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24 I Cover story bne November 2018
conditions before upcoming regulatory changes. Ukraine has engaged in an ambitious energy reform that plans to do away with the current green tariffs to replace them by an auction system. Rather than providing fixed subsidies,
July 2019 will be able to keep ben- efiting from green tariffs until 2029. Igor Dykunskyy, managing part-
ner at DLF attorneys-at-law believes that “there is a risk of a decline in the renewable energy sector in Ukraine
Ukraine still has major advantages
that could make it a serious player in
the renewable business. Its geographic position makes it ideal for both solar
and wind power, with several promising regions (such as the western Transcar- pathia) still untapped. The country joined the International Agency for Renewable Energy as a member in February 2018. And while renewables represent less than 2% of the total energy mix, it “accounted for around 6.4% of the total electricity generation by January 2017,” a Carnegie Europe report found. The figure is half the target (11%) set up in the National Renewable Energy Action Plan, adopted in 2014.
“Renewables will take a larger share
of the market,” Oleh Savitskyi argues. “How big will depend mostly on political factors, the two key issues being unfa- vourable conditions for foreign investors and problems with the independent reg- ulator, who isn’t independent.” Ukraine’s National Energy Regulator Commission was established in 2014, and has since regularly been accused of being sub-
ject to intense political pressure.
“Renewables is still in its infancy in Ukraine, but it has seen a flurry of projects in the last two years”
the government would issue tenders to buy a certain capacity of renewables electricity.
“Right now, there’s a window of oppor- tunity to get the green tariff before it is cancelled, so we see a rush of projects,” Oleh Savitskyi says. “But this is very short term, and there’s a real possibility we’ll see a drop in the numbers of big projects when the auctions are introduced.”
The current draft of the law states that renewable projects set up before
after 2020. Once the feed-in tariff is reduced, the payback period of the projects will increase.”
The current appetite for renewables proj- ects could, paradoxically, cause some issues too. Analysts worry that the grid connection in southern Ukraine, where most of the renewable projects are located, might soon be saturated. “The construction of new power plants will not make any sense without the develop- ment of power transmission and storage systems,” according to Igor Dykunskyy.
RUSSIA
Oil rich Russia is lagging behind the rest of the region in embracing renewables. While the country is also home
to rivers ideal for the production of hydropower by 2025 the share of renewable energy sources in Russia's energy mix will amount to 1% or 11.3bn kWh, well behind the official government's target of 4.5%. To meet the target Russia needs to add 24GW of install capacity but the state support programme for the sector includes plans for only 5.5GW of solar and wind stations and 445MW of waste-to- energy stations.
The state technology promotion agency Rosnano has said Russia has the world's biggest potential for wind generation and estimated that 10GW of new capacity is required in 2025-2035 to support domestic renewable energy sector.
Previously the government planned to auction 3.351GW worth of licences but has cut that to 250MW under the reduced plans, while the number of planned hydropower stations has been halved to 425MW of planned new capacity. Solar power investment was the only part of the
programme that was expanded by 240MW to 1.759 GW, Prime-TASS reported.
Rosnano has tied up with Finland's power company Fortum and set up a wind power development fund. The partners plan to invest RUB30bn ($526mn) into wind farms projects over the next five years that can generate several hundred megawatts of power.
To meet the government plan a total of RUB1.37 trillion ($20.89bn) needs to be invested, but the gains to GDP are worth RUB1.54 trillion according to experts.
EXISTING PROJECTS INCLUDE:
• Fortum wind farm: was completed in 2017 with 35MW of installed capacity in Ulyanovsk region in the Volga basin. Other prospective sites for wind farms are
near the cities of Rostov, also in the Volga basin, and Murmansk on the northwestern coast, as well as Krasnodar in Siberia and the southern Stavropol region.
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