Ukraine and US Sign Agreement Including US$522 Million to Strengthen Ukraine's Energy System

Ukraine and the United States have signed a memorandum of understanding on Collaboration on Ukrainian Energy System Resilience, which includes US$522 million for strengthening the energy system, of which US$100 million is subject to certain conditions.

As reported by the US Embassy in Ukraine, the agreement provides for cooperation to improve the resilience of Ukraine's energy system, particularly by restoring critical infrastructure, introducing distributed generation, reforming the energy sector and promoting Ukraine's post-war transition to a low-carbon, competitive and EU-integrated energy economy.

To quote the areas of cooperation:

• restoration of Ukraine’s damaged electricity, heating, and gas infrastructure, including the purchase and installation of main lines autotransformers,
• strengthening the resilience of the power system through increased adequacy and flexibility, including improvement of resiliency to power disruptions in essential services sectors like heating, water, sanitation, transport, telecommunications, and health,
• installation of distributed gas generation (including CCGT turbines of USA production),
• expansion of distributed generation from renewable and other energy sources in the power and heat sectors,
• strengthening of Ukraine’s physical interconnection with European gas and electricity networks,
• preparation and implementation of energy sector reforms in accordance with EU legislation and Ukraine's obligations under the Energy Community Treaty,
• civil nuclear energy cooperation,
• protection of Ukraine’s most critical energy infrastructure, including but not limited to areas such as physical anti-drone and anti-missile defence, physical and cybersecurity as well as the identification of cross-sectoral interdependencies and implementation of mitigation measures to prevent cascading failures due to potential power supply disruption.

"Subject to the availability of funds, the United States Government intends to provide assistance to Ukraine in the total amount of US$522 million, including US$422 million in new energy assistance, and US$100 million subject to the implementation of the measures by the respective Ukrainian authorities, provided for in paragraph 3 of this section," the text reads.

The conditions for providing 100 million are a number of steps in energy sector reforms, namely: approval of the new charter and creation of the Supervisory Board of the Gas TSO of Ukraine LLC by 30 October 2023; progress in the implementation of the corporatisation plan of SE NNEGC Energoatom (beginning of the competitive procedure for the election of members of the NNEGC Energoatom Supervisory Board by 30 November 2023, the establishment of Energoatom PrJSC by 31 December 2023; and the National Energy and Utilities Regulatory Commission has until 1 April 2024 to establish the procedure, volume, degree and frequency of submission of information on wholesale trade in energy products related to REMIT legislation.

For the implementation of the agreement, a Steering Committee should be created, which will include representatives of the Ministry of Energy, the Ministry for Communities, Territories and Infrastructure Development of Ukraine, the National Energy and Utilities Regulatory Commission, the State Nuclear Regulatory Inspectorate of Ukraine, and representing the US, representatives from the State Department, the Ministry of Energy, and the US Agency for International Development. The committee will hold quarterly meetings to assess progress.

The memorandum, by its nature, is not a binding agreement.