and complex conversion and modernization of electricity, water, gas and heat supply networks;
• The concept of CEN creation was developed on the order of the Dolyna Territorial Community.

Current state

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Conduct a legal analysis of current legislation, identify legal restrictions and barriers and develop a feasibility study.

After approval of the feasibility study, begin implementation of the project as a whole (FID).

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Together with representatives of the Dolyna village energy management, complete calculations of the economic efficiency of various project implementation options.

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We are seeking investments to conduct a comprehensive techno-economic justification of the project, within which we plan to carefully examine all aspects of implementing "smart grids" in the Dolyna.

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Information regarding the approximate project cost will be provided to interested investors.

Further steps

Offers that are being prepared for potential investors regarding the construction of solar, wind power plants and energy storage stations

Full support from the governing bodies of Dolyna territorial community.

Use of the industrial park. 26 hectares are available. Terms - 4% per annum + tax benefits. The standard price estimate is UAH 209 per 1 m².

Rent of land plots. Terms - 6% per annum for generating equipment. The term is 25 years. It is held out of competition.

The standard price estimate is UAH 122 per 1 m².

Sale of land plots. The condition is only an open auction without preferences.

Thank you for attention

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Ivan Dyriv

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Leonid Unigovskyi

+38 (050) 311 13 06

ngbi.ukrconsulting@gmail.com