bne : Ukraine’s renewable rush still faces uncertainties

Article published on the bne IntelliNews website on October 19th.

By Fabrice Deprez in Nikopol October 19, 2018

A cold autumn wind is sweeping through the roughly 400 hectares of dirt that will soon host the biggest solar plant in Ukraine. 350 workers started laying 750,000 solar panels in this former ore quarry near the city of Nikopol, in southern Ukraine. DTEK, the Ukrainian energy giant who will operate the plant, says it is set to start running in early 2019. To keep to the schedule, the number of workers will soon rise to a thousand, most of them Chinese employees from the China Machinery Engineering Corporation.

“We’re ambitious,” DTEK CEO Maxim Timchenko told bne IntelliNews. “Our goal is to set up 1GW of capacity in renewables by the end of 2019.”

40 kilometres south, on the bank of the Azov Sea, the company is also getting ready to operate 26 wind turbines currently being built by General Electric.

Sunny weather and the steady breezes blowing from the Azov Sea have put the southern regions of Zaporozhe and Dnipropetrovsk at the heart of Ukraine’s recent rush into renewables. Its supporters hope the increasing number of projects could translate into major foreign investments and bolster Ukraine’s energy independence. At the same time, uncertainties over the energy reform means the sustainability of this growth is still unclear.

Ukraine still relies on soviet-era nuclear power plants as well as gas and coal-powered thermal plants for its electricity. Nuclear, natural gas, oil and coal make up 96% of the country’s energy mix, with renewables estimated at somewhere between 1 and 2%. Several of these traditional facilities are also located in southern Ukraine: a 20 kilometres radius around the Nikopol solar plant includes both the most powerful nuclear plant and coal-powered thermal plant in Ukraine. The latter is also owned by DTEK.

DTEK is owned by Ukrainian oligarch Rinat Akhmetov, Ukraine’s wealthiest man. The conglomerate controls 70% of the country’s thermal plants, which provide most of the electricity. At the same time, it is set to become the biggest player in Ukraine’s renewables sector.

Rush into renewables

While renewables is still in its infancy in Ukraine, it has seen a flurry of projects in the last two years. The number of licenses for producing renewable energy delivered in Ukraine grew from 131 in 2015 to 163 and 230 in the following years, according to the Ukrainian Association of Renewable Energy (UARE). State-run power company Ukrenergo expect the country’s renewable energy capacity to go from the current 1.5GW to 3GW in 2019.

Renewables have benefited from so-called “green tariffs”, state subsidies designed to boost investment in clean energy. “The green tariff is set in euro, which is important to make it attractive to investors,” Iryna Krymus, an expert at the UARE, told bne IntelliNews.

Launched in the country in 2008, the green tariffs jumpstarted the renewable sector in Ukraine: 12 licenses for renewables projects were delivered in 2009, and 107 in 2013. “We started investing in renewables in 2010, with a pilot project, 200MW of wind power” DTEK CEO Maxim Timchenko says. “It was very successful, but the 2014 political and economic crisis forced us to suspend all our expansion projects. Now however, we’re back on the market.”

Read the rest on the bne IntelliNews website.

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