Ukraine cuts solar FITs

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In addition to the Ukrainian parliament’s announcement of renewable energy tariff cuts, Ukrainian power supply companies will reportedly be obliged to buy excess electricity from households, which has been generated from rooftop solar systems up to 16 kW in size. At the same time, it is believed that households will not be required to obtain a license for electricity production.

The draft law, "On Introducing Changes to the Law of Ukraine ‘On the Power Sector’", was adopted by the parliament on July 4. "The Draft Law is currently preparing for the second reading with the Parliament. It is hard to predict when the Draft Law might be finally adopted, but we assume it will happen at the next Parliament’s session in the fall of 2012," said Ukraine-based energy advisory group, Imepower at the end of June.

Under the cuts, new tariffs for solar plants have been announced. The tariffs are said to be revised on a monthly basis, based on the exchange rate of the euro against the UAH.

Category
Effective green tariff

New green tariffRetail Tariff for the 2nd Voltage Class ConsumersGreen coefficientPeak period coefficient
Ground-mounted PV plants465.3339.2653.853.51.8
Rooftop PV systems >0.1 MW445.9348.5553.853.61.8
Rooftop PV systems <0.1 MW426.5358.6453.853.71.8
Private rooftop PV systems <16 kW387.2753.854.01.8

Source: Ukraine-based energy advisory group, Imepower. All tariffs are shown in Ukrainian grivna (UAH). 1UAH equals around USD0.12 or €0.10.

Currently, says Nikolai Pashkevich, head of the Ukrainian State Agency of Energy Efficiency and Saving, the Ukrainian solar industry is continuing to enjoy enormous interest from foreign investors. In a newsletter discussing the changes, Imepower confirmed this view: "In general, we have observed during recent months a shift of focus from investors and developers towards solar projects as EPC prices for PV solar power plants are going down with more and more international EPC contractors looking at the Ukrainian market to enter due to overall negative situation in this industry around globe." It says that 290 MW of solar will be installed in the Ukraine this year.

The European-Ukrainian Energy Agency further believes that Ukraine’s solar market has the potential to grow by 90 percent annually until 2015.

Local content

A sticking point however, continued Imepower, is the local content requirement, since it "did not allow all project stakeholders to plan their steps. Hopefully, this area will be clarified soon by the NERC (National Electricity Regulatory Commission) that will boost number of solar and other renewable projects getting from development to construction stages in Ukraine."

It said that NERC approved the local content requirement law on June 14. The procedure must now be sent to the Ministry of Justice for registration, "after which it will be published and come into force." While the details have not been made publicly available, it is said that in order for renewable energy facilities coming into operation in 2012 to qualify for the green tariff, at least 15 percent of "raw materials, equipment, works and services" must be sourced from the Ukraine. This will be increased to at least 30 percent in 2013 and 50 percent in 2014.

Project landscape

As aforementioned, there is said to be a huge interest from both developers and investors in the Ukrainian solar industry. In its newsletter, Imepower said that the Council of Ministers of Crimea (CMC) has permitted 17 companies to develop solar power plants on a land area covering 538.8 hectares. Based on its calculation that around two hectares of land are required to install one MW of solar, this would amount to around 269 MW worth of projects.

It added, "Earlier the CMC leased 336 ha of land in the territory of Simferopol and Kirov regions to eight companies for 49 years for SPP construction. As we understand, all these companies belong to Activ Solar, the largest solar developer in Ukraine."

The energy advisory group further noted that the Land Code of Ukraine is looking to allocate land plots, without undergoing a tender or auction process.

Pipelines

According to Imepower, the following projects are underway in the Ukraine:

  • Tokmak Solar Energy Ltd.is planning to install 1.5 MW until the end of 2012. Overall, it aims to install 22 to 23 MW.
  • Ekotechnik Praha is expected to finish the construction of its 42 MW solar power plant, located in Kyiv region. It is then expected to start construction of a 50 MW plant in Dnipropetrovsk region.
  • Rentechno is scheduled to complete construction of its 1.8 MW solar power plant in Vinnytsia region and start work on an 11 MW facility in the Kherson region.
  • Rengy Development will reportedly construct six solar plants, with a combined capacity of 50 MW in the Vinnytsia region.
  • Israeli SunElectra is expected to build 10 solar plants worth 25 to 30 MW.
  • Tokmak Solar Energy is said to be planning a nine MW solar plant;
  • Ukrgelios will reportedly undertake a 15 MW solar plant project in the Zaporizhia region.
  • French Helios Strategia is also planning to install "several" roof solar power plants, worth seven MW.
  • Activ Solar has already installed over 200 MW of solar in the Ukraine. It has said that owing to the Odessa region’s favorable conditions for solar, it is currently developing and constructing further solar parks there.

Reportedly, the State Agency for Energy Efficiency and Energy Saving predicts that renewable energy capacity will grow to one GW in 2012, up from 411 MW. The Ukraine is said to be looking to target 12 percent of renewables by 2020, up from one percent.