Renewables in Ukraine – July 2019

Renewables-in-Ukraine-Report-2019-en

Ukraine’s Renewables Investment Boom

The Ukrainian government has committed to increase renewables from around 4 per cent of the energy mix today, to 25 per cent by 2035.

While hydropower dominates the country’s renewable capacity, averaging 4.6GWp over the last decade, installed wind, solar and bio energy capacity increased by 54 per cent to 2.1GWp in 2018 alone, with a further 4.6GWp of capacity in the pipeline.

Much of this growth and pipeline, particularly in wind and solar, has been fuelled by a rush to secure the Green Tariff, which will be replaced by an auction-based regime from 2020.

Introduced in 2008, the Green Tariff provides highly attractive and guaranteed Euro-denominated rates until the end of 2029. Investors can still secure the Green Tariff provided that projects have obtained land use rights, a grid connection agreement, a construction permit and a power purchase agreement (PPA) in the new format by 31 December 2019.

Passing of Ukraine’s Auction Law for alternative energy sources in April 2019 follows a well-trodden path. Use of auctions to manage supply to a national grid has become commonplace in recent years.

According to research by the International Renewable Energy Agency (IRENA) the number of countries that have adopted renewable energy auctions increased from six in 2005 to more than 67 by early 2017, and continues to rise.

Although the auction regime will undoubtedly lower returns on investment, compared to those offered by the Green Tariff, any reductions should be manageable, subject to the capacity offered at each auction, as advances in technology continue to reduce generating costs.

We expect the investment climate for Ukrainian renewables to remain favourable. Indeed, the government’s 2035 energy mix target will require significant, and sustained investment in new renewable capacity, storage and transmission networks.

Overall, the outlook for the renewables sector in Ukraine looks bright. Development of the sector has been rapid in recent years, and will continue in the years ahead, although investors should carefully assess the impact of the new auction regime.

 

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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