Aside from problems with Russia, Ukraine offers top conditions for PV

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Solar PV in Ukraine has had a strong and undisputed take off, leading to both a very good photovoltaic installations portfolio and the PV technology being now the most wide-spread renewable energy (RE) technology in the country.

Sergiy Maslichenko, of the European Bank for Reconstruction and Development (EBRD), told pv magazine that “as of September 1, 819 MW of solar PV are installed in Ukraine. This represents approximately 58% of total grid-connected RE capacity in Ukraine.”

Very good solar irradiation

There are various factors affecting a country’s RE development (e.g., political determination and energy security concerns), however Ukraine’s solar photovoltaic progress has been clearly affected by its very good solar irradiation and its even better feed-in tariff (FIT) policy scheme.

Solar irradiation is very strong, mostly over 1,500 kilowatt hours per square meter (kWh/m2) in the Crimea Peninsula and across the Black Sea in the Bilhorod-Dnistrovsky area of Odessa in southwestern Ukraine. Solar irradiation is also very strong in central and western Ukraine and specifically in the areas surrounding the capital city of Kiev and up to the southern border with Moldova. Solar irradiation in these areas ranges between 1,350 to 1,450 kWh/m2. Solar irradiation in the eastern parts of Ukraine bordering the Sea of Azov is very satisfactory too, at around 1,350 kWh/m2.

Overall, Ukraine’s solar irradiation is better than Germany’s, Maslichenko told pv magazine.

Even better tariff scheme

The EBRD has been actively assisting the Ukrainian government in preparing legislation to support renewable energy for the last five years, according to Maslichenko. Based on extensive support from EBRD consultants, Ukraine initially issued primary legislation (the Green Tariff Law) setting a feed-in tariff (FIT) for renewable energy in April 2009. “Following that, the National Energy Regulatory Commission of Ukraine (NERC) issued green tariff approvals to 107 companies (as of October 1), which now operate under the feed-in tariff framework,” Maslichenko said.

In practise, this means RE investors firstly need to develop their projects and then receive a FIT later. As of today, 107 companies operate in Ukraine, however there are over 200 RE projects in the country, as often a company can have several projects with the same FIT, noted Maslichenko.

Tariffs are fixed for each RE technology at a euro currency figure until 2030. “Every month, the NERC calculates the green tariffs in Ukrainian Hryvnia (UAH) based on the National Bank exchange rate with a floor exchange rate set on January, 1, 2009,” Maslichenko explained. “Once the green tariff is awarded, it remains valid and unchanged till 2030.”

FITs for RE projects vary according to the project commissioning time. For ground-mounted solar PV projects specifically, FITs are set at 46.53 eurocents per kilowatt hour if the project was commissioned between January 1, 2013, and March 31, 2013; 33.93 eurocents if commissioned between April 1, 2013, and December 31, 2014; 30.53 eurocents if commissioned between January 1, 2015, and December 31, 2019; 27.14 eurocents if commissioned between January 1, 2020, to December 31, 2024; and 23.75 eurocents per kilowatt hour if commissioned between January 1, 2025, to December 31, 2029.

Currently, Maslichenko told pv magazine, there are neither caps on the budget allocated towards RE development nor caps related to the RE capacity to be developed. A FIT reduction, though, is envisaged every five years and Ukraine’s government is also now reconsidering the support level for solar PV, “so it is likely it will be further reduced,” Maslichenko noted.

Political risks, solar PV’s main threat

With such good solar irradiation and FITs, photovoltaics are expected to drive the country’s power redevelopment. Specifically for the period ending December 31, 2019, subsidy support for micro hydro (plants smaller than 200 kW) at 17.45 eurocents per kilowatt hour is second to the solar PV tariff.

Moreover, Ukraine needs desperately to develop its RE sector and decrease its energy and economic dependency on Russian gas, upon which it now relies disproportionally. Yet the path to the country’s solar renaissance is thorny and depends heavily on its political stability and competence.

Ukraine’s western allies have praised the results of the country’s parliamentary election on October 26. Reformists have clearly won at the polls, giving the People’s Front party of Prime Minister Arseniy Yatsenyuk 22.2% and President Petro Poroshenko’s bloc 21.8%. Both figures have talked about the dire urgency to reform Ukraine’s economy, which now survives on foreign aid. Western powers’ continuing support of the Ukrainian economy is also linked to reforms. So the question emerging is whether Ukraine can achieve such a reform agenda.

Critics tend to point to the fragmentation of Ukraine’s political elite. Past experience, they argue, has shown a lack of cooperation between different political parties who have different agendas and refuse to achieve agreement on key economic reforms.

On a positive note, the EBRD announced on Monday that it had established a fund to assist Ukraine’s efforts to reform its economy and improve its business climate. The fund has so far attached €11 million from Finland, France, Germany, Netherlands, Sweden, Switzerland and the U.K., while the U.S., Denmark, Japan and Norway are also considering contributing to the fund.

Ukraine does not have time to waste. Sunday’s farcical elections in the Donetsk and Luhansk regions in eastern Ukraine show why. The Donetsk and Luhansk region, which has been controlled in large part by pro-Russian separatists since the spring, organized elections that no country or international institution, apart from Russia, recognize. Not surprisingly, the separatist Aleksandr Zakharchenko won the election.

Ukraine needs to step forward to reform the state and establish a strong competitive economic model that fights corruption, pulls the country together and encourages international investors to also step in. Until the first signs of a serious reform effort by Ukraine’s government are visible, most international investors will be kept at bay.

Chernobyl still poisons

On a separate note, Ukraine experienced last week a key development concerning its nuclear safety. The second half of the New Safe Confinement (NSC) in Chernobyl, a giant structure aiming to cover the destroyed Chernobyl nuclear plant and minimize radiation exposure, was successfully lifted to full height of 110 meters on October 24.

Chernobyl’s NSC is a design and construction project unprecedented in the history of engineering, which began constructed in late 2010 and is expected to be completed by 2017.

“The total cost of the Shelter Implementation Plan, of which the NSC is the most prominent element, is estimated in the range of €2.15 billion,” the EBRD said on Friday. Of this, The NSC project will cost about €1.5 billion.

The project in Chernobyl presently faces a funding shortfall and this, as in the past, is expected to be filled with funds from the EBRD, the G7, the European Commission and non-G7 donors.

The NSC is seen as necessary to make the old Chernobyl shelter and remnants of the damaged nuclear reactor safe and environmentally secure. Its size is tall enough to house Paris’ Notre Dame or London’s St. Paul’s cathedrals and will weigh more than 30,000 tons.

It is not hard at all finding reasons why Ukraine needs to develop renewable energy.