We analyzes some perspectives and plans for cooperation within alternative energy sectors of Ukraine for foreign companies and mentions main challenges that could be faced while cooperating with Ukrainian colleagues during PV projects development and implementation. It is not a big secret that now Ukraine is going through difficult times, but our country and its economy have big possibilities as market for local and foreign investors. Especially in such area as energy generation. We think that renewable energy and its photovoltaic sector is a very promising industry where many companies can expand own business being suppliers of equipment or technologies or even like investors for utility-scale solar power plants.
By the end of 2016, the total installed capacity of renewable energy sources in Ukraine was 1.1 GW and additional 500 MW remains in Crimea. On the mainland of Ukraine, capacities of all renewable energies, which already put into operation, is divided by types as follows:
- Solar energy — 530 MW;
- Wind — 440 MW;
- Capacity of small hydro power stations — 90 MW;
- Biogas with biomass — 60 MW.
Over 2016, the largest numbers of new facilities have been built among the solar power plants — it was almost 100 MW. There are some main reasons why Ukrainian PV industry is very attractive in terms of investment:
- Special government program, which aims to increase share of renewable energies in the total power balance of Ukraine. This share has to achieve at least 11% until 2020 and 21% until 2035. However, at the beginning of 2017 the current capacities of renewable power is still very low — only 1.26% of total electricity consumption.
- Ukrainian Government guarantees that all amount of electricity produced from renewable energy sources will be paid by the «green» tariff. Electricity is purchased on Wholesale Electricity Market of Ukraine by State Enterprise «Energorynok».
- Green tariffs are actual until 1st of January, 2030 and are set in euros to reduce the risks of investors: for ground-mounted commercial PV power plants FIT it is 15 eurocents per kW-hour and for roof-mounted solar plants it is 16 eurocents.
- The climatic conditions and the level of insolation in Ukraine are good for the implementation of solar energy projects. At current level of technologies and equipment efficiency, an average annual performance ratio is about 1300 kWh per 1 kWp of solar panels for south regions of Ukraine.
As a result, solar market in our country is growing now and it is one of the most attractive PV markets in Eastern Europe. Our current forecast for PV industry is the following:
- In 2017, we will see a rapid growth of the new installations’ quantity and capacity.
- In 2018 and 2019 there will continue a stable growth of new installations.
- However, slow decreasing of new capacities is possible in the period after 2020.
Chalanges of solar market
Despite the fact that Ukrainian solar industry has lots of attractions, it has some important problems. In case of not taking into the account well-known country risks, we can underline the following issues that is necessary to know about Ukrainian solar market:
- First of all, there are some difficulties with correct prediction of terms and costs of land permits obtaining. It was a main reason why we selected best ready-to-built projects. It is much easier to attract investors to a project if the land leasing agreement is signed and all land issues became transparent.
- The second point is difficulties related to the grid connection. Grid operators have some technical limitations regarding connection. It is not easy to find land areas with reasonable cost of connection to the grid.
- Very often foreign investors worried about the fact that PPA (Power Purchase Agreement) is signed just for already built solar power plants after construction phase. But it is necessary to remember that Ukrainian government guarantees that all amount of electricity produced from renewable energy sources will be bought.
In any case, all these challenges can be resolved. And it is confirmed by a lot of PV power plants which have been built and successfully operating in Ukraine for the past 7 years. Despite all country risks, we see that the interest to such projects each year only increases. If you are interested in getting more details about Ukrainian solar energy market, PHC Capital can provide you with additional information and answer your questions. Just contact us to begin.