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UKRAINE - RENEWABLE ENERGY INVESTMENTS

Updated: May 27, 2020


Ukraine Renewable Energy Report

Flag of Ukraine has two colors blue and yellow. Blue represents peace as well as the sky above the nation and the streams found throughout the country. Where the color yellow is a symbol of prosperity and also represents the many wheat fields found on the wonderful fertile soil of the country.

If regulatory authorities can manage to handle high demand on investments in renewable energy than it is pretty clear that we will be mentioning these colors also like yellow is representing the sun energy , bio energy and blue is representing wind energy and hydro energy. It is not there right now but brave investors with a risk and high return appetite are rushing into the market of renewable energy. We, as IEW , will be trying to give investors an insight of what is happening in the market of renewables and also extend the view also to economy and politics so to be able to understand it in a better way. Great potential for stands for solar and bio energy in Ukraine as well as the wind and as it is in most of countries around the world. Developing country and a new market , Ukraine has announced standard high FIT / Green Tariff rates to attract investments in renewable energy in 2009. Almost more than two times of the wholesale market electricity prices. Having a great experience in Hydro Power plants and a history of a problematic Nuclear Power Plant issue , everybody thought renewables would be the new alternative to the very old electricity production facilities in Ukraine. Starting with 3 MW Solar and 87 MW Wind investment in 2009, these numbers added up to 411 MW Solar , 426 MW Wind , 35 MW Bio Mass , 14 MW Bio Gas , 80 MW new Hydro Power plants , which are small scale compared to already installed 5.700 MW Hydro power plants , adding up to 967 MW installed renewable capacity in 2014 even though some investments of 634 MW were left out due to the Crimea problem. If this was not the case then the capacity would be 1.600 MW. Latest information on 2019, installed capacity reached to 4.867 MW in renewable energy and Solar is the most powerful player with 3.421 MW in this portfolio. Each quarter of 2019 was with more than 500 MW solar investment.

Further on became renewable energy investments more and more popular attracting Chinese , European , Middle Eastern and even Canadian companies to invest in Ukraine. Offering a green tariff of 0,15 € / kWh until 2030 was of course unstoppably brought solar energy investment giants to Ukraine and not to forget Ukraine's strongest business man and companies also increased their portfolio on investment in renewable energy. Even though irradiation levels are low , substations are old and there is exchange rate risks , Ukraine still is a great market for taking the country risks.

 

TOO GOOD TO BE TRUE ?

In order to get more insight of the market , IEW team visited more than different areas of investments , made meetings with experienced law firms , partners , banks , accountants , authorities and of course most important of all investors who already invested in Ukraine market. Additionally visited and attended all of the exhibitions and conferences in the area of renewable energy in Ukraine. Last event SEF 2019 - 11th Sustainable Energy Forum and Trade Show of Central and Eastern Europe, was the most interesting of all , showing us on one side that the interest is exponentially growing in the market having most of the important vendors to promote themselves , attending law firms to present themselves , banks to be a part of the rhythm and regulatory authorities who excitedly expressing their future targets. On the other hand complaints are rising from the investors side showing decreasing trust and confidence on laws , regulations and of course the sustainability of the system. Even though new government of Zelensky is also for the renewable energy investments in the country there were changes in authorities such as establishing the new authority called " Guaranteed Buyer " who will be the control checkpoint of renewable investments ,changes regarding reducing FIT price for each year with %25 percent for the power plants with Pre - PPA signed with Guaranteed Buyer , new auction program release , these were a little too much for the investors to digest. In addition to this there were noises during the SEF that the government could "retroactively" change the FIT of 0,15 € / kWh even for the gained right customers. So these rumors even today scare the investors with lower risk appetite. Not to mention the difficulties on project financing or even the re-financing of the projects from the banks.

For sure it is obvious that many reputable players and banks are there in the play and it is not really very possible to change the rules of the game retroactively without any understanding and compensation of the investors by the authorities. Such as many emerging markets Ukraine will face these issues and we are confident that it will reach out to a final success at the end. How and when it will be , we will surely be following closely.

 

NOT TO BE LATE

So as many investors are aware developing markets exponentially grow and come to maturity phase where always changes will occur and these changes always lead to new solutions and opportunities inside itself. This is the reason why renewable energy investments are interesting all over the world where investors always follow up the new trends and find a way to flourish the brilliant ideas from it. 2017,2018 and especially 2019 will be remembered as the golden times of the market since the projects which will not participate in the auctions will no more be able to get 0,15 € / kWh but will be getting 0,1125 € / kWh. Reduction on PV module prices , new innovations on tracker systems , higher efficiencies and lower cost pricing on BOS due to the new type inverters still makes reduced FIT appealing in Ukraine market also this year. For investors who would be interested in Ukraine market for renewable energy should be working closely to the experienced law firms , reputable EPC companies and expert developers so to catch the window frame where the business is still very attractive.

 

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