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The promotion of the renewable energy sector has brought the
first results. Renewable sourced electricity facilities with a
total capacity of 96 MW have been put into operation for the period
September 2010 to September 2011.
Growth on target
According to the State Program of Energy Efficiency for
2010-2015, the share of renewable energy sources in the total
energy generation in Ukraine should increase to up to 10% by 2015,
while the current share represents less than 1%. In line with this
target, and in line with market reports, the production of
electricity from renewable energy sources for the first half of
2011 has grown by 16% compared to the same period in 2010, and
renewable electricity generation reached 274 million kilowatt hours
(kWh).
The growth in electricity generated from renewable energy
sources comes from new hydro, solar, and wind power facilities put
into operation in the first half of 2011. A new 47.5 megawatt (MW)
solar photovoltaic (PV) facility was installed in Crimea by Activ
Solar GmbH. The first part of Wind Park "Novoazovskyi",
with 25 MW, was connected to the Ukrainian energy system by LLC
Wind Park "Novoazovskyi" in the Donetsk region. It is
expected that new PV and wind power facilities will be installed
and operating in the second half of 2011 and in 2012.
Attracting investors with "green" tariffs
To attract private investors to renewable energy projects, the
government has introduced incentive tariffs for electricity
generated from renewable sources. The value of these incentive
tariffs, also called "green" tariffs, depends on the
source of the renewable energy used to produce electricity and
other factors.
Based on the method of installation of a solar energy facility
and its installed capacity, the value of the green tariff varies
from UAH 4.321 (ca. EUR 0.398) to UAH 4.714 (ca. EUR 0.434) per one
kilowatt (kW). The green tariff for electricity from wind power
depends on the installed capacity of the wind power park and varies
from UAH 0.702 (ca. EUR 0.065) to UAH 1.228 (ca. EUR 0.113) per kW.
However, for renewable energy facilities put into operation after
2014, 2019, and 2024, the value of green tariffs will drop by 10%,
20%, and 30% respectively. The green tariffs will stay in place
until 1 January 2030.
To sell electricity at the green tariffs, owners of renewable
energy facilities must procure that the value of Ukrainian sourced
materials, fixed assets, and services in the total capital
expenditures of the renewable energy facility reaches at least (i)
15% starting from 1 January 2012; (ii) 30% starting from 1 January
2013; and (iii) 50% starting from 1 January 2014.
Also, from 1 January 2013, solar energy facilities must use PV
modules produced using Ukrainian sourced raw materials whose value
is at least 30% in the total value of the PV modules. Starting from
2014 the required value of Ukrainian sourced materials in the total
production value of the PV modules will increase to 50%.
Connection to the electricity network?
An important factor to consider when deciding whether to invest
in a renewable energy facility in Ukraine is connection to the
electricity network. The connection can be made based on a
connection agreement between the owner of the facility and an
operator/owner of an electricity network located on the territory
adjacent to the renewable energy facility. Given that many
technical issues may arise concerning connection to the grid, it is
advisable to negotiate the terms of the connection agreement and
the costs involved with the electricity network operator/ owner
before the erection of the facility starts.
Licence for electricity generation
Producers of electricity from renewable energy sources will
obtain a licence for electricity generation if (i) the installed
power capacity of a renewable energy facility equals or exceeds
10MW, or (ii) irrespective of the installed power capacity, such
producers intend to trade electricity generated from renewable
energy sources on the Wholesale Electricity Market of Ukraine
("WEM"), operated by the State Enterprise
"Energorynok". The producers may also choose to sell
electricity directly to customers or electricity supply companies
based on direct contracts and at agreed prices which, however, may
not be lower than the green tariffs. By law, electricity not sold
via direct contracts with customers or supply companies must be
purchased by the WEM. This law ensures that owners of renewable
energy facilities make a profit on their investments.
This article was originally published in the schoenherr
roadmap`12 - if you would like to receive a complimentary copy
of this publication, please visit:
pr.schoenherr.eu/roadmap.
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guide to the subject matter. Specialist advice should be sought
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