In connection with the recent changes in the legislation of Ukraine regulating the market of renewable energy sources, in the period from 2021 to 2024, it makes sense to apply the “green” tariff as an investment instrument, primarily for ground-based solar power plants with a capacity of up to 1 MW. Avenston offers a full package of services for the development, construction, and maintenance of ground-based solar power plants up to 1 MW. On-grid solar power plant of this type is being built exclusively for the sale of electricity at a “green” tariff and is an interesting investment tool with clear financial indicators and risks.
A ground-based solar power plant with a capacity of 1 MW covers an area of up to 2 hectares (depending on the type and efficiency of the selected solar panels). The amount of electricity produced also depends on the location of the facility (the difference in specific generation between the southern and northern regions of Ukraine is approximately 10-15%), but other factors also affect the payback of the project. For example, the cost of connecting to power grids is essential. Sometimes, when planning a project, it will be more rational to work in the central or even northern regions of the country with a low connection cost than for southern projects, but with a more expensive connection.
Ground-mounted solar PV power plants under the “green” tariff are on-grid. Accordingly, on-grid solar inverters are used, working in conjunction with the grid. Solar farms also have got voltage transformers required to connect a solar power plant to a power line or a substation. Most often these are 0.4/10 kV transformers or more expensive 0.4/35 kV transformers. When planning a solar power plant, Avenston takes into account such factors as the capacity of the installed solar panels, the geographical location of the future facility, weather, and climatic conditions. It is possible to receive a premium to the feed-in tariff due to the use of equipment manufactured in Ukraine and meeting the requirements of “local content”.
Avenston accompanies investors at all stages of the project implementation, provides the necessary support. We can cooperate both at individual stages and perform turnkey work, completely freeing a non-core investor from the need to spend time studying the specific nuances of solar energy solutions.
Any investment project starts from the development stage. A potential investor can carry out the development of the project on his own, attract specialized companies for cooperation, or purchase an already established company (SPV) with a ready-to-build package of documents that allows to immediately start construction of a solar power plant. Usually, at the end of the development stage, a legal entity has a complete package of documents for a land plot (lease or property), contracts, and technical specifications for connecting the future SPP to the power grids of a power transmission organization (for example, oblenergo) and other necessary documents depending on the current legislative requirements. Also, all the initial data for the design must be collected, topologic and geological surveys must be carried out. Avenston can fully accompany you at this stage, carry out a comprehensive technical and legal review of existing documents or assist in finding and purchasing ready-to-build solar power plant projects. We have been developing solar power plants since 2012 and have accumulated a lot of practical experience necessary for the most efficient implementation of such projects.
The next step is general contracting services, the result of which is a turnkey ground-mounted solar power plant. Under the general contract (EPC contract), the development of a working project is carried out, all the necessary equipment and materials are purchased and delivered to the construction site, construction and electrical work are carried out, including testing and commissioning of the solar power plant. Also, at this stage, all permits are issued and the necessary approvals are carried out. To reduce the risk of downtime due to defects or breakdowns, we recommend working only with top-end equipment. The difference in cost will still be compensated for in the first 1-2 years of operation due to the more efficient operation of solar panels and solar inverters, as well as the absence of downtime due to their temporary inoperability. We have direct channels for the supply of basic equipment. Avenston will select the most optimal options for your project.
The constructed solar power plant must go through the legal procedures for concluding a contract for the sale and purchase of electricity at a “green” tariff. After that, the object begins its regular work, and the investment project begins to generate cash flow. Correct operation and maintenance (O&M) of the solar power plant is very important to ensure the planned financial performance. Avenston provides services for the maintenance of SPP, including physical security.
The “green” tariff as an instrument of state support for the solar energy industry has been operating in Ukraine since 2009. During this time, the size of “green” tariffs was periodically revised, which stimulated the development of different segments of solar energy. In the early years, the most popular were ground-based solar power plants of high power, then private home solar power plants began to be actively built. Since 2020, the state support scheme was changed again, and large commercial solar power plants were limited in capacity to no more than 1 MW (DC).
The advantages of working under the “green” tariff are in fixing income in foreign currency (FIT is connected to the euro exchange rate), attractive investment payback periods, and predicted project implementation schemes, etc. The main risks are possible delays in payments for the “green” tariff. But after the last changes in the legislation, it became possible at any time to abandon the work on the “green” tariff and start selling electricity produced by the solar power plant at market or auction prices. This significantly increases the reliability of investments and stimulates the construction of such projects.
To minimize risks in the implementation of a PV project, it is recommended to work only with qualified and experienced engineering and general contractors. It is these companies that will select the best solution for a solar power plant, help you choose the optimal power of the solar power plant, and select the most efficient equipment. It is also important not to hesitate in deciding on investments in the construction of a solar power plant. The law of Ukraine provides for a planned annual reduction of the “green” tariff, that is, the earlier a photovoltaic station is built, the more annual cash flows it will generate, and the faster the investment will pay off.
The planned investment in a ground-based solar power plant is 600-700 thousand euros, and the payback period of the project is 5.5-6 years. These characteristics depend on several reasons. The financial model is greatly influenced by the cost of solar panels that are planned to be used in a specific project. Prices for solar panels around the world are constantly changing, and this equipment accounts for about half the cost of an entire solar power plant. Also important is the location of the solar power plant, the cost of fulfilling the technical specifications for connecting to the power grids, the presence or absence of debt financing, and other factors.
In any case, upon completion of construction by the end of 2024, the solar power plant will have time to fully pay off even before the end of the “green” tariff, and then you will be able to sell all generated electricity at market rates. By the time the investment returns, payments remain pegged to the euro, and the project’s IRR exceeds the rates on foreign currency deposits. Thus, investments in ground-based solar power plants up to 1 MW using state support in the form of a “green” tariff are a reliable and interesting tool for maintaining and increasing your savings.
Since 2010, we have been professionally involved in the implementation of solar energy projects of all types and sizes. We have extensive experience in the development, design, construction, and operation of commercial on-grid solar power plants, and we offer a full range of solar energy services. By contacting Avenston, you will receive the necessary support at all stages of the implementation of your project. Avenston’s ground-mounted solar power plant is a reliable and smart investment for companies or private investors.