Crisis in Ukraine threatens domestic PV industry

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The ramifications from recent months have already had devastating consequences for employees in the industry. pv magazine spoke to one current and one former employee of Activ Solar in the country, both of whom insisted on anonymity.

According to the first source, Vienna-based Activ Solar no longer has any projects in development in Ukraine while management are looking to actively reduce staff. They said, “A lot of people were already fired. For me, the last day in this company is known as well.”

This was confirmed by the second source, a former employee of the company. They said, “The company is now optimizing costs at all levels with no additional staff, except maintenance for the existing plants.”

Activ Solar recently completed a 69.7 MW facility in the Crimea. Until recently, it was one of the most active solar developers in the area, having installed over 127 MW of capacity in Q1 2013 alone. In December, pv magazine wrote about the great potential of the region.

pv magazine emailed questions to Activ Solar, asking about the company’s intentions in Ukraine. The company sent this statement in response: “The current political instability and the ensuing tensions have caused a severe disruption of economic activity in Ukraine. We are closely monitoring the ongoing political discussions and developments. We expect the situation to remain difficult for the foreseeable future causing a slowdown in economic activities. In this environment of sustained uncertainty, Activ Solar remains cautious regarding undertaking new projects until the situation in the country stabilizes.”

Existing plants, according to the second source, are being maintained but all new projects have been stopped or cancelled. “The current Crimean government has already commented on solar parks in Crimea, saying that now they are a vital part of the energy infrastructure in the peninsula and will continue to generate power. However, the question is open as to who pays for the solar electricity and at what rate. Most of the solar projects in Crimea were financed by Russian banks so I would assume that very soon we will see a sudden growth of the cumulative solar capacity in Russia.”

These have followed Energorynok’s announcement on 2 April that it has officially stopped purchasing all electricity produced in Crimea. According to the state energy company, an extraordinary meeting of the Wholesale Electricity Market (WEM) of Ukraine voted 9-0 to adopt the draft resolution “On protection of rights and freedoms in the temporarily occupied territory of Ukraine” due to what it called “confirmed force majeure”. WEM is a union of electricity producers, power retail, and wholesale suppliers across the country while Energorynok is a state enterprise that functions as a single buyer and wholesale supplier of electricity.

That move by WEM came the day after Russian utility giant Gazprom hiked its gas prices to Ukraine by 40%. That move was widely seen as economic retaliation against Ukraine by the Russian government. Gazprom explained the price hike as being due to Ukraine failing to settle a debt to Russia of $1.7 billion. Russia had offered Ukraine a subsidy until the current deterioration between the two countries.

Further afield, the annexation of Crimea and the potential for further unrest within the country has caused new conversations between investors and suppliers. Stefan Mueller is COO at Hamburg-based Enerparc, which recently installed the largest PV power plant in Russia. Mueller said that the biggest issue was the localisation of modules and that the biggest challenge will come if they begin to be manufactured by newcomers.

Mueller added, “All the power plants in Crimea have been annexed by the Russians so they are not being paid by the Ukrainian government. And there is no discussion as to what will happen with the plants if they degrade, even if the plants are now Russian.”