Latest Ukraine Renewable Energy Newsletter (#27) published

The latest issue of Ukraine Renewable Energy Newsletter was published. You can download full version here. Please see below introduction and the list of content.


The European Bank for Reconstruction and Development has been a major newsmaker in the renewable sector of Ukraine during recent months approving several loans for renewable energy projects. In addition to 7 loans provided in the framework of USELF program to small and medium size projects (3 solar, 1 biogas, 1 wind, 1 small hydro and 1 biomass), the Bank has recently approved loan for larger 57.7 MW Novoazovskiy wind farm project.

New local content rules, applicable to the renewable power plants commissioned after 01 July 2013, as expected, brought uncertainty for the developers of renewable projects. In particular, majority of solar developers put their projects on hold to assess the options for solar PV modules and respective EPC packages, which comply with new local content requirement. While some relevant options are available, respective prices exceed the international level of solar PV installations that makes investors and banks cautious when making decision about new investments in such projects in Ukraine. We believe that acceptable solution can be found within several months that will allow bringing more solar projects to financial closing and construction in 2014.

Approval of new Energy Strategy until 2030 by the Government at the end of July led to certain confusion among market participants as it has not yet been published. According to various sources, the major reason for such delay is internal discussion within the Government concerning the share of renewables in perspective generation mix for 2020-2030. While the latest available draft of the Strategy envisaged 6 GW installed capacity of renewable power plants in 2030 (not counting large hydro power plants), many stakeholders considered this figure to be low, especially considering Ukraine’s commitment in the framework of the Energy Community Treaty to bring the share of electricity production from renewables up to 11% in 2020. We expect that the share of renewables envisaged by the Strategy will be increased and updated document will be published shortly.

Draft Law 0916 introducing new liberalized model of electricity market (bilateral contracts and balancing market) has been approved for the second reading by the Parliament Fuel and Energy Sector Committee earlier this week and will be put for the Parliament’s voting during the first week of November. Launch of the new market model is planned for 2017.

The Draft Law envisages that special Guaranteed Buyer will be established by the end of 2015 on the basis of the state enterprise Energorynok (that currently performs the function of the Wholesale Electricity Market Operator) and will ensure purchase of all electricity from renewable power plants at respective green tariffs. The Guaranteed Buyer will receive compensation (of the difference between market prices for electricity and green tariffs) from the special Fund of Regulation of Price Disbalance that will also be the source of compensation of imbalances caused by renewable power plants until 2030 (with exception of small hydro, biomass and biogas power plants that will be fully responsible for imbalances starting from the 3rd year after commissioning).

In This Issue

1. EBRD finances the first biomass project in Ukraine via USELF program

2. DTEK attracted EUR 138 million loan for wind power plant construction

3. EBRD finances Novoazovskiy wind park in Ukraine

4. Vestas received new order for 21 MW wind turbines

5. EBRD finances two more solar projects in Ukraine

6. KSG Agro plans to launch new pellet production facility

7. EBRD finances the first biogas project in Ukraine

8. Draft National Action Plan for renewable energy presented