Building materials producers halt production due to power shortages

The energy crisis has become a critical challenge for the Ukrainian building materials industry. Constant power outages, a 3.5-fold increase in tariffs, and high prices for generator equipment are threatening the survival of building materials producers.

Impossible to work

The production of building materials is quite energy-intensive, so it depends on the stability and volume of electricity supplies. For example, concrete production uses dryers that require technical steam with a temperature above 100°C. One can imagine how much electricity and gas this consumes.

Some equipment cannot operate at temperatures below +5°C because the software on complex foreign production lines fails at such temperatures. Even if the equipment is turned on at such temperatures, problems arise with its operation.

It is impossible to mix concrete because many materials freeze in warehouses. For example, sand freezes at such temperatures and must be prepared separately for the production of concrete products. Many production facilities are now suspending active work because no one knows when electricity will be supplied or when it will be possible to work.

Any factory is several thousand square meters where people work. The premises need to be heated to at least +9–10 °C, and that costs money. Without electricity, heating devices cannot be turned on. Construction industry factories are experiencing the same problems as ordinary Ukrainians, only the scale of the losses is significantly higher.

The cost of “generator” electricity

In the mind of the average Ukrainian, it’s simple: install a large generator at the factory, start it up, the conveyor belt spins, and everything is fine. In reality, this is not the case. Electricity for industrial consumers cost 4 hryvnia per kWh in 2022, and now it costs 14 hryvnia. The cost of electricity generated by industrial generators is 18–20 hryvnia per kWh.

At this cost of electricity, the use of generators makes the products uncompetitive. Electricity must be generated not only for production, but also to ensure the operation of engineering and technical personnel and administrative buildings. In other words, more electricity is needed.

Our ability to raise prices has reached its limit for many companies. Of course, we can try to sell at higher prices now, but Ukrainians will come, look at the price, and decide to wait for another opportunity or look for cheaper leftovers at competitors’ warehouses. If you want production to go bankrupt for good, raise the price.

If a producer reduces production volumes, people buy less, and the state receives less tax revenue. It’s very simple.

There are also natural monopolies. Gas companies recently raised their tariffs, and energy companies are looking for ways to dip into producers’ pockets through various items. Producers have to take this money from Ukrainians. The chain is complete.

Alternative energy supply projects

Cogeneration is a very interesting topic that our union is working on within the framework of certain projects.

Since 2022, not a single functioning fund to support Ukrainian industry has been created. The programs (“5-7-9” and others) that were in place at the beginning allocated UAH 6-8 million. It is impossible to purchase, for example, a kiln for firing ceramic bricks or serious energy equipment for UAH 8 million.

Batteries, which are currently imported from Europe and China, are prohibitively expensive. In addition to their purchase, it is necessary to pay for:

• for the connection project to specialized organizations;
• for technical conditions to energy monopolies.

Even if 8 million hryvnia were allocated and the enterprise purchased batteries, half of its own funds would have to be spent just to connect them.

Batteries need to be recharged. They cannot deliver energy for 8 hours and recharge for 3 hours, so their capacity may not be sufficient.

Who can survive

Perhaps micro-producers are being saved by small-scale solutions, such as those who make wooden products, the so-called «garage producers.» Small, medium, and large powerful enterprises now need significant support. No one wants to bring these problems out into the open because everyone understands that the population is suffering just as much.